Short-term Bond Return

[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?

[haha]

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%

ha

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.

[ShokWaveRider]

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

[brewer12345]

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.

[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?

[Spanky]

Quote:

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.