Lawrence Weinman's  Instablog

Lawrence Weinman
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Lawrence Weinman has worked over 20 years in the financial markets advising both institutional and individual investors. His services now include both ongoing fee only asset management and per hour or per project portfolio analysis and allocation reommendations by email/phone or in personal... More
My company:
Lawrence Weinman Financial Advisory and Investment Mangement
My blog:
sensible investments
  • I Am Quoted In A Reuters Article On Bond Investing. 0 comments
    Mar 9, 2012 6:52 PM

    which appears here

    Lawrence Weinman, a registered investment adviser in Los Angeles, points out that even a modest steepening of the yield curve in your portfolio can ratchet up risk dramatically.

    For example, let's say you moved your money from the Vanguard Intermediate Term Corporate Bond ETF (NASDAQ:VCIT) to the company's Long-Term Corporate ETF (NASDAQ:VCLT). While you pick up 1.38 percentage points in additional yield, duration increases from 6 to 13 -- a more than doubling of risk. Weinman warns that the higher yield on the longer-term fund may not translate into a better risk-adjusted return.

    "I'm really cautious on long-term corporates," Weinman says. Weinman suggests that a better, perhaps safer, core income holding is the Vanguard GNMA fund (MUTF:VFIIX). The fund holds mortgage securities guaranteed by the full faith and credit of the U.S. Treasury and is yielding just over 3 percent. It's considered an intermediate-term fund.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Mr Weinman's clients own vcit vclt and vfiix

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