VCIT Rising

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hoops777
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VCIT Rising

Post by hoops777 » Thu Jan 24, 2019 11:25 am

I have a decent size position in VCIT that I would like to eventually get out of.Lately It seems to be increasing in value almost everyday no matter what the overall market does.Is there a reason for this?
K.I.S.S........so easy to say so difficult to do.

UpperNwGuy
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Re: VCIT Rising

Post by UpperNwGuy » Thu Jan 24, 2019 11:35 am

What is VCIT?

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SpringMan
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Re: VCIT Rising

Post by SpringMan » Thu Jan 24, 2019 11:54 am

VCIT is Vanguard's Intermediate Corporate Bond ETF. There is a corresponding mutual fund, VICSX but VICSX has a .25% purchase fee so VCIT avoids the fee. Corporate bonds have gone up lately.
Best Wishes, SpringMan

UpperNwGuy
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Re: VCIT Rising

Post by UpperNwGuy » Thu Jan 24, 2019 11:59 am

@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?

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hoops777
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Re: VCIT Rising

Post by hoops777 » Thu Jan 24, 2019 12:58 pm

UpperNwGuy wrote:
Thu Jan 24, 2019 11:59 am
@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?
I do not see the need to post more than the ticker because I was requesting thoughts from people knowledgeable about the specific ETF.
K.I.S.S........so easy to say so difficult to do.

barnaclebob
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Re: VCIT Rising

Post by barnaclebob » Thu Jan 24, 2019 1:00 pm

hoops777 wrote:
Thu Jan 24, 2019 12:58 pm
UpperNwGuy wrote:
Thu Jan 24, 2019 11:59 am
@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?
I do not see the need to post more than the ticker because I was requesting thoughts from people knowledgeable about the specific ETF.
What makes you think that special knowledge is needed? How is it different from any other asset class with a gain. If you want out, sell it, smile, and pay your taxes. Waiting for it to drop to avoid taxes is not in your best interest.

cyfairslam
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Re: VCIT Rising

Post by cyfairslam » Thu Jan 24, 2019 1:10 pm

VCIT is rising because interest rates have been falling.

It appears the FED will not be raising interest rates much over the next year. There is an economic slow down in China and Europe. Some think there is a slow down or even a recession coming in the near future for the US. Steady or lower interest rates are bullish for bond funds.

VCLT price has been increasing as well.

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hoops777
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Re: VCIT Rising

Post by hoops777 » Thu Jan 24, 2019 3:43 pm

cyfairslam wrote:
Thu Jan 24, 2019 1:10 pm
VCIT is rising because interest rates have been falling.

It appears the FED will not be raising interest rates much over the next year. There is an economic slow down in China and Europe. Some think there is a slow down or even a recession coming in the near future for the US. Steady or lower interest rates are bullish for bond funds.

VCLT price has been increasing as well.
Thank you very much for your answer.Makes sense.
K.I.S.S........so easy to say so difficult to do.

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hoops777
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Re: VCIT Rising

Post by hoops777 » Thu Jan 24, 2019 3:50 pm

barnaclebob wrote:
Thu Jan 24, 2019 1:00 pm
hoops777 wrote:
Thu Jan 24, 2019 12:58 pm
UpperNwGuy wrote:
Thu Jan 24, 2019 11:59 am
@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?
I do not see the need to post more than the ticker because I was requesting thoughts from people knowledgeable about the specific ETF.
What makes you think that special knowledge is needed? How is it different from any other asset class with a gain. If you want out, sell it, smile, and pay your taxes. Waiting for it to drop to avoid taxes is not in your best interest.
So all asset classes are always the same,all of the time no matter what is happening in the world?
I am not waiting for it to drop to avoid taxes.I did not want to sell it it right now if there is a reasonable expectation that it should continue to rise in the near future.Willing to gamble a bit on the forbidden market timing on this one.
K.I.S.S........so easy to say so difficult to do.

barnaclebob
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Re: VCIT Rising

Post by barnaclebob » Thu Jan 24, 2019 3:52 pm

hoops777 wrote:
Thu Jan 24, 2019 3:50 pm
barnaclebob wrote:
Thu Jan 24, 2019 1:00 pm
hoops777 wrote:
Thu Jan 24, 2019 12:58 pm
UpperNwGuy wrote:
Thu Jan 24, 2019 11:59 am
@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?
I do not see the need to post more than the ticker because I was requesting thoughts from people knowledgeable about the specific ETF.
What makes you think that special knowledge is needed? How is it different from any other asset class with a gain. If you want out, sell it, smile, and pay your taxes. Waiting for it to drop to avoid taxes is not in your best interest.
So all asset classes are always the same,all of the time no matter what is happening in the world?
I am not waiting for it to drop to avoid taxes.I did not want to sell it it right now if there is a reasonable expectation that it should continue to rise in the near future.Willing to gamble a bit on the forbidden market timing on this one.
Asset classes are different and move differently, but that doesn't mean anyone can predict that movement. Why are bonds a good investment when all the experts have been saying they will crash for years now?

3feetpete
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Re: VCIT Rising

Post by 3feetpete » Thu Jan 24, 2019 5:32 pm

I've owned VCIT for several years. I wouldnt sell it now unless you feel impelled to change your asset allocation. I've seen it go through a couple of cycles where it losses value when the feds increase the interest rates and then gradually catches back up when the feds stop raising rates. The last time I checked my investment in it had lost a couple of percent but the yield had gone up a couple of percent as well. Vanguard has to constantly sell old bonds as they mature and buy newer ones and the result is that the yield has not only gone up as a percentage of value but in real dollars as well.

So I'll hold onto it and collect the dividends until the next business cycle when the Feds drop rates again and VCIT goes up. I suspect it will have a pretty good total return at that time.

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oldcomputerguy
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Re: VCIT Rising

Post by oldcomputerguy » Thu Jan 24, 2019 5:55 pm

cyfairslam wrote:
Thu Jan 24, 2019 1:10 pm
VCIT is rising because interest rates have been falling.
Forgive me for seeming stupid, but I thought rates were rising. What am I misunderstanding?
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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David Jay
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Re: VCIT Rising

Post by David Jay » Thu Jan 24, 2019 9:53 pm

oldcomputerguy wrote:
Thu Jan 24, 2019 5:55 pm
cyfairslam wrote:
Thu Jan 24, 2019 1:10 pm
VCIT is rising because interest rates have been falling.
Forgive me for seeming stupid, but I thought rates were rising. What am I misunderstanding?
I am not the poster, but I believe what they said was shorthand for “the expectation of near-term interest rate increases has moderated”.

Bond prices are affected by anticipated future interest rates. Since that expectation was built into the pricing, bond prices have increased as the perception changed.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

z3r0c00l
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Re: VCIT Rising

Post by z3r0c00l » Thu Jan 24, 2019 10:37 pm

barnaclebob wrote:
Thu Jan 24, 2019 3:52 pm
hoops777 wrote:
Thu Jan 24, 2019 3:50 pm
barnaclebob wrote:
Thu Jan 24, 2019 1:00 pm
hoops777 wrote:
Thu Jan 24, 2019 12:58 pm
UpperNwGuy wrote:
Thu Jan 24, 2019 11:59 am
@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?
I do not see the need to post more than the ticker because I was requesting thoughts from people knowledgeable about the specific ETF.
What makes you think that special knowledge is needed? How is it different from any other asset class with a gain. If you want out, sell it, smile, and pay your taxes. Waiting for it to drop to avoid taxes is not in your best interest.
So all asset classes are always the same,all of the time no matter what is happening in the world?
I am not waiting for it to drop to avoid taxes.I did not want to sell it it right now if there is a reasonable expectation that it should continue to rise in the near future.Willing to gamble a bit on the forbidden market timing on this one.
Asset classes are different and move differently, but that doesn't mean anyone can predict that movement. Why are bonds a good investment when all the experts have been saying they will crash for years now?
This is a bond fund. It is well below recent highs in NAV, yet the NAV has recovered some ground nicely like other bond funds. But NAV is only a small part of the overall return. (Good thing, since if it were, this found would be down 6 percent since summer 2016.) One would primarily hold this or other bond funds long-term, earning most return from monthly distributions. There is little reason to sell bond funds unless you need the money for a specific purpose. It's return isn't significant enough for market timing. Are you really going to buy and sell bond ETFs over "wild" daily swings like .24%?

Topic Author
hoops777
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Re: VCIT Rising

Post by hoops777 » Fri Jan 25, 2019 12:41 am

I am trying to get away from owning Corp bonds.The Nav has been rising so I was simply looking to recover a bit more before selling and it is in my IRA.I was going to sell it a couple weeks ago but didn’t.Not a huge deal.Thanks for the replies.
K.I.S.S........so easy to say so difficult to do.

UpperNwGuy
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Re: VCIT Rising

Post by UpperNwGuy » Fri Jan 25, 2019 6:43 am

hoops777 wrote:
Thu Jan 24, 2019 12:58 pm
UpperNwGuy wrote:
Thu Jan 24, 2019 11:59 am
@SpringMan - Thanks! Wish folk would be more faithful about posting the names of the funds instead of just the ticker.

@hoops777 - If it is rising consistently, why do you want out?
I do not see the need to post more than the ticker because I was requesting thoughts from people knowledgeable about the specific ETF.
You're assuming that people knowledgeable about funds always take the time to memorize the tickers? I only own five funds, and I still have to look up the tickers from time to time. But I can tell you quite a bit about those funds.

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jeffyscott
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Re: VCIT Rising

Post by jeffyscott » Fri Jan 25, 2019 8:58 am

oldcomputerguy wrote:
Thu Jan 24, 2019 5:55 pm
cyfairslam wrote:
Thu Jan 24, 2019 1:10 pm
VCIT is rising because interest rates have been falling.
Forgive me for seeming stupid, but I thought rates were rising. What am I misunderstanding?
It's an intermediate term corporate fund, 5, 7, and 10 year treasury rates were over 3% in October and are 2.5-2.7% now. So the intermediate term interest rates have declined over that time. Spreads may have changed too, though.
Time is your friend; impulse is your enemy. - John C. Bogle

venkman
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Re: VCIT Rising

Post by venkman » Fri Jan 25, 2019 11:47 pm

https://fred.stlouisfed.org/series/BAMLC0A4CBBB

Spreads between corporate bonds and Treasuries peaked around the beginning of the year and have been steadily decreasing since then. Looks like a decline of 20+ bps over 3 weeks.

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