Respected VG guy with low bond expectations

Everyone should take a look at Vanguard's limited term Tax Exempt bond fund. it pays around 80 basis points, better than short term or CD's or money market funds. I'm holding a lot of money there instead of money market or long term bonds. Rates will go up, sooner or later and if anyone remembers when they went to 20% in the early 1980's, you, like me, would be a little careful today. The good news is that your short term bonds will probably pay 2 or 3% when interest rates rise. So, when rates go up you'll have the option to switch to longer term bonds or stay in shorter term getting more dividends each month with less risk missing out than in cash or long term.

Really, there is no answer anyone can depend on.......we don't know what will happen with taxes or when. ......if we did we'd be able to predict the future a lot better.
 
Everyone should take a look at Vanguard's limited term Tax Exempt bond fund.
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Definitely is much better than holding cash. Muni bond funds could remain attractive as income tax rates will most likely go up for everyone.
 
jerome len said:
Everyone should take a look at Vanguard's limited term Tax Exempt bond fund. it pays around 80 basis points, better than short term or CD's or money market funds. ...
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I took a peak at this fund and the duration is 2.4 years. So it's not really cash and should probably be compared to a short term bond fund like VFSUX or to a CD that is 2 years out.

VFSUX has a 1.2% SEC yield versus VMLUX at 0.6%. I'm not in the tax bracket where this makes sense to switch but others may be. I don't really know how to compare the Muni short term bonds to investment grade bond risks and that is another thing to look at. Probably being short term, both are comparable.
 
Dawg52 said:
Originally Posted by Spanky
- what's the batting average (or effectiveness) of the newsletter?



Correct. That was part of the question.
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Now I've got it, thanks...
 
audreyh1 said:
That move seems rather odd to me as well. Although if it is to buy a different bond fund, it might make more sense.
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yes we swapped it for another type of bond fund.

international bonds have been showing alot more promise as the gnma's performance has slowed way down.

we have mature international companies going global now that are looking for financing.

emerging market bonds had a hell of a run up . international bonds seem to be ramping up.

of course its only 1 fund in the portfolio thats being swapped so right or wrong its never a really big issue.
 
Much as I love Vanguard, IMHO Sauter's forecasts about interest rate directions are worth about as much as Warren Buffett's and everyone elses: nothing. The "gurus" have been calling for higher bond interest rates for years, while meanwhile most of us would've been better off holding 100% 30 year Treasurys for the past decade:

http://us.ishares.com/product_info/fund/performance/TLT.htm
 
DFW_M5 said:
And what did they use to replace it?
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im kind of limited to what i can say since we all pay for that information.i can not really get to specific about the models.

sorry.
 
Spanky said:
What was the rationale used to drop GNMA? Just curious - what's the batting average (or effectiveness) of the newsletter?
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i have been following them for 25 years now. followed the growth model up until about 5 years ago. was up about 1200% cagr since 1987.

switched to the income mix and the returns have been fine, up around 11% this year with 2/3 less volatility then the s&p.

nothing i couldnt do on my own but the fact is i dont have to even think about my next move or second guess myself.
 
mathjak107 said:
im kind of limited to what i can say since we all pay for that information.i can not really get to specific about the models.

sorry.
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mathjak107 said:
i have been following them for 25 years now. followed the growth model up until about 5 years ago. was up about 1200% cagr since 1987.

switched to the income mix and the returns have been fine, up around 11% this year with 2/3 less volatility then the s&p.

nothing i couldnt do on my own but the fact is i dont have to even think about my next move or second guess myself.
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Here is a sample issue of the newsletter. I'm not a member, but for someone needing a little hand holding(me).....might not be a bad investment.

http://www.fmandi.com/reports/archive/FMI0912.pdf

mathjak, how often do they adjust the income portfolio on average? Just curious.
 
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prior to the change on friday i believe last one was around june or so.
 
Dawg52 said:
Here is a sample issue of the newsletter. I'm not a member, but for someone needing a little hand holding(me).....might not be a bad investment.

http://www.fmandi.com/reports/archive/FMI0912.pdf

mathjak, how often do they adjust the income portfolio on average? Just curious.
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wow im surprised they archived such a recent issue. i guess because they merged with fidelity monitor,it was kind of historical.

what i like about them is all the pressure is off marilyn and i to keep deciding what to do.

many times left to my own devices i know i would have tried to time things or bail at the wrong time.

while i can put portfolios together in my sleep what i can not get is the freedom from second guessing myself.
 
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mathjak107 said:
im kind of limited to what i can say since we all pay for that information.i can not really get to specific about the models.

sorry.
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You can say what to dump (sell), but not what to buy? >:D

I'll take a wild guess that you are using their Income portfolio.
 
discussing what was is never an issue. eventually you can even see the archived issues.
 
mathjak107 said:
im kind of limited to what i can say since we all pay for that information.i can not really get to specific about the models.

sorry.
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I didn't expect you to provide a ticker symbol, but thought you might be able to indicate what type of bonds the new fund holds, afterall you did say a GNMA fund was replaced. If thats a breach of your membership, no problem, I understand.

Looks like they offer some interesting models and glad to hear you have had good success with them.
 
fidelity does not have to many funds in particular areas,some times its only one choice.

so far so good running income funds only . many in the model act more like less volatile stock funds then true bond funds.

many times lately the markets have been down and we have been up.

bond and income funds can be tough to put together on your own. many move opposite the markets and some don't.

overlap can be a problem too just like with stock funds.

you can buy different bond funds based on the name from fidelity and end up with quite a bit of duplicate coverage.

at some point we may introduce equity income funds again in a low percentge but for now the goal of yielding 3-4% is being met with the bond funds.

capital gains have been good as well.
 
So Eric Kobren retired and sold Insight to Fidelity Monitor a while back, I had not looked at them in a while but I recall Hulbert financial digest had both of them at the top of their long term performance. Another one with good a record is NoLoad FundX.
 
mathjak107 said:
so far so good running income funds only . many in the model act more like less volatile stock funds then true bond funds.
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I think we know what you meant...;)
 
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