More VFIIX Charts
Here is what Vanguard says about the fund:
Fixed income characteristics as of 12/31/2008
|GNMA Fund Investor Shares||Barclays US GNMA Index|
|Number of bonds||25||120|
| Yield to maturity |
yield to maturity
The rate of return an investor would receive if a security is held to its maturity date.
| Average maturity |
An average of the maturity dates for all securities in a money market or bond fund. (The maturity date is the date that a bond or money market instrument buyer will be repaid by the security's issuer.) The longer the average maturity, the more a fund's share price will move up or down in response to changes in interest rates.
|1.7 years||3.8 years|
|Average duration |
A measure of the sensitivity of bond—and bond mutual fund—prices to interest rate movements. For example, if a bond has a duration of two years, its price would fall about 2% when interest rates rose one percentage point. On the other hand, the bond's price would rise by about 2% when interest rates fell by one percentage point.
|1.0 years||2.4 years|
|Fund total net assets||$29.2 billion||—|
|Share class total net assets||$14.7 billion||—|
You can see that the fund has positioned itself for higher rates by shortening maturity at the cost of lower yield to maturity and a slightly lower credit rating. (Understanding Credit Ratings will be covered in the March 2009 issue of The Retirement Advisor.)
VFIIX is NOT an index fund. Vanguard says the fund "Follows no specific maturity guidelines but typically maintains a dollar-weighted average maturity of 3 to 10 years."
Vangaurd Fixed Income Funds:
Kirk's Dec. 2009 Update. I sold ALL my GNMA holdings in my "explore portfolio" a few months ago for a nice gain from buying at a much lower price. I made two buys at $9.93 and $10.09, collected the interest and sold the last at $10.72. I then used the funds and some other cash in the portfolio to buy TIPS (at the auction directly via my broker) that are up about 2% since buying as I type.
My core portfolio had an index fund for fixed income that has a significant position in GNMAs but I sold that also in one of my very rare core portfolio changes.
The full details of my "core and explore" holdings with monthly updates are covered in each issue of "Kirk Lindstrom's Investment Letter."
Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through
"Kirk Lindstrom's Investment Letter Explore Portfolio" gained 33.5% in 2009. This portfolio has 75% in equities and 25% fixed income with a beta of 1.0.
(Your 1 year, 12 issue subscription will start with next month's issue.)