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Vanguard High-Yield Corporate Message Board

  • derrillp derrillp Jun 1, 2009 7:53 PM Flag


    Today's puny one cent rise in the nav was most disappointing. Other junk funds rose much more. I have to believe this lackluster performance was due to the funds exposure to treasuries,which got murdered today. Why doesn't our dumbo fund manager get out of these miserable things once and for all? they ain't going nowhere but down. You don't need a harvard mba to see this,mr chang.

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    • Looks like a down day for junk unless the Treasury Effect mitigates the down trend.

    • When will your year be up? I believe you have to hold VWEHX for a year to avoid the penalty?

    • I think this fund's performance really sucks. The risk/reward ratio is bad. As soon as I'm beyond the point where I have to pay the redemption fee I'm pulling out and going with BJBHX and PRHYX.

    • That's why I'm in VWEHX, too. The alternative is to buy a fund with a higher yield but it's no fun watching the NAV drop twenty cents in one day because one of their lower rated bonds defaulted. The daily NAV decreases and increases won't be as large, either, for the same reason......not because of treasuries. When (as according to Vanguard's site) treasuries only make up 2.7% of its portfolio underperformance by treasuries would be barely noticeable.

    • Last sentence of my last post should have read: "---when all CORPORATE bond funds were getting killed ---"

    • VWEHX is a "conservative" junk fund. This is almost a contradiction in terms, but it's true. How many other junk bond funds does anyone know of which include treasuries as part of their holdings?

      I'm certainly not saying that treasuries and junk will 'always' go in opposite directions, but they frequently do since treasuries are a safe haven play, and junk bonds definetly are not. This is a bit of a hedge. Also, VWEHX generally holds primarily "higher grade" junk than other junk bond funds. Because the treasury portion of VWEHX's holdings pay low single digit returns, even a small portion of the total holdings in treasuries is bound to dampen the total fund returns somewhat. That said, I'm happy with the more conservative nature of VWEHX compared to other junk bond funds, even if it means a lower total return. This is especially true in conditions like we had last October/Novemeber/December time frame when everyone predicted catestrophic bond defaults and all bond funds were getting killed (not just junk).

    • Junk does NOT have to go up when treasuries go down. Treasuries go up or down for lots of reasons including inflation fear, flight to safety and improvement in the economy. Junk reracts mostly to just the state of the economy. VWEHX hit its lows when the economy looked like it was going to self destruct. The fear in junk was all about possible bond defaults. As more and more neutral or early good news comes out about the economy VWEHX continues its climb upward.

    • This fund's NAV rise has lagged other junk funds. This is a fact. Yesterday alone PRHYX was up .02,SPHIX was up .03 and USHYX was up .03. VWEHX was up only .01. I'd like to know why VWEHX is lagging. I take it you are OK with the fund's exposure to Treasuries even if they happen to be down 15% in the last month? And this exposure to Treasuries is not the cause? I'm not saying it is. I'm just looking for the reason(s) why VWEHX seems to be at the party but not fully participating.

    • Peeing contest going on here. The only "correlation" between treasuries and junk bonds is that junk bonds and Treasuries are at opposite ends of the safety spectrum. It's only logical that as a general rule when one goes down the other would be up. However, the only "stat" I'm really interested in is seeing VWEHX break back through $5 and head for $5.50, which I think it will as the economy continues to "improve" (which is a relative term).

    • I guess you think you own this board. I should have known that the God of Junk would be defensive when another opinion is issued. I think I will "retire" from this site. And unlike you I really mean it.

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