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Future of vanguard gnma (vfiix)
Old 08-22-2013, 01:04 PM   #1
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Future of vanguard gnma (vfiix)

Just curious to know if current holders of VANGUARD GNMA (VFIIX) think that the fund will not perform as well as it has in the past !! It seems to be lagging VANGUARD INT TERM INDEX (VBIIX) by a decent amount and I can't see it rebounding for quite awhile.
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Old 08-22-2013, 02:13 PM   #2
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OTOH, those Ginnie Maes have a pretty solid gummint guarantee, and it went up in 2008 when pretty much everything else went south. Seems like a solid holding to me, as a counterweight to the rest of the portfolio.
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Old 08-22-2013, 03:25 PM   #3
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Bond fund performance is based on credit rating, duration, interest rates, and interest rate changes. The GNMA fund is performing as expected.

It should return less than a bond fund with corporate bonds unless folks think corporations are having problems.

It should return more than a shorter duration fund.

It should fall when interest rates rise.

The GNMA fund has done BETTER than the VBIIX since the beginning of the year, since the last 3 months, and since the last month. Where does the observation that the fund is lagging come from?
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Old 08-23-2013, 07:08 AM   #4
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I wouldn't hold or buy them now. Bonds have been in a bull market for 30 years but that is over. GNMA do well in a steady and decreasing rate environment and did well for many many years. Yes they have the gubmint guarantee but IMO they will not do well for many many years. I exchanged out of my fund about 1.5 years ago. There are better bond or bond funds than GNMAs.
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