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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (6220)	8/10/2011 10:34:00 PM
From: marc ultra	1 Recommendation Read Replies (1) \| Respond to of 10065

<I floated out of FIDELITY Fltg Rate Fund last Friday and back into GINNIE as of yesterday. With helicopter Ben promising to keep rates low for the next 2 years, I figure being into GINNIE for my IRA's has got to be much more prudent for the next few years. While I got out of FFRHX in that mostly fixed income portfolio and am looking for alternatives, I 'm not a fan of GNMA funds here. Given the massive run-up on flight to safety I think there's significant interest rate here and there is no ore meaningful upside in terms of price. Also I think there is another issue that is specific to GNMAs in that now that rates have plunged, and should remain low for an extended time, there should be a lot of pre-payment risk. Everyone's going to refinance now and those higher yielding GNMAs are going to come out of the portfolios and managers will have to replace them with low yield new ones which potential GNMA buyers may find unattractive. I believe there have been occasional times in the past when this has caused GNMAs and their funds to take some kind of hit. So you may want to read up and evaluate these things and maybe discuss it with Vanguard etc. and make sure it's what you want to commit to for two years. I think for those looking for replacements for Treasuries and for that matter CDs paying nothing, and don't want any stock market risk, I think they may turn to quality corporate bond funds for some yield. On the riskier side I've decided to hold on to my decent high yield fund MWHYX and the more eclectic DLTNX that Bob recommended. I'm also taking a serious look at FRIFX but that's not for the more conservative fixed income investor. So those quality funds brought up the other day, and the one I liked in the past MWTRX, while they have interest rate risk I think they're the kind of places people will be attracted to for yield that are fairly conservative though not risk free. So again I'd gather info and opinions before making long term commitments and evaluating if my concerns are warranted. BTW one reason I'm looking at FRIFX as one choice is because I have a lot of cash at Fidelity now after selling FFRHX and was looking for a Fidelity alternative and that's the only one that looked interesting. Since it's not my personal account it's a hassle moving it to another broker.