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Tuesday, June 25, 2013

VFIIX - Vanguard's GNMA Fund

Vanguard's GNMA Fund with ticker VFIIX (Charts and current quote) is Bob Brinker's favorite bond fund to talk about on his show "Money talk with Bob Brinker."  Brinker recommends VFIIX on the radio and in his "Marketimer" newsletter portfolios that are not 100% in equities.

Bob has told callers who are worried about net asset value (NAV) fluctuations leading to potential losses to either use a stop loss at a price they don't want to lose any more money or to put the funds in FDIC insured CDs.

This chart shows how the fund has performed on a NAV basis since January 1, 2012.

Bob Brinker's Favorite Bond fund is down fairly significantly this year. I wonder how many expected VFIIX to fall so suddenly?

According to Vanguard, the "income return" from the fund last year was only 2.7%

This means the fund has lost money for anyone who held it as of December 31, 2011 or later. Here is a chart showing the fund adjusted for dividends.
VFIIX with price adjusted for dividends showing a loss since 1/1/2012
Note how VFIIX was a money maker for anyone who "sold in May" at the very top on a basis adjusted for dividends.  Like fame, that was fleeting...

Does these charts erase any doubts about Brinker's ability to time either the stock or bond markets?

FWIW, I got out of Vanguard's GNMA fund some time ago and have my core and explore fixed income funds mostly in a savings account earning 0.85%.  It was not flashy, but making over 1% since 2011 sure beats losing money for a "safe" investment.  I tell my subscribers that I prefered to take my risks in my explore portfolio with equities plus I have TIPS and I-Bonds bought as new issues from the US Treasury so they, unlike bond funds, never lose money.  For more info, see:
get the June 2013 Issue for FREE! 


  1. In the June newsletter, Brinker says dollar cost average new money on weakness.

    What kind of advice is that? What is weakness?

    What sort of an adviser has both his aggressive and moderate portfolios all in stocks? I thought aggressive was 80 or 90%.

  2. Bob's mission, if you will, seems to have shifted though the years. He's not as helpful, especially to small/not-wealthy investors as he once was.


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