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