Last Updated Aug 25, 2011 9:28 AM EDT
- Vanguard 500 Index Fund (VFIAX) -- -6.2 percent
- Vanguard High-Yield Corporate Fund (VWEAX) -- -2.0 percent
- Vanguard Intermediate-Term Treasury Fund (VFIUX) -- 2.4 percent
- Vanguard Intermediate-Term Investment-Grade Fund (VFIDX) -- 0.7 percent
Junk bonds or lower credits may seem attractive because of their higher yields, but before deciding to add an asset class to your portfolio you should consider how the asset class fits with the rest of your portfolio. High-yield bonds have a higher correlation with equities than treasury bonds, and this higher correlation makes them poor diversifiers of equity risk. In general, the risks of high-yield bonds tend to show up at the wrong time.
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