With a total return of 0.36% in 2008, the Colorado Bond Shares Tax-Exempt Fund (HICOX) deserves 12 cheers.
While the fund's fractional gain might not seem impressive at first glance, it was higher than the 2008 inflation rate of 0.1% the government announced Friday. By besting the CPI, HICOX was able to produce a positive "real" annual return for its holders. Its return in 2007 also surpassed the gain in the consumer price index, as it did in the previous year, and the year before that, and again and again and again.
In fact, the double-tax-exempt HICOX turns out to be the only fixed-income fund in TheStreet.com Ratings' database to have achieved 12 consecutive annual returns, besting the corresponding gains in the CPI. Its singular achievement is summarized in the table below.
An investor in search of a bond fund consistently producing gains exceeding the annual inflation rate will find that the quest is anything but a slam dunk. It turns out that even with supposedly steady fixed-income funds, lengthy annual strings of positive "real" returns are surprisingly elusive.