Both JNK (.24) and HYG (.05) are holding above their 200ma but just barely - (HYG actually closed below 1 day but has since recovered). Unfortunately their smaller sibling PHB is now trading well below its 200ma. I think PHB needs to recover and JNK & HYG need to hold for the 1992 scenario to play out. If they all close below and stay there a few days then I think HY is going much lower and stocks too. We shall see.
VHEWX is trading (-1.47% 20ma) (-3.25% high) (2.68% 200ma). The average MF I follow is trading (-1.28% 20ma) (-3.05% high) (4.05% 200ma). So VHEWX is a little worse than average so far. With over 11B in assets it is going to be hard for VHEWX to be anything but average I think.
If you had timed the top and the bottom in high yield perfectly, you would have made boat loads of money regardless of the 1% fee. The reality is that most of us can't do that. Vanguard is smart in differentiating themselves from the ETFs. This is a fund for long term investors, not traders.
I agree with you completely on this one year holding period. It's ridiculous. The only way Vanguard will change this,though,is if they see a significant number of $$$$ moving out of VWEHX and into ETF's. As far as CNBC, et al, is concerned I think they should be muzzled. CNBC is the worse of all the business networks. Their commentators get everyone riled up and it affects their investment decisions. They also can affect the markets with the experts that come on and make statements that are outlandish. I hate to say it but their women commentators are the most excitable females I have ever encountered.
I think we are all a little gun shy after what happened in 2008 and 2009. People on CNBC and even this blog are talking about the possibility of a double dip or "W" type of recovery in the economy. If one had stayed with VWEHX in 2008 and the first part of 2009 they would have been burned. Even though we have seen nice gains in junk over the last 10 months it still is not anywhere near breakeven. If one had done nothing they still would be in the red. I remember very well when in June of '07 VWEHX was at $6,25/sh and PRHYX was at $7.20/sh. Then the market started deteriorating. None of these funds have recovered to these levels yet. However,if one sold out before the crash and then got back in in March '09 they would have a very nice gain. I know it's hard to time the market but when all one hears is that Greece is going under,interest rates are going up,unemployment is too high,etc,etc it gets a little scary and you have to wonder if it is the start of another crash. In this environment ETF's are a much better choice. It's not that anyone wants to be a trader. We are all just trying to avoid a financial calamity similar to what happened in 2008 and 2009. When a junk mutual fund keeps going down for a month like VWEHX did it's not a good sign. A person can't just stay in and do nothing. I was very surprised that junk came roaring back last week with all the negativity that surrounded the market since Obama made his war declaration on the banks. I think that Vanguard should re-think this one year holding period in light of the current market environment. I don't know of any other junk fund that has a one year holding period.
"If you got out of VWEHX in January ------- you probably wished you hadn't gotten out."
Derrillp, I think you inadvertently made Vanguard's case for them. If some investors were discouraged from selling earlier this month because of the 1% fee, they are probably happy now. VWEHX is intended for long term investing, and Vanguard tells investors this. If you want to actively trade based on "reacting" to constant changes in economic news, you can easily shoot yourself in the foot by mistake. Frequently, doing nothing at all is the best investment choice. Taking the long term view avoids a potential hazard, which is Vanguard's philosophy.
I don't agree with you that VWEHX belongs to Jurassic Park. Just because Vanguard's investment philosophy doesn't happen to coincide with yours doesn't mean VWEHX is a dinasauer. If you want to be a market timer, buy and ETF. However, if you want to take the long term view then VWEHX is a good choice. You obviously like the more hands on approach, and ETF's are a good choice for you. However, this approach isn't necessarily right for everyone.
I've been in T. Rowe Price Hi-Yield and Value Line Hi-Yield for over 20 years. At the inception of these funds they too had one year waiting periods. Then with the advent of ETF's they changed their waiting periods to 90 and 120 days respectively to compete with the new ETF funds that were gaining popularity. Unfortunately,Vanguard still maintains their one year redemption period. They seem to be living in the past. In these times where you have markets moving dramatically every day one can't buy and hold for an entire year anymore. I'm going with JNK and HYG more and more. I like the flexibility one gets with these ETF's. An investor can react quickly to changes in the market and pay no redemption fees. Just look at what has happened to junk in the last month. After Scott Brown was elected in Mass. Obama declared war on the banks. Then problems surfaced in Greece and the Eurozone. Junk started declinig. Someone on this board said VWEHX was going to $4.50. Then this last week nobody was paying attention to Greece or tightening of bank regulations. Throw in some encouraging economic data and junk went up quite a bit. How does an investor react to these fast paced developments? If you got out of VWEHX in January you probably paid the fee. But last week you probably wished you hadn't gotten out. What will happen next week? Greece is supposed to have a pretty big bond sale. Will Greece be able to sell their bonds next week? If not VWEHX will go down along with the rest of the market. The talking heads on CNBC will start wringing their hands and declaring the end of the world is coming. It may be another disaster in the market just like in January. The investor needs a vehicle to react to these changes in the market without being killed with redemption fees. ETF's are a great way for a junk bond investor to protect himself in these changing markets. VWEHX seems to me to be a dinosaur in this respect.
There are other high yield funds with other bond qualities and other fee structures. This is the fund that Vanguard created, and they are very clear about the 1% redemption fee. If you missed that on your entry into the fund, shame on you. If you're now just pissed about it, well TS.
SPHIX seems to be the first of the junk funds to report after the close. It's also probably one of the most risky junk funds. Today it is only up .01 when the market was up 165 DOW points. This is not a good sign for junk. I will bet that VWEHX will be unchanged today.
When the smoke clears and I feel junk has bottomed USHYX and MWHYX are my choices to inject funds. Both are paying comparable div's to VWEHX and DO NOT have any redemption fees like VWEHX. I called VWEHX last week to plead my case against a one year holding period and was told that this was what the fund manager wanted. Even though I was only five weeks away from serving my one year sentence I couldn't get it waived. I'm really,really done with VWEHX.