Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Bonds, The Calendar (And A Little Bit Of Leverage) – A Love Story

Published 09/26/2019, 11:59 AM
Updated 07/09/2023, 06:31 AM

In a series of recent articles (here, here and here) I wrote about seasonality in the bond market. In this piece we will look at a “practical application”.

The Caveats

*Everything that I write here should be considered “food for thought” and NOT “an immediate call to action.”*Trading a leveraged fund has inherent risks that an investor should carefully consider BEFORE entering a position.

The Strategy

This strategy uses funds available at Profunds, as follows:

*FYAIX (Access Flex High Yield) – High yield bonds

*GVPIX (U.S. Government Plus – 20+ year treasuries leveraged 1.25 to 1)

*MPIXX – Government Money Market fund

FYAIX (blue) Vs. GVPIX On Buy-And-Hold Basis

The Baseline

Figure 1 – Growth of $1,000 invested in High Yield Bonds (FYAIX; blue) and Long-Term Treasuries (GVPIX – orange); 12/31/2004-8/31/2019

*$1,000 in FYAIX grew to $2,398*$1,000 in GVPIX grew to $2,600

Jay’s Profunds Bond Calendar

Now let’s use the following calendar

Calendar
Jay’s Bond Calendar System Vs. Buy-And-Hold

Results

Using Jay's calendar (blue) Vs. Buy And HoldJay’s Profunds Bond Calendar System versus buy-and-hold

Key things to note is that the Calendar System:*Generated significantly more return*Had a lower drawdown*Generated more consistent returns

Summary

Is this anyway to trade the bond market?

Well it’s one way.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.