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Tuesday, November 13, 2012

VWEHX Vanguard High Yield Fund - Bob Brinker's Junk Bond Fund Advice

Bob Brinker's comments on why he deleted the Vanguard High Yield (junk bond) Fund from his model portfolios  (Charts and quote at  VWEHX)

Moneytalk with Bob Brinker Commentary for November 11, 2012 Radio Show

Caller:  Why did you eliminate the Vanguard High Yield Fund from your newsletter Model Portfolio? Was that a call on the fund or something else? 

1-yr Chart

10-year chart

Bob said he saw the yield on that fund drop below 5% which is very unusual historically.  As a result of that decline in the yield, the net asset value of the fund rose so much that he regarded it as an opportunity to take profits. 

Kirk Lindstrom's Comment:  That is odd.  In the October 2012 Marketimer, Brinker shows VWEHX with a yield of 4.8% but the chart above shows the yield at about 6% and Google also shows the yield at over 6%.  

Checking Vanguard's website, I find the following yields as of 11/12/12:
This is a good lesson and reminder to ONLY trust the information on mutual funds that you get directly from the mutual fund companies.When I do the monthly updates for  "Kirk's Two Investment Letters"  I always go directly to Vanguard and Fidelity.  It is a good thing Brinker is paying attention! 

Bob noted that decision had nothing to do with the fact that the fund had closed to new investors.  If that fund had remained open, he would have made the exact same decision.  Bob added that even though the fund closed to new investors, it has done that in the past and then reopened at a later point in time. 

EC (David Korn): :The Vanguard High Yield Corporate Fund closed to new investors in May, 2012 because so much money had flowed into it in the prior six months (more than $2 billion).  The move did not limit current investors in the fund to contributing more, and if you are a cline of the Vanguard Asset Management Services or Vanguard Flagship Services, you can invest in it.  Learn more at this url:

The above commentary is courtesy of my writing partner, David Korn
David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service.  Copyright David Korn, L.L.C. 2012
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