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QUOTABLE Bogle: Total Bond Bad

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position and get extra income the way I’ve described…I think the index is wrong.” Just to put real numbers on it, at the end of March, Total Bond Market’s allocation to Treasury bonds was 44.1%; Short-Term Bond Index had “The bond index [Total Bond Market] is much more heavily weighted in government debt than most investors need.” —JACK BOGLE 68.4% of its portfolio in Treasurys; Intermediate-Term Bond Index , 51.3%; and Long-Term Bond Index , 35.2%. This is why you find funds like Short-Term Investment-Grade and Intermediate-Term Investment Grade in the Model Portfolios , as well as High- Yield Corporate , though Bogle says he is not a fan of high-yield either. n

JACK BOGLE FINALLY SAID what I’ve been telling you for some time: The overweight of Treasurys in Vanguard’s bond index funds is bad for your finan- cial health, and a good dose of cor- porate bonds and municipal bonds will improve your performance with- out adding undue risk. But let’s allow Bogle to speak for himself, as he did in a recent interview with ETF.com. “I go to basically short-term and intermediate-term municipals in my personal account, and, in my retirement plan account, which is my largest asset here, I use intermediate-term corporate and short-term corporate debt.” Why does Bogle do this? “The bond index is much more heav- ily weighted in government debt—72 percent—than most investors need to be.” And he goes so far as to suggest that Total Bond Market should be changed—that the index the fund tracks is flawed. “I’d rather have a lower Treasury position, change the Bond Market Index a bit, have a lower Treasury

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DAN’S DO-IT-NOW ACTION RECOMMENDATIONS 4 The tax man takes his due from every fund, but some funds are better at avoiding his reach than others. Just don’t let the tax tail wag the portfolio dog. (See page 1) 4 Adding more managers to a fund tends to dim its prospects. Some multimanaged funds, like U.S. Growth , you should avoid. Others, like Selected Value , still have the potential to shine. (See pages 4 and 6) 4 Precious Metals & Mining may be better than its peers, but don’t be fooled—this isn’t a crowd you want to be spending much time with. (See page 5)

Daniel P. Wiener is America’s leading expert on the Vanguard family of funds. He is founder of the Fund Family Shareholder Association and chairman and chief executive officer of Adviser Investments, LLC, a Newton, Massachusetts, investment advisory firm (800-492-6868). As

Jeffrey D. DeMaso, Editor/Director of Research, works directly with Dan Wiener researching and writing the multiple-award winning Independent Adviser for Vanguard Investors newsletter. He also leads the analyst team for Adviser Investments, LLC, helping to

editor of The Independent Adviser for Vanguard Investors , he is a five-time recipient of the Newsletter Publishers Foundation’s Editorial Excellence Award. He also edits the annual Independent Guide to the Vanguard Funds. Mr. Wiener is often quoted in the nation’s leading financial publications.

oversee $2.7 billion in assets. Jeff graduated magna cum laude from Tufts University with a B.A. in economics in 2006, holds the Chartered Financial Analyst designation and is a member of the CFA Institute and the Boston Security Analysts Society.

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