For a more recent article, see Saturday, April 11, 2009
Bob Brinker on Ginnie Mae Funds: Vanguard vs. Fidelity
If we get massive inflation from the trillions of fiscal stimulus to keep the economy from crashing, then we could see high interest rates down the road which will be bad for Ginnie Maes and Ginnie Mae Mutual funds like VFIIX.
Personally, I like "triple diversification" for my fixed income side of my portfolio with perhaps something like 35:30:35 in TIPS, Cash and Bonds such as Vanguard's total bond fund and/or Vanguard's GNMA fund, VFIIX. Rebalance once a year to take advantage of potential inflationary and deflationary cycles I think lie ahead.
I believe digesting what the FED and US Treasury department are doing to prevent a depression will be like snake swallowing a large animal... loads of undulations in the rate of inflation and thus the NAV of bond funds.
Needless to say, I just bought some of this TIP fund since inflation expectations are low now and it is on sale.
More Fixed Income Charts for: