I am looking for the best Vanguard Bond fund in terms of not fluctating
much with interest rate changes. I have been in Vanguard Long Term
Treasury and exited a week or so ago. Anyone know anything about GNMA
fund? It seems to be pretty resistant to interest fluctations. Any
downside with all the Fannie Mae, Freddie Mac stuff? Do they even own
those?
Thanks
The duration of GNMA was 3.3 years when I last checked. If you want
lower volatility then go with a fund with duration around 2.
example: Short Term Federal, Short Term Treasury, Short Term Index,
Short Term Corporate...
Something short term is good when rates are rising.
"hp" <> wrote in message
news:
> The duration of GNMA was 3.3 years when I last checked. If you want
> lower volatility then go with a fund with duration around 2.
> example: Short Term Federal, Short Term Treasury, Short Term Index,
> Short Term Corporate...
> Something short term is good when rates are rising.
The only rates that are rising are short term rates. This is not good for
short term bond funds.
Wouldn't you agree?
Short term bond funds are underperforming money market funds, so are most of
the intermediate term bond funds.
Ed,
are you saying Doug should invest in long term bonds?
"hp" <> wrote
> Ed,
> are you saying Doug should invest in long term bonds?
No. At least not as a buy and hold position. I would wait for rates to rise
as has long been anticipated before buying into a bond fund.
I do have some bond exposure in some of my funds but it's the nature of
those funds. I don't own any bond funds.
"Doug" <> wrote
> I am looking for the best Vanguard Bond fund in terms of not fluctating
> much with interest rate changes. I have been in Vanguard Long Term
> Treasury and exited a week or so ago. Anyone know anything about GNMA
> fund? It seems to be pretty resistant to interest fluctations.
It's pretty resistant because it has a pretty short duration (about 2.2
years according to Vanguard's site) bond fund. It still tracks interest
rates pretty much like any other high grade bond fund of similar duration.
See for example the chart comparing VFIIX and VBISX (a short-term high grade
corporate bond fund, duration = 2.5 years):
> Any
> downside with all the Fannie Mae, Freddie Mac stuff? Do they even own
> those?
I don't want to be presumptuous, but have you ever used the www.vanguard.com
site (among other, more generalized, mutual fund info sites) to answer
questions like this?
If this investment is for the short-term, a short-term bond fund is okay. If
it's for the longer term, then I suggest you consider a 5-year bond ladder,
socking away the interest in, say, an INGDirect money market account, then
adding to the ladder as the money in this account builds.