Vanguard: Anyone holding VWEHX and/or VCITX?

[cube_rat]

I'm thinking of plopping some cash into these funds. Anyone have feedback? Note: I lean towards the safe side.

 

[cube_rat]

Wow, 57 views in 2 hours and nothing?

 

[wildcat]

Well, I for one am a sucker for cube

High Yield - Probably not the best time to be getting into this area unless of course you are simply modifying & will maintain a certain asset allocation. Not the best of times b/c the spread between risk-free & high yield (risky) debt is very narrow, at least by historical measures.

Tax-Exempt - Well, depends on income tax situations more than anything else. The duration is pretty monderate as well. High earner & in need of a tax-exempt fixed income shelter, sure why not?

 

[clifp]

There was a recent thread about VWEHX
http://early-retirement.org/forums/index.php?topic=12114.0

I don't think my opinion has changed, as junk bond funds go, Vanguards is lower risk and isn't that volatile. However, if we see a shake out it in the commercial subprime market (i.e. junks bonds) like we just saw in mortgage sub-prime market, I am sure VWEHX will be hammered, even if their actual exposure to defaulting companies is relatively minor. Is the additional risk less than 200 basis you get vs a money market, GNMA, or total bond intermediate fund,your call. Frankly, I think you should investigate the various threads on OSM, and ISM, these securities offer a 7% yield to maturity (same as VWEHX) assuming inflation remains constant, plus protection if inflation takes off, and much lower credit risk, IMO.

 

[ats5g]

Check out recent conversation that Larry Swedroe started on VD about VWEHX.

- Alec

 

[cube_rat]

Thanks very much for your helpful links and feedback

Wildcat - Where have you been hiding??

 

[clifp]

Wow that is good study by Larry Swedroe, for a 1.5% increase in equities, you historically could eliminate junk bonds (even good funds like Vanguard, and achieve the same return with slightly lower volitality.

I guess it is time to sell my mom's crappy junk bond fund. Does anybody put off selling assets because you have no idea what the biases is? My dear mom, was good about keeping all of her financial records, but off course never ever actually bother to track the bias for any of her investments.

Life is too short to have go through 20+ years of statements to figure out if the her basis is $6000, $7000, $8000, $9000 for the fund it worth $7000 now.

 

[wildcat]

Wildcat - Where have you been hiding??

Ahh, I've been around a lil' bit. Saving all of my pennies so I can buy a place in Laurence's neighborhood.

 

[brewer12345]

Please stay away from junk. It is overpriced now, especially for amateurs and mutual funds. If you want to stay safe, stick with bonds. IIRC, you are in CA, right cube? HArd to go wrond with a nice 6 month t bill right now. 5% yield exempt from sttae and local taxes and one of the lowest risk investments on the planet.

Alternatively, you could look into ISM/OSM or wait for the next auction of 5 year TIPS.

 

[JohnEyles]

Alternatively, you could look into ISM/OSM or wait for the next auction of 5 year TIPS.

Coming soon ! But 2% YTM, yikes ...

 

[mb]

Cuberat,

I have money in VCAIX, the intermediate CA tax free fund (3.72%, 4.5 year duration) rather than VCITX, the long term fund (3.91%, 5.6 year duration).

IRRC, the difference in duration was larger in the past? I used to be in the long term fund but switched to the intermediate term fund a couple of years ago when it appeared that interest rates would be going up.

MB

 

[brewer12345]

Coming soon ! But 2% YTM, yikes ...

She said safe, not lucrative.

 

[FIRE'd@51]

Coming soon ! But 2% YTM, yikes ...

Speaking of which, you must be grinning ear-to-ear since you bought those last fall at 2.6% YTM.

 

[cube_rat]

Ahh, I've been around a lil' bit. Saving all of my pennies so I can buy a place in Laurence's neighborhood.

Seriously? We should all have a California meeting someday. Maybe we could talk Fuzz out of his new abode.