VBMFX and VBIIX

[bamboo1947]

I realize that VBIIX (INT TERM INDEX) is a subset (more or less) of VBMFX (TOTAL BOND INDEX). VBMFX has short,long and mortgage investments while VBIIX does not. Does it make any sense to have both funds and try to maximize your total return as market conditions change. Also, would it be wise to have VFIIX (GNMA) as an extra 'kick' when interest rates rise?

[DblDoc]

Trying to time the bond market to maximize your return is more likely to hurt you. The bond market is much more efficient than the stock market - just ask Bil Gross Pimco's Gross Has 'Lost Sleep' Over Bad Bets - WSJ.com.

MY AA has 1/3 of each of short, intermediate term treasuries and TIPS. I do also own TBMFX as it is the only choice in my 401a/403b and HSA accounts. At some point I may just simplify it to TBMFX and TIPS.

DD

[easysurfer]

Quote:

Originally Posted by bamboo1947 I realize that VBIIX (INT TERM INDEX) is a subset (more or less) of VBMFX (TOTAL BOND INDEX). VBMFX has short,long and mortgage investments while VBIIX does not. Does it make any sense to have both funds and try to maximize your total return as market conditions change. Also, would it be wise to have VFIIX (GNMA) as an extra 'kick' when interest rates rise?

I was thinking along a similar line. But instead of using VBIIX, to use VWINX (Wellesley) as a portion of my emergency fund to add a little more return. But then again, when I think of going that route, it feels like I'm guessing and playing with my allocations.

[photoguy]

Quote:

Originally Posted by bamboo1947 Does it make any sense to have both funds and try to maximize your total return as market conditions change. Also, would it be wise to have VFIIX (GNMA) as an extra 'kick' when interest rates rise?

I don't see the goal of bonds in a portfolio to maximize total return. I'd much rather they serve as a safe asset so that when stocks go down 20% my portfolio as a whole only goes down 10%.

Also, re GNMA -- if interests rates rise won't they likely get hit worse than other bonds since the duration will increase?