Dan Weiner suggests "sell" Vanguard tips fund

[avram53]

(First, how do I properly show a link to a website/ webaddress?)


Weiner was interviewed by Chuck Jaffe, Marketwatch.

See link: http://news.morningstar.com/news/ViewNews.asp?article=/DJ/200704231238DOWJONESDJONLINE000517_univ.xml

How has the Vanguard Tips fund done relative to other Tips funds?

Ave

[tnlsea]

**Deleted**

[Wagnerjb]

Personally, I plan on continuing to ignore his advice and will be keeping and adding to the Vanguard TIPS fund.

YMMV.

Same here!

[oneleaf]

Unless he's going to go into a meaningful discussion as to why the ENTIRE Target Retirement series of funds is structured poorly, it is pretty useless and silly to suggest getting out of the 2025 fund.

[CyberBob]

...while the Vanguard Group has a reputation for outstanding funds some of the firm's issues are laggards, following questionable strategies with only a low-cost structure to make them attractive.

...but said he would get out of Vanguard Inflation-Protected Securities (VIPSX) , Vanguard High-Yield Corporate (VWEHX) , Vanguard Target Retirement 2025 (VTTVX) and Vanguard International Growth (VWILX).

Laggard because of a questionable strategy?
Does that mean he specifically doesn't like the Vanguard TIPS fund, or just doesn't like TIPS funds in general? Same for the others. Does he specifically not like Vanguard high-yield bond fund or just doesn't like junk bond funds in general?

I wish there was more information here...

Bob

[4th&Goal]

Vanguard TIPS Fund (VIPSX) is a plain vanilla TIPS fund with an ER of .20%. I will add to my VIPSX position every month until my retirement.

[gkaplan]

I plan to keep on adding. Unless, of course, I'm already at my target allocation.

[stratton]

Does that mean he specifically doesn't like the Vanguard TIPS fund, or just doesn't like TIPS funds in general? Same for the others. Does he specifically not like Vanguard high-yield bond fund or just doesn't like junk bond funds in general?

The Vanguard TIPS fund looks pretty generic to me. The Pimco and Fido ones try to do some small things to enhance yield a bit, but even they're pretty much the same too.

If you want to do something unusual with TIPS look at PCRIX Pimco Commodity Real Return. 70% TIPS with leveraged amount of commodities equivalent to the size of the fund. ER 0.74.

I'm NOT advocating people buying commodities. I don't own any, but they are doing something different with TIPS.

The knock on junk right right now is the ~250 basis point yield spread over treasuries is so thin they're not worth the default risk.

Paul

[bilperk]

Laggard?

DW's favorite bond fund is GNMA. 5 year return: GNMA 4.82% IN Prot Sec 7.22%.

More spin by the spin master.

He told everyone to get out of Windsor II about this time last year and get into US Value. Since then WindsorII 16.07%, US Value 9.84%, Value index 17.06%.

Then he had the nerve to tell his subscribers that US Value "crushed" the index and WindsorII on a "monthly rolling average".

At that point I started throwing my subscription in the recycle bin without opening it. Fortunately I only had a couple of months left and was doing a lot of fishing at the time

The guy is a dart thrower and that's all. Sometimes he hits but often he misses. Then he covers up with BS.

It was a cheap lesson since I never made any moves based on his advice.

best,

[Blackhawkzone]

big Deal

This so called "EXPERT" is nothing more than a market timer, which probably contricts most of what people here think.

Stay the course.

[kenn3d]

...this discussion raises a couple of questions in my newbie brain:

First, my fixed income allocation doesn't currently include any TIPS bonds. So I'm wondering what recommends "adding to a VIPSX position every month until my retirement"?

Secondly, it occurs to me that many mutual fund firms offer "index" funds which may/will vary in specific allocations to specific stocks within an asset class, or have other minor differences. Does Vanguard "indexing" offer any superiority over the others generally... apart from expense ratios?

still learning,

Kenn

[edge]

I doubt that Dan Wiener even understands how TIPs work.

[4th&Goal]

...this discussion raises a couple of questions in my newbie brain:

First, my fixed income allocation doesn't currently include any TIPS bonds. So I'm wondering what recommends "adding to a VIPSX position every month until my retirement"?

kenn

I am adding TIPS because I want to have a healthy allocation to TIPS at retirement as insurance against unexpected inflation during retirement.

[oneleaf]

Does that mean he specifically doesn't like the Vanguard TIPS fund, or just doesn't like TIPS funds in general? Same for the others. Does he specifically not like Vanguard high-yield bond fund or just doesn't like junk bond funds in general?

These kinds of questions are important, but I'm afraid that it's a waste of time to even think too much about Weiner's advice.

For instance, when I subscribed a year ago (yea, i'm ashamed), i was privvy to a very "special" report that only subscribers get, that tells you what funds you must SELL NOW. One of them was Tax-Managed International (despite the fact that he had buys on developed index and total international). It turns out he doesn't like the 0.5% redemption fee. Great, thanks Dan. SELLING NOW would guarantee that I would get hit with the redemption fee, and is hardly good advice. It would have been more accurate to say "don't buy in the first place, but if you already bought, no need to be in a hurry to get rid of it".

The same with that Target Retirement 2025 that he recommends selling. Why? Is the whole target retirement series in question, or is there something magical about the 2025 retirement date that makes that fund particularly undesirable? I've come to the conclusion that it's better to simply ignore his advice entirely, as his advice raises far more questions than it answers, and upon figuring out, it's usually a disappointing anti-climax.

[MadBax]

I have 25% of my bond allocation in VIPSX now. IMO they are starting to look better and I will be increasing my TIPS percentage. With the
uncertain oil supply and other inflationary contributors, I find that having VIPSX helps me sleep better at night.

BTW, when I started handling my own investmests, I started lurking on the M* Diehards forum and I certainly appreciated the comments about Mr. Weiner then.

Thanks,
MadBax

[Mel Lindauer]

Weiner was interviewed by Chuck Jaffe, Marketwatch.

Who really cares what he says about TIPS? I know I sure don't.

Regards,

Mel

[murfields]

I see that two wiener's ex-letter subscribers have replied. I will make it a third and I will post some of my observations:

As yet this posting has not caught the eyes of the Wienerites, but probably will be discussed on their forum and also on their selected secret society's private Yahoo web site.( the discussions in the past was to get the number of Diehards' posting up to 100 or more to advance Wiener's name among our members.) In the past if Adrian posted, their implied hated, the number of replies grew immensely and it became some-what like a contest among their members to see how many replies could be made and of course congratulations were in order if they felt Adrian index's philosophy was marred by a Wienerite. When-ever an attack was suggested the attackers would jump on to the old Diehard's Morningstar site and several of the postings did reach near to a 100.

The reason for this is their forum members believe Dan Wieners is some type of a Financial God for suggesting active Vanguard low-cost funds. Index funds are not a alternate for the majority of the Wienerites although Dan's second most producing portfolio is his version of index funds for those who prefer not having active funds in their portfolios.

Dan Wiener is a talented writer who's is wise to use funds of the number one mutual fund company in the U.S for suggestions in a newsletter. How to influence clients and make a buck I would say he is gifted and has been very successful. Probably has a B.S in English but not a suggested MSB, CPA, CFA for also running a financial advisory service. He even attempted to call the original letter "Vanguard Investment Letter" and to use Vanguard's name but was prevented by a law-suit. He has hated Bogle ever-since and has made nasty remarks when-ever he could. This month it was on Bogle's recent international and etf's discussions.

Hulbert for newsletters give it a rating slightly higher than average, but it has never been in the top rating for performance or risk. I have enjoyed reading it the last year but didn't agree with or accepted most of his advice. Will not renew.

Murfield

Murfield

[grabiner]

How has the Vanguard Tips fund done relative to other Tips funds?

According to M*, it has beaten the category average every year of its existence, usually by about 0.7% a year. This is what you would expect given the fund's low expenses and the fact that all of these funds have about the same holdings.

If TIPS are appropriate for you, Vanguard's fund is a good way to hold them. If TIPS aren't appropriate (because you don't hold any bonds, you have a lot of I-bonds, or you will have a large inflation-adjusted pension), you shouldn't hold Vanguard's fund or anyone else's fund.

[Pacific]

But, if a lot of people followed his advice and sold the TIPS fund, wouldn't that make its shares cheaper for those of us who are buying the TIPS fund? I wish there were more out there like him. If people follow his "advice" and their portfolios subsequently do not perform well, isn't it just an example of survival of the fittest?

Go Dan!

[zhiwiller]

...Probably has a B.S in English...

Yeah, I've seen him use some BS English as well.

Oh. That isn't what you meant.

I took all the Weiner naysayers with a grain of salt at first, thinking they were just set-in-their-ways Diehards. Then I read some of his pieces. Either the guy cannot do basic financial arithmetic or his is just a downright dirty liar. Either way, I wouldn't pay a shiny nickel for his services. Additionally, we should stop promoting him every time he craps out a new opinion.

[Jazztonight]

Our Sunday Newspaper (SF Chronicle) has a column by Chuck Jaffe. I don't remember him ever using the term "Index Fund."

He mostly talks about fund managers, managed funds, etf's, etc.

Now, like I said, I only read him on Sundays, but as far as I can see, he's as much a Boglehead as Jim Cramer, even though Jaffe's "expertise" is supposed to be Mutual Funds, and he's in a unique position where he could, if he wanted to, deliver some (IMO) meaningful information to his readers, he just touts funds.

I would guess this has something to do with who's paying his salary.

[paulob]

Its unfortunate that the article and/or the interview did not list the why's?
Blame the writer, and not Wiener for that gaffe.

I don't know what is behind his current thinking, but he has said before that you want to own TIPS when inflation is running hard. He has compared TIPS above inflation yield with Int Term Treasury before. He used an example for one to compare the "gap" in yield to determine what to buy.

I'm pretty sure he is not dismissing TIPS as a candidate for target retirement funds. But, as is his style, will recommend different bond funds for the income portion of his portfolio from time to time.

[Petrocelli]

As yet this posting has not caught the eyes of the Wienerites, but probably will be discussed on their forum and also on their selected secret society's private Yahoo web site.

Perhaps they saw it, but did not think it was worth starting a food fight over (despite the best efforts of some posters to start one...)

[Random Musings]

Perhaps Weiner read Larry Swedroe's book - and is cutting back on TIP's since their "fixed rate" is lower. Although at current rates, I do recall that the L.S. strategy recommends holding some TIP's at current levels.

The sweet spot for TIP's is now on the long-term TIP's, many around 2.33% for the fixed component give or take a few basis points (and before commissions).

RM

[Abciximab]

What a weiner. (Sorry, I couldn't help it) Just ignore him.

[haban01]

If we should bail out of these three Vanguard funds, we should then buy what??? Oh, wait we need to buy his newsletter first. He is just trying to create hype to then justify purchasing is regular newsletter.

Vanguard TIPS fund ranks very high among it's peers as Ave has stated.

Stay the Course.

[paulob]

Perhaps Weiner read Larry Swedroe's book - and is cutting back on TIP's since their "fixed rate" is lower.

Well, I read in his newsletter before Larry's book was published, but regardless of where the idea came from, it has the same "basic" idealogy. However, Larry's table is much more specific in terms of the amount to allocate to TIPS.

[hollowcave2]

Vanguard's TIPS fund is pretty basic. Low cost. There's only TIPS and there's only so many TIPS issues. If he recommends selling this, it can only mean either a) he doesn't like TIPS right now (not exciting enough), or b) he doesn't understand them. Let's give him the benefit of a doubt and assume he understands them. Just because inflation isn't a problem now doesn't mean it won't surprise us later, and that's exactly what TIPS are supposed to protect against.