One area of the financial markets that we constantly monitor for signs of confirmation or divergence in the trend for equities are spreads between interest rates on high yield debt and comparable treasuries. High yield debt is far out on the risk spectrum of fixed income, so it tends to have a closer correlation to equities. Therefore, when stocks
In this article, I will be looking at the largest bond ETFs to assess the projected total returns they may have with a rate increase. The reason for writing this article is that I read an article by a fellow contributor who had a good start to estimating projected value of bond ETFs and mutual funds. However, his title of "How Much Money Are You Planning to Lose in Your Bond Portfolio?" I believe was misleading and I believed he left out a few important items. There are two items that I added that I believe will make estimating future total returns more accurate. The first was that income was not added to his estimates. The second is many bond ETF investors have funds set up on a DRIP plan, so I accounted for that as well in my analysis.
Step 1: Finding Bond ETFs
For the first step, I