Bond mutual funds can invest in wide range of securities such as corporate debt, government securities, mortgage backed securities, asset backed securities, foreign bond, etc. This article will feature one of the intermediate government bond funds by Vanguard, Vanguard Intermediate-Term Treasury fund. This Vanguard fund invests mainly in treasuries securities or government bonds (including treasury bills, notes, and bonds). This government bond fund is usually considered one of the safest investments because they are backed by US government credit. The income from this bond is usually tax free from state and local taxes, but not from federal income taxes.
Most diversified bond fund may have about 10-40% of asset in government bond. Rule of thumb is to have some portion of your asset portfolio in this government bond fund. Note: Hence everyone is anticipating of double recession and debt woes, some of the diversified bond fund has reduced most of government bond from its assets. Recently, PIMCO Total Return fund has net short of this government bond in its fund portfolio.
Vanguard Intermediate-Term Treasury Investor (Ticker: VFITX)
The Vanguard Intermediate-Term Treasury fund seeks to provide a moderate and sustainable current income level. The fund mainly invests >80% of assets in U.S. Treasury bills, notes and bonds issued by U.S. Treasury. This Vanguard fund is anticipated to maintain a dollar-weighted average maturity of 5 to 10 years.
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| Vanguard VFITX fund details |
- Fund Inception Date: October 1991
- Ticker Symbol: VFITX
- CUSIP: 922031802
- Beta (3yr): 1.19
- Rank in category: 22
- Category: Intermediate Government
- Yield: 2.32%
- Capital Gains: If any, it will be distributed on March or December
- Number of Years Up: 16 years
- Number of Years Down: 3 years
- Total Bonds: 43
- Average Coupon: 3.1%
- Average Maturity: 5.6 years
- Average Duration: 5.0 years
- Total Assets: $6 billion
If you have a brokerage account, you can start investing in this fund with $3,000 initial investment. For IRA account, please check with your account administrator or IRA brokerage provider for details. This Vanguard Bond can be bought from 83 brokerages across the country like T Rowe Price, Vanguard NTF, Royal Alliance, JP Morgan, E Trade Financials, Raymond James, Firstrade, Bear Stearns, etc. The best way to invest in Vanguard funds is by opening Vanguard account or Vanguard brokerage services (VBS) account. You can select various Vanguard mutual funds or Vanguard Exchange Traded Funds (ETF).
For the fund performance, this Top Bond fund has returned 5.48% over the past year and 7.29% over the past five years. The fund has its best return in 2002 with 14.15% return and the worst return in 1999 with -3.52% return. This VFITX fund has 5 stars rating from Morningstar. The fund annual turnover rate is 80% which is low compare to its category (293.19%). Besides investor class, this best government bond mutual fund is available in admiral class (Ticker: VFIUX).
As of April 2011, the distribution of this fund by the issuers is as follow:
- 85.2% in treasury/ agency
- 14.9% in government mortgage backed
- 0.3% in commercial mortgage backed
Disclosure: No Position
Interesting taxable bond funds:
Interesting taxable bond funds:
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