VAIPX vs. individual TIPs

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CapitalPreservation
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Joined: Fri Oct 31, 2008 7:41 pm

VAIPX vs. individual TIPs

Post by CapitalPreservation » Fri Oct 31, 2008 7:55 pm

I purchased VAIPX at a level about 9% higher than the current price. Since the fund drops precipitously every day at 2PM EST, it sure does appear that there's some forced selling occurring, motivating me to rethink this position. I see no end to this downward trend if hedge funds are pushing the price down because of redemptions.

Since I have ridden the price down, does it make more sense to stay in the fund than it does to cash out and buy individual TIPs at these great yields?

Any help is greatly appreciated.

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stratton
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Re: VAIPX vs. individual TIPs

Post by stratton » Fri Oct 31, 2008 7:59 pm

CapitalPreservation wrote:I purchased VAIPX at a level about 9% higher than the current price. Since the fund drops precipitously every day at 2PM EST, it sure does appear that there's some forced selling occurring, motivating me to rethink this position. I see no end to this downward trend if hedge funds are pushing the price down because of redemptions.
I don't know if you should cash out and buy individual ones. The individual TIPS with the highest real yields appear to be the ones most found in a TIPS fund.

Paul

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PiperWarrior
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Post by PiperWarrior » Fri Oct 31, 2008 8:15 pm

Welcome to the forum!

If you are selling VAIPX and buying individual TIPS that are pretty much the same as what's in the fund, I don't see an advantage (other than saving on expenses).

If you are extending the maturity to lock in the 3% real yield for 20 years or something, there may be an advantage in holding individual TIPS.

Assuming Treasuries (including TIPS) have no credit risk, it's hard to imagine the NAV going down forever.

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CapitalPreservation
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Post by CapitalPreservation » Fri Oct 31, 2008 9:20 pm

Thanks for the replies and the welcome. :) There is one advantage to selling for me, in that this is a taxable account, and cashing out would allow me to offset gains from the rest of the year. I don't mind normal fluctuations, but for some reason taking a hit because of hedge funds is particularly vexing.

YDNAL
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VAIPX vs. individual TIPs

Post by YDNAL » Sat Nov 01, 2008 11:15 am

CapitalPreservation wrote:VAIPX vs. individual TIPs
Capital,

A 9% nut in a safe investment is a tough nut to crack. Your handle (name) indicates that capital preservation may be of very high importance to you. Replacing the fund with X number of the same individual issues seems counter-productive.

Regards,
Landy
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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