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Though GNMAs have a number of characteristics similar to Government bonds (e.g., insured by the Federal Government), unlike bonds, a GNMA fund can go down as the interest rate goes down. A good example was last year. For example, the American Century Ginnie Mae Fund returned the smallest dividend in a downword progression from its peak in 2000. The price/unit dropped from a high of $10.90 to below $10.50 and the dividend was only 4.3%. I thought the Vanguard GNMA Fund might do better, but it is yielding only 4.3% too. Granted there is an annual percentage fee on the funds, but I doubt anyone can get 30-yr mortgages for a little as 5%. Don't know why the yield is so low. They maybe are heavily invested in 15-yr mortgages?

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