And what do you think of the speculation that there is a bubble building in the fixed-income market?

Vanguard Total Bond Market - VBMFX or BND is the etf.... super-low expenses.

I also like some TIP as an add on - the inflation-adjusted treasury.

used to love vanguard, till they started writing credit default swaps and hiding the details in the foot-notes. Even John Bogle was unaware till I emailed him.

Use a SMA or buy individuals. Funds are stoopid.

As for the bubble question, hold them to maturity.

short duration high quality tax frees individual issues are the way to go.

For IRAs/401(k)s:

I've preferred Vanguard's Intermediate Investment Grade Bond Fund.

Obviously, very low fees. That's Vanguard.

But I have no interest in owning their Total Bond Market Index Fund "now" as they are chuck full of Treasuries (very low yields with no spreads) and particularly, Mortgage Backed Securities. The govenment has been buying both Treasuries and MBS which has pushed their prices to unsupportable levels. They've stopped buying Treasuries and will phase out MBS purchases early next year. Watch out when the government support ends. Think China really wants more U.S. paper?

TIPS are attractive given the possibility of longer term problems with inflation.

Also have liked PIMCO's emerging markets "local currency" bond fund, their intermediate-term corporate bond fund.

For tax-exempt income:

I've used Vanguard's intermediate tax-exempt bond fund and high yield tax-exempt bond fund. I've also used PIMCO's equivalent funds for more aggressive management.

Note: PIMCO's funds expense ratios are a bit on the high side. But you can often buy their institutional class ones with just $25 K. (I can do this with my Vanguard brokerage account - but not possible with many other providers.) Institutional class fees are pretty reasonable.

I have also been a big fan of closed-end muni bond funds selling at a substantial discount to net asset value. These typically include a measure of leverage which gooses up yields to north of 6%. But you really have to know what you're doing in this arena.

What's wrong with writing credit default swaps, Riversider? You just have to know what you're doing. Think PIMCO doesn't do this?

My issues were Vanguard is supposedly a conservative fund company. The CDS'S appear to have juiced up the yield, weren't disclosed in the normal section of long & short positions and used Vanguard share holder money to write insurance.... on Lehman brothers if I recall correctly. Furthermore they entered into interest rate swaps with..you guessed it Lehman. The fund I'm bringing up is the short term corporate bond fund. One invests in a fund like this when they are looking for a short duration, conservative bond fund. In my opinion derivatives are inconsistent with that objective. I only noticed because the the fund wasn't performing well, the address to shareholders made no mention of it, and the disclosure of derivatives was like I said burried.

"Even John Bogle was unaware till I emailed him."

evidence? or just name dropping? what did he do? how did he respond? or is this more of your bullshit?

Looks like they did stub their toe here. Pity. Generally, they seemed to have weathered last year with aplomb, though.

lucky that riversider was there to correct them. hilarious.

evidence?
Bogle responded to the email pointed out that he no longer worked at vanguard and was as surprised as I. He forwarded the email to a representative at Vanguard who responded to both of us. Vanguard sees nothing wrong with the practice.

why don't you post a copy of this?

why don't you post a copy of this?
Because I think it's inappropriate.

quickly...or we may believe that you made it up.

then why bring it up in the first place?

believe as you wish, doesn't matter to me..

you're a wannabe, lying scumbag.

Jack Bogle sent me a copy of your October 13 email to him, and his response of October 18, asking me to respond to your concerns.

As you note in your earlier email, at the time of its July 31, 2008 semiannual shareholder report, Vanguard Short-Term Investment Grade Bond Fund had investments in various types of derivatives such as Treasury futures contracts, interest rate swaps, and credit default swaps. These derivative investments were made with various counterparties, including Lehman Brothers.

A primary risk of swaps contracts is that a counterparty will default on its obligation to pay. Vanguard’s Fixed Income Group mitigates this risk by thoroughly analyzing and evaluating counterparties and executing transactions only with those counterparties on an internally-maintained approved list. Counterparty exposure is monitored on a daily basis.

In addition, and with respect to Lehman, all swap activity with Lehman was executed under legal documents that govern the collateralization of swap transactions and reduce counterparty risk. As a result, any losses associated with these contracts are expected to be relatively minor. Subsequent to Lehman’s bankruptcy filing, Vanguard took various additional steps to protect shareholder assets, such as securing and liquidating pledged collateral, terminating existing swaps, and executing swaps with other approved counterparties.

As you probably know, the prospectus for Vanguard Short-Term Investment Grade Bond Fund provides the fund with the flexibility to invest in derivatives. Importantly, the fund only invests in derivatives when their expected risks and rewards are consistent with the fund’s stated investment objective, policies, strategies, and risks. As noted, the fund’s derivative investments currently consist of futures contracts, interest rate swaps, and credit default swaps.

Futures contracts and interest rate swaps are used to invest with greater efficiency and lower cost than is possible through direct investment, to add value when these instruments are attractively priced, or to adjust the fund’s sensitivity to changes in interest rates. Credit default swaps may be used to simulate investments (by selling protection) in bonds that are either unavailable or considered to be less attractively priced in the bond market, or to reduce exposure to a given issuer (by purchasing protection).

Vanguard takes very seriously investor concerns regarding recent developments in the equity and fixed income markets, and we will continue to manage our funds with our shareholders’ best interests in mind. Vanguard believes that—when used appropriately—certain types of derivatives can be efficient tools that assist advisors in producing broadly diversified portfolios with specific risk characteristics.

We hope that this letter helps to allay your concerns, and we thank you for entrusting your assets to Vanguard.

where are the legal disclaimers you lying sack of shit?

i give up

give up what marco?

topper, thank you for your thoughtful post.

rs, i think you were most likely lucky and you still find Rand "provocative."

Okay, what individual ones do you like?

What individuals? I charge 1% for that.

columbiacounty
about 5 hours ago
ignore this person
report abuse where are the legal disclaimers you lying sack of shit?

Another friendly reply by columbiacounty.

columbiacounty
about 5 hours ago
ignore this person
report abuse you're a wannabe, lying scumbag.

And another.

> What individuals? I charge 1% for that.

Which does a whole lot to help out the folks making .5% on the funds themselves.

You shouldn't be buying funds. You don't need to pay annual expense fees to be in a passive fixed income index (aka ETF). Pay a point up front and then pay zero expenses for the next 5-10 years.

If the dollar's allocated is small a fund makes sense, provided expenses are low.
Historically Vanguard GNMA has provided good risk/return attributes. If you don't want to go the fund route, look for the highest paying CD'S..