Timing for moving $$ into a Treasury fund?

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2quik6
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Joined: Mon Nov 24, 2008 8:12 pm
Location: Ft. Worth, Texas

Timing for moving $$ into a Treasury fund?

Post by 2quik6 »

Due to the current rise in most T-bill mutual fund share prices, wouldn't now be a bad time to move money into this type of fund?
Since alot of folks have done this already, I see the current VG mutal T-bill fund share prices are at years highs....if money is moved in now won't the share price/principle start to deflate as everyone moves back into the market in the future and thus lose more money since the interest rate would not keep up with the drop in share price?

Just curious as I noticed this researching diffent funds and see alot of people still moving to these funds currently.
Mainly the VUSTX Long-Term Treasury fund...started the year at $11.66, hit its lowest price on 10/31 at $11.11 but is now at its high for the year per share at $12.30...which is more than 10% from its low...that would take 2 years of interest just to overcome the price falling back to $11 and change.
Rob
Gekko
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Post by Gekko »

given that the VG LT Treasury has the best YTD performance of all VG funds for 2008, i wouldn't jump into it at this time - IMO, that'd be performance chasing which is never good. but nobody knows where it will go in the future. one strategy is to put the minimum in ($3k) and slowly trickle into it over 12-24 months. another strategy would be to just buy another bond fund that's been beaten up. buy low sell high. good luck.

"Today's winning technology (investment) is tomorrow's sinkhole." - Bill Gross
Topic Author
2quik6
Posts: 35
Joined: Mon Nov 24, 2008 8:12 pm
Location: Ft. Worth, Texas

Post by 2quik6 »

That's what I figured, never invested in T-bill funds before.....and then again, the share price was at its year low less than a month ago so that would have been a perfect time to jump in...so it went from its year low to high in less than 4 weeks..and was at its low even after the huge drops in the market in Sept/Oct..go figure.
Rob
Gekko
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Post by Gekko »

well, ask yourself if you really want to live with that volatility. a lot of people want the yield of the bond funds, but the when the NAV starts tanking, it can start to get ugly - especially if that's part of your "safe" money.

IMO, ain't nothing wrong with the VG Prime MM and the VG Treasury MM. no NAV fluctuation and you sleep real good at night.
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joe8d
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Post by joe8d »

If money is moved in now won't the share price/principle start to deflate as everyone moves back into the market in the future and thus lose more money since the interest rate would not keep up with the drop in share price?
Yes. I've been doing buying in the VG Short Term Investment Grade bond Fund which is near it's all time low NAV and has a 6%+ yield.
All the Best, | Joe
Topic Author
2quik6
Posts: 35
Joined: Mon Nov 24, 2008 8:12 pm
Location: Ft. Worth, Texas

Post by 2quik6 »

joe8d wrote:
If money is moved in now won't the share price/principle start to deflate as everyone moves back into the market in the future and thus lose more money since the interest rate would not keep up with the drop in share price?
Yes. I've been doing buying in the VG Short Term Investment Grade bond Fund which is near it's all time low NAV and has a 6%+ yield.
Thats still fairly volatile and could continue to go down. Similar to the Hi-Yield corp bond fund is at its low for the year..around $3.90 compared to $6 at the beginning of the year...so now its drawing a 14% rate so it too would bea good time to jump in but can be even more volatile since it deals with junk bonds.
Rob
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