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?