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Bond Mavens- Vanguard Question
03-30-2006, 04:35 PM
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#1
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Bond Mavens- Vanguard Question
Hi
My wife has an IRA and a 403b invested in Vanguard Inflation Protected Fund, VIPSX. I went to the website to read up on it. It claims a real yield as of today of 1.9%; an average duration of 6.2 years, and an expense ratio of 0.17%.
Meanwhile, according to Bloomberg last night, the 5 yr TIP is yielding 2.21% real; and the 10 year TIP 2.30%.
It seems to me that there must be a yield leak at Vanguard. Given a .17% expense, shouldn't their yield be at least 2.03%?
Maybe I don't understand how they report yield.
Any help?
Ha
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Re: Bond Mavens- Vanguard Question
03-30-2006, 04:43 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Re: Bond Mavens- Vanguard Question
I suspect the difference has to do with the construction of the portfolio. The real yield curve is pretty flat from 5-20 years but I think pretty steep from 0-5 years. The Inflation Protected Securities Fund has about 26.5% of the portfolio in the 0-5 year range with a little more than 6% in the 0-3 year area. The loss of yield on this front end, and the absence of yield pick-up on the back end, probably explains the difference.
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Re: Bond Mavens- Vanguard Question
03-30-2006, 05:10 PM
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#3
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Re: Bond Mavens- Vanguard Question
Quote:
Originally Posted by 3 Yrs to Go
I suspect the difference has to do with the construction of the portfolio.* The real yield curve is pretty flat from 5-20 years but I think pretty steep from 0-5 years.* The Inflation Protected Securities Fund has about 26.5% of the portfolio in the 0-5 year range with a little more than 6% in the 0-3 year area.* The loss of yield on this front end, and the absence of yield pick-up on the back end, probably explains the difference.
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I see what you are saying. Thanks for the very clear explanation.
Ha
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Re: Bond Mavens- Vanguard Question
03-30-2006, 05:12 PM
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#4
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Re: Bond Mavens- Vanguard Question
Ha, real yields are up a bit recently. * Last month they were closer to 2%. * Vanguard reports the SEC Yield, which is a 30-day average, so that may explain why it's a bit lower than the current yield.
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Re: Bond Mavens- Vanguard Question
03-30-2006, 06:29 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Re: Bond Mavens- Vanguard Question
Quote:
Originally Posted by wab
Ha, real yields are up a bit recently. * Last month they were closer to 2%. * Vanguard reports the SEC Yield, which is a 30-day average, so that may explain why it's a bit lower than the current yield.
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Thank you Wab. I don't really understand SEC yield, as I have not been a mutual fund investor. I guess what you are telling me is that when rates are rising, a 30 day everage will necessarily be below today's rate.
I'll read about SEC yield.
Ha
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