Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares (VCADX) anyone ?

[wanaberetiree]

Hello,

I have this fund but thinking that it has no potential to deliver positive returns after prime being lowered to 0% and also maybe be going down because of increased credit risk.

Anybody has an opinion ?

Thx

 

[Ready]

I own a lot of VCADX. Typically when interest rates go down the NAV of the fund goes up. But the opposite has been happening. I’m not sure why and haven’t had the time to call Vanguard to find out what’s going on with municipal bonds. I would assume most of the bonds in the fund are not callable so they will have to continue paying out the current yields until maturity.

 

[Golden sunsets]

I've noticed the same decline in value, with VWITX, (vanguard intermediate tax exempt) and also a decline in the value of 2 individual municipal bonds that are not callable until at least 2027. I initially thought it might be a liquidity issue, but when the individual bonds also declined in value, I assume there is a different explanation. All of these holdings are investment grade, so I assume it isn't credit risk.

 

[Montecfo]

These assets are being sold like everything else, due to fear. That's why they are down even in a positive rate environment.

 

[Retireby45ish]

The big question is will these bounce back? If there is no default in the basket of bonds the NAV must eventually go back up, right?

 

[wanaberetiree]

I sold all of it and went into cash.
I don't really have any scientific explanation, but what we live thru now is so surreal. I feel that municipalities will experience lots of fiscal pressure.
So will try to wait it out .

 

[Retireby45ish]

I read an article that basically said it was a liquidity issue. No one wants to hold the actual bonds so the value of the ETF is trading way under NAV.

But who knows what that means.

Definitely a learning opportunity going forward. What I thought was relatively safe was not (though this is the wildest situation anyone has ever been though).

Heck I find myself wondering if the gov money market account is with the slim amt it pays vs worrying that they break the buck.