PROTECTION AND WEALTH BUILDING STRATEGIES 211Over the same period, the S&P 500 stock index crashed 28%.
Treasuries would likely strengthen again if we faced another
crash. Investors’ demand for liquid, safe instruments would
overwhelm the supply of Treasuries, pushing up prices.
Conditions can change very rapidly in the bond market,
however. That’s why I believe an actively managed mutual
fund is the best way for you to invest in Treasury bonds. Fund
managers can adjust the mix of bond holdings in response to
changing conditions.
Van Hoisington at Hoisington Investment Management has
one of the best long-term track records managing a Treasury-
only mutual fund. He has managed the Wasatch Hoisington U.S.
Treasury Fund (WHOSX) since 1996, delivering an impressive
8.1% compound annual return over the past decade.
Hoisington limits the risk of default by investing primar-
ily in U.S. Treasuries. All Treasury bonds are direct obliga-
tions of the U.S. government and vary only in maturity and
coupon. Hoisington wouldn’t hesitate to concentrate assets
into 30-year Treasury bonds — because the collapse would
send their prices soaring.
Treasury Bonds Paid Off in the 2008 Crash
15 22 Oct 6 13 20 27 Nov 10 17 24 Dec 8 15 22 29
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%$USB (Daily) 15.57% (31 Dec)
$SPX -27.84% (31 Dec)