Stock Market Returns, Bond Market Returns, and Brokerage Fund Money Funds

Another tough week for the stock market and further indications that the housing/mortgages crisis may get worse before it gets better. A jittery stock market has given up a lot of the gains from 2007 and year-to-date returns now stand at:

Dow Jones Industrial Average: 5.77%
NASDAQ: 3.97%
S&P 500 Index: 1.04%
Russell 2000 Index: -4.09%

Bond prices have benefited from the recent flight-to-quality with the yield on the 10-year Treasury Bond dramatically dropping 50 basis points in the last 45 days. The YTD returns on the iShares Treasury Funds (our favorite investment vehicle for purchasing Treasuries) are below with the shorter duration Treasuries outperforming the longer term iShares fund:

iShares Lehman 1-3 year Treasury Bond: 3.20%
iShares Lehman 3-7 year Treasury Bond: 3.66%
iShares Lehman 7-10 year Treasury Bond: 2.95%

A recent trend in the last year has been the promotion by brokerage firm’s of their own money funds and checking accounts. Short term interest rates are now at a high enough level to make cash a viable investment option in an uncertain market, especialy for risk-averse investors or investors with a short investing time-frame.

Brokerage Firm Money Funds (YTD returns):

Merrill Lynch CMA Money Fund: 2.94%
Schwab Value Advantage Money Fund: 2.90%
Schwab Money Market: 2.77%
Edward Jones Money Market: 2.65%
Morgan Stanley Liquid Asset: 2.77%