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Subject:  Re: GNMA Talk from Vanguard Date:  3/17/2006  10:53 PM
Author:  Lokicious Number:  15815 of 35576

"So, is this article suggesting that the Vanguard GNMA fund is a good, safe investment? Because I have owned it for several years, and it is in the hole. (I have not reinvested dividends.) I have been thinking about selling at least half of it, but maybe this is not the right time. Opinions?"

You should read the risk assessment on the GNMA fund on the Vanguard site, because I think it is accurate. They don't have a high default risk, although some of those playing with high risk mortgage lending do. However, like any bond fund, there is interest rate risk, and as mortgage rates have gone back up, the NAV has gone down. This can be compounded by refinancing risk.

I'm surprised to hear you are in the hole. Do you mean the NAV is below your initial investment price, or have you lost even after dividends? With a bond fund,