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Short-term Bond Return
Old 01-18-2006, 09:32 PM   #1
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Short-term Bond Return

My return for Vanguard Ltd-Term Tax-Exempt Inv since 5/04 is less than 1%. I am thinking about moving it a money market fund. Has anyone moved money from short-term bond fund to something else?
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Re: Short-term Bond Return
Old 01-18-2006, 11:59 PM   #2
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Re: Short-term Bond Return

I wouild guess that your interest income has been cancelled out by capital losses. That may not say anything about the future. If it is a long term committment, it will sometimes do better, sometimes worse than shorter term securities, but overall it should do a bit better over cycles of both rising and falling rates. Right now, the Fidelity Muinicipal Money Market fund has a 7-day yield of 2.60%

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Re: Short-term Bond Return
Old 01-19-2006, 06:31 AM   #3
 
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Re: Short-term Bond Return

I am not sure how much you have Invested, but if you are $10,000 +, why not just buy a Bond yourself, or if more$'s, ladder some Bonds.

A bond earning 3% a year in a Fund is subject to an Annual 2% MER, 2/3 of your return is taken by the fund.

I would suggest at this juncture, stay with 3 and 5 year maturing Bonds, rates are going up, you want to be able to ladder into higher rates.
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Re: Short-term Bond Return
Old 01-19-2006, 07:20 AM   #4
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Re: Short-term Bond Return

Quote:
Originally Posted by Spanky
My return for Vanguard Ltd-Term Tax-Exempt Inv since 5/04 is less than 1%. I am thinking about moving it a money market fund. Has anyone moved money from short-term bond fund to something else?
PenFed 3 year CD 5.5% APY.

SWR
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Re: Short-term Bond Return
Old 01-19-2006, 07:28 AM   #5
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Re: Short-term Bond Return

Spanky, it is hard to see how a ST bond fund would be more attractive than the Vanguard MMF or a high rate savings account. As SWR suggests, a CD from Pen Fed for 3 years or Corus for 1 year also looks more attractive. Alternatively, I noticed yesterday that Sallie Mae has an exchange-traded bond (OSM) that pays CPI plus 2% and adjusts monthly.
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Re: Short-term Bond Return
Old 01-19-2006, 08:31 AM   #6
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Re: Short-term Bond Return

Even the PIMCO total return fund which has an intermediate term bond style is more than 50% cash.

Calvert Income fund (CFICX) available as a no-load in my 401(k) has a short style, but has 14% cash.

Do you really need tax-exempt?
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Re: Short-term Bond Return
Old 01-19-2006, 09:56 AM   #7
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Re: Short-term Bond Return

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Originally Posted by LOL!
Even the PIMCO total return fund which has an intermediate term bond style is more than 50% cash.

Calvert Income fund (CFICX) available as a no-load in my 401(k) has a short style, but has 14% cash.

Do you really need tax-exempt?
I do not need the income. Tax-exempt is nice since I do not want to pay tax. I might just buy IBond from Treasury Direct and do not have to worry about tax.
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