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For Bob Brinker readers who are seeking to minimize DURATION in their Fixed Income portfolio in anticipation of a rising interest rates going forward, you should consider Vanguard's two new ultra short duration bond funds.
They are Vanguard's:
- VUBFX - Ultra-Short-Term Bond Fund Investor Shares
- VUSFX - Ultra-Short-Term Bond Fund Admiral Shares
Fund Comparison
Fund
|
Minimum
Investment
|
Current
Yield
|
Expense
Ratio
|
Average
Duration
|
VUBFX
|
$3,000
|
1.30%
|
0.20%
|
0.9 years |
VUSFX
|
$50,000
|
1.35%
|
0.12%
|
0.9 years
|
For my recommendations for fixed income investments, read "Kirk Lindstrom's Investment Letter.
"
Bob Brinker talked about Vanguard's Ultra Short Term Bond Fund. This is a new fund from Vanguard that they announced on November 24, 2014. Key features:
- The new fund, which is scheduled to launch in early 2015, will offer investors low-cost exposure to money market securities and high-quality short-term bonds* with an average estimated duration of one year.
- However, the fund should not be viewed as an alternative to money market funds, which seek to offer a stable $1 net asset value.
- Unlike a money market fund, Vanguard Ultra-Short-Term Bond Fund will have a fluctuating net asset value and subject you to principal risk.
- Expense ratio as of 02/10/2015 is 0.20%
- SEC yield as of 02/13/2015 is 0.00% (yes, ZERO!) It just started Friday so it may have to buy some bonds and subtract the management fee before it can calculate a higher yield.
Currently (2/16/15) you can get 1.00% at two banks that offer FDIC insurance. This rate tool helps find the best rates for savings accounts:
Due to the risk to principal if rates go up this year, I'd go with an FDIC savings account at 1.00% instead. If your cash is in a Vanguard IRA, perhaps you can move your cash out of Vanguard and into an IRA at one of these banks to get the full 1%.
