GNMA FUNDS
What is your opinion on owning a GMNA fund. Is it as dangerous as owning bonds or bond funds/
Terry Says
Here’s the issue with GNMA funds. These are filled with mortgage backed securities. Homeowners are refinancing to get the lower rates, so the funds have to reinvest at lower yields. Once that happens, if rates rise investors are stuck with lower yield mortgages since no one will refinance those good deals! So I would avoid GNMA funds.
