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  1. #1

    VBMFX-vanguard total bond index

    Just curious for those who hold VBMFX (Vanguard Total Bond Index), whether they feel it is a good buy in today's market?Yield about 2.3%, effect. avg duration 6 yrs, AA quality.
    Its trailing total return listed by M* for 1,3, and 5 years as 1.56%, 2.47% and 1.95% respectively.

  2. #2
    But it is a vanguard index fund and has only a 0.16% expense ratio. Compare that to say a PONDX active bond fund with a .79% er, or a cef such as PDI actively managed debt fund with its adjusted er of 2.12%. Since as we know from EMH (efficient market hypothesis) that markets are efficient, those high er's are just over time throwing money away, right?

  3. #3
    Risk and reward? Why would anyone think of taking exposure to a 6yr duration for a 2-3% reward IN A RISING INTEREST RATE ENVIRONMENT.
    Awfully risky position to take for limited reward --- and one wonders as an aside, how can a "total" bond index have a AA average rating......?

  4. #4
    It depends on one's strategy. For my strategy, VBMFX totally satisfies my needs for bonds. DEFENSE.
    If my STRATEGY is to ACCEPT market returns because I feel I can't beat them, then my TACTICS are:
    1. AA. Balance shallow (equity volatility) risk with deep risk (run out of money) according to my risk tolerance.
    2. Reduce portfolio friction whenever and wherever possible. Keep the number of MF/ETF to a minimum. Always use the cheapest MF/ETF available to you.

  5. #5
    1- Don't be a Penny wise and Dollar foolish and let all that Lower Expense business sway you..Dig Deeper and Per How your actual $ is going into it, etc ( if taxable? Minus the est taxes too)
    2- Apples to Apples: I don't think I would compare a PONDX/PIMIX toa BND/VBMFX as since PIMIX is Leveraging ( ave 25% long?) that Unbalances comparisons and It also now has addtional Bond Sectors in it..
    3. While I call both types a MBF" ( Multi Bond Funds) and in that category?
    Add the Likes of VBIIX/BIV ( Treas & Corps) as my Benchamark( I dropped VBMFX yrs ago and moved that $ into VBILX/BIV eversince .. but expanded and added these other MBF's..)
    and if want to make it more Equal to VBMFX? I Added a TGLMX/DLTNX Mortge to it in a 66/34 weighting..
    other MBF's in my Bond Port are:
    MWTRX
    DODIX
    DLFNX

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