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Old 02-25-2009, 11:51 AM   #1
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Vfiix

In this environment of low interest rates and possible home refinancing, will VFIIX (GNMA Fund) be able to maintain its NAV?

For a steam of income while preserving capital is VFIIX, still a solid choice as it has in the past?. VBMF (total Bond Market) is also a consideration.

I would appreciate your comments and/or suggestions.
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Old 02-25-2009, 12:52 PM   #2
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I would also be interested in reading comments on VFIIX in which I may invest soon. Thanks all!
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Old 02-25-2009, 04:29 PM   #3
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Looks like the NAV has traded in a range of about $1.00 over the last 10 years. Right now it is at the high of that range. If your primary reason to hold it is income, I would not worry about the NAV too much.

VFIIX Stock Charts - Vanguard GNMA;Inv Stock Market Charts - Free Stock Charts
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Old 03-06-2009, 06:13 PM   #4
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Hasn't anyone else invested in this fund? Too boring? I have about 80K from an inheritance coming and I'm hoping to find a fund that has boring predictable returns.
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Old 03-06-2009, 06:23 PM   #5
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Originally Posted by Oldbabe View Post
Hasn't anyone else invested in this fund? Too boring? I have about 80K from an inheritance coming and I'm hoping to find a fund that has boring predictable returns.

Yes, my wife and I each own this fund. Our neighbor also owns the fund. The fund just keeps on truckin' along. It doesn't seem to be much affected by the economic climate. I wish the neighbor would go home now because he's as boring as the fund. And, if someone has an idea why this fund might eventually be in trouble, I, too, would like to hear about it.
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Old 03-06-2009, 06:41 PM   #6
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To quote Mr. Pappas, the manager of VFIIX:

"...with yields having gone down so much, it's hard to get excited about the future [of GNMAs]. Today it's best to think about GNMAs as attractive versus cash and treasury alternatives while being mindful that they are bonds that will lose when rates eventually go up".

Disclaimer: I sold VFIIX last month (locking in a nice gain) after having held it for 9 years. I reinvested the money in high quality corporate bonds.
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Old 03-06-2009, 07:14 PM   #7
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Originally Posted by FIREdreamer View Post
To quote Mr. Pappas, the manager of VFIIX:

"...with yields having gone down so much, it's hard to get excited about the future [of GNMAs]. Today it's best to think about GNMAs as attractive versus cash and treasury alternatives while being mindful that they are bonds that will lose when rates eventually go up".

Disclaimer: I sold VFIIX last month (locking in a nice gain) after having held it for 9 years. I reinvested the money in high quality corporate bonds.
Firedreamer, I DIDN'T REALLY want to hear what might go wrong with this fund.
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Old 03-06-2009, 07:17 PM   #8
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Firedreamer, I DIDN'T REALLY want to hear what might go wrong with this fund.
OOPS?

But if it helps, the duration of the fund is quite short, so VFIIX shouldn't get hurt too much by rising interest rates...
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Old 03-06-2009, 07:23 PM   #9
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So a corporate bond fund might pay a higher yield now. But what about the tanking economy? What might cause a corporate bond fund to tank?
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Old 03-07-2009, 12:12 AM   #10
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Originally Posted by FIREdreamer View Post
OOPS?

But if it helps, the duration of the fund is quite short, so VFIIX shouldn't get hurt too much by rising interest rates...
FIREdreamer: That's much, much better. Thank you.
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