With money market fund returns so low and probably going even lower with US funds now backing away from turmoil in the higher yielding European money markets, alternatives are in order.
The chart shows the total returns of five such alternatives since June 30, 2008.
I have owned all of these at one time in the past five years and currently own VFIJX as one of my "Big Six" and own smaller positions in VFIRX and PFIUX.
The table is the Vanguard website fund comparison format showing all particulars of each of the five funds as to costs (VERY important at low yield), duration, record of performance, etc.
All of the Vanguard are very conservatively managed with excellent individual issue selection and fabulously low annual costs. PIMCO's Unconstrained Bond Fund (PFIUX) is the most interesting of thre five and most like a hedge fund. PFIUX's charter allows it to vary the fund duration all the way from five years to minus three years! The latter would be a substantially net short position. Currently duration is about five months, compared to a maximum average duration of 90 days for money market funds.
PFIUX is said to have been developed at the request of a PIMCO private separate account owner, and proved to be so successful that it is now offered to the public since June 2008. PFIUX itself is available to the public with $25,000 minimums at some mutual brokerages like Vanguard and Schwab,, and for smaller minimums there are other classes of the fund at moderately higher cost.
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