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Vanguard High-Yield Corporate Message Board

  • readwriteeatsleep readwriteeatsleep Jul 1, 2009 4:23 PM Flag

    $0.03227 June dividend

    A bit smaller than the May dividend of $0.03367. any insight as to why the dividend bumps around so much? A year ago it was 0.036 to 0.037.

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    • As I mentioned, I have 17% in junk. Most of my income is from other investments. Normally, I try to keep only 5% to 10% of my portfolio in junk as a reasonable range. I happened to buy back into VWENX at the bottom ($3.90). So, I loaded up.

      In my opinion $5.25 to $5.50 will be its top range. Long term I don't plan to keep more than 7% or 8% in junk. Consequently, I may try to sell some while it's in the top range and put it in something else which has a long term track record of holding its NAV better over a period of years, i.e. investment grade (such as VWETX). I hold VWENX and other funds in a non-taxable account, so I can effectively transfer any capital gain on VWENX to another fund in that account without paying a capital gain tax.

    • I don't understand this. If you bought in around $4.25 you've locked in a fat 9.75% dividend return. Why would you sell at $5.25? You're in for the income,right? So,if and when you sell where do you go to get your income??

    • I believe high-yield bonds still have some room to move up (maybe another 5% to 10%) in the next 6 to 12 months, but the biggest gains are over.

      As far as long term goes keeping an eye on Total Return is important. Junk bond funds in general have done very poorly in keeping up their NAV's. I think the total return for VWEHX for the last 5 years is less than 3%. Junk bonds are good for juicing up monthly dividends, but I wouldn't keep too much in there over the long haul. The total return track record argues against it.

      Personally, I currently have 17% of my portfolio in VWEAX (Admiral), but will sell most of it if the NAV goes up to $5.25 to $5.50 range. By then the effective dividend yield will be well below 8%, which is not an attractive risk/reward ratio for junk, especially considering the low Total Return track record of the last 5 to 10 years.

    • I've been dollar cost averaging into this fund for 5 years, and as a result I'm still up cumulatively. Market timing isn't for me.

    • I churned a lot also with this fund last year and avoided the big drop. Even though I paid all those fees I still came out ahead. I may have lost 8% but did I really want to lose 35% by holding FOR THE LONG TERM? I DON'T THINK SO!!

    • I sold at $4.92 and bought back in at $3.92. The $1 per share rise since then has only just recouped the 98 cents per share I lost when the NAV dropped from $5.90 to $4.92. When I bought in the first time at $5.90 I thought it was a "good" price. (NOT.)

      Personally, I don't think the NAV will ever rise back to the upper $5 range. It may achieve $5.25 or possibly even $5.50. It's a crap shoot. You will notice that the NAV's of other junk funds (like BJBHX, PRHYX, SPHIX and PHDAX) have all done about the same. Therefore, switching to another junk bond fund which has essentially the same investment profile is pointless unless you get a significantly higher yield. BJBHX has a higher yield, but the others I mentioned do not.

      Good luck, whatever you do.

    • Yeah....but I avoided a 30% drop in the price!!

    • Bro, you lost 8% just by jumping in and out 8 times.

    • I've been thinking about pulling out but I want to wait until my one year is up to avoid the out fee. I figure I've already lost the 5% in upside appreciation from March until June.

    • Are you still in this fund? IF so, why? Most investors who think a fund's managment is as poor as you seem to think this one is, leave.

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6.130.00(0.00%)Sep 2 6:25 PMEDT

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