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The short term performance of a portfolio gives a snapshot of the ups and downs that the markets deals out, and can be a measure of future direction. The short term investment grade bond provides a snapshot of the state of the bond market, showing what the appetite is for bonds today.

These Bonds, shown below, can indicate the direction of Fixed Income Assets for those looking for lower risks in the short term.

U.S. Short Term Investment Grade Bonds

04/21/2011

Description

Symbol

1 Yr

3 Yr

5 Yr

Avg. Volume(K)

1 Yr Sharpe

Vanguard Short-Term Corp Bd Id

VCSH

4.49%

NA

NA

202

215.13%

SPDR Barclays Capital Short Term

SCPB

3.12%

NA

NA

136

217.55%

iShares Barclays 1-3 Year Cred

CSJ

2.5%

3.61%

NA

499

142.82%

Vanguard Short-Term Corp Bond Index (NASDAQ:VCSH), shows the best short term performance, with good volume for a new ETF. Next comes the SPDR Barclays Capital Short Term (NYSEARCA:SCPB), tracking 1 to 3 years investing approximately 80% of the assets in securities comprising the index. Both are new ETFs with reasonable volume for their age but, as yet, unproven. iShares Barclays 1-3 Year (NYSEARCA:CSJ) invests the major part of the assets in the industrial sector and financial institutions, with most made with maturity from 1 to less than 5 years, with good average volumes.

These new ETFs represent a new asset sub-class in a portfolio. The investor should be slightly careful as SCPB shows a Sharpe index (i.e. better risk adjusted returns) than VCSH which has higher returns. They all have relatively short histories and deserve deeper investigation. We will investigate this in a future article.

Fixed Income Assets Trend

04/21/2011

Description

Symbol

1 Week

4 Weeks

13 Weeks

26 Weeks

52 Weeks

Trend Score

International Inflation Protected

WIP

1.25%

3.22%

7.83%

7.97%

17.36%

7.53%

High Yield

JNK

0.74%

1.35%

3.32%

8.68%

15.3%

5.88%

International Treasury

BWX

1.69%

1.65%

5.89%

2.36%

12.95%

4.91%

Inflation Protected

TIP

0.58%

1.25%

3.99%

-0.01%

8.14%

2.79%

Long Term Credit

LQD

1.02%

0.95%

1.83%

-0.4%

7.52%

2.18%

Intermediate Term Credit

CIU

0.62%

0.55%

1.13%

-0.25%

5.62%

1.53%

Emerging Mkt Bonds

PCY

0.33%

0.9%

2.02%

-3.01%

7.36%

1.52%

US Total Bond

BND

0.52%

0.47%

1.34%

-0.63%

5.25%

1.39%

MBS Bond

MBB

0.38%

0.48%

0.78%

-0.28%

4.25%

1.12%

Intermediate Treasury

IEF

0.79%

0.31%

1.07%

-4.16%

7.3%

1.06%

10-20Year Treasury

TLH

0.97%

0.3%

1.91%

-5.25%

7.18%

1.02%

20+ Year Treasury

TLT

1.28%

0.64%

2.74%

-6.42%

6.29%

0.91%

Short Term Credit

CSJ

0.27%

0.12%

0.72%

0.71%

2.62%

0.89%

National Muni

MUB

0.96%

1.35%

4.46%

-3.29%

0.73%

0.84%

Short Term Treasury

SHY

0.2%

0.19%

0.26%

-0.14%

1.78%

0.46%

California Muni

CMF

0.92%

0.45%

6.03%

-5.23%

-1.11%

0.21%

Treasury Bills

SHV

0.02%

0.06%

0.09%

0.1%

0.17%

0.09%

New York Muni

NYF

-0.19%

-0.36%

3.43%

-3.1%

0.49%

0.06%

Analyzing the overall fixed income asset class, we find the iShares Barclays 1-3 Year Cred (CSJ) representing Short Term Credit in the lower half of the table. But if at 26 weeks, the asset gains positions reached 4th place, below High Yield (NYSEARCA:JNK), International Inflation Protected (NYSEARCA:WIP), and International Treasury (NYSEARCA:BWX), and above Treasury Bills (NYSEARCA:SHV).

In conclusion, Bonds at the moment are not in favor. Nevertheless, they represent an essential part of the portfolio and the short term sub-class can be a good indicator to keep watching for when they turn positive.

Disclaimer: We don't have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

Source: U.S. Short Term Investment Grade Bonds: New ETFs Worth Watching