You may have seen a recent report from Morningstar that investors have put $209 billion into bond mutual funds this year, through the end of August. That's a whopping thirteen times more money than they've put into stock funds. To put that in a little perspective, from 2003 to 2006, when the stock market was roaring, inflows into bond funds totaled just $113 billion.
A big part of that is because people have been reluctant to sink more assets into this stock market, and need some place to put their money. But those bond investments have paid off. Some more numbers:
* The Barclays Capital U.S. Aggregate Bond Index, which mimics the entire bond market, is up nearly 14 percent since October 2007, just before the recession started.
* Over the past five years, bonds have returned an average of 5 percent a year to just 1 percent for the S&P 500.
* Over the past ten years, bonds have had an average annual gain of 6.2 percent, compared to an average annual loss of 0.5 percent for stocks.
* What used to be called junk bonds are on fire; Fidelity’s High Income fund has returned 41 percent so far this year.
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