Mutual Funds containing Fannie Mae securities

I was wondering about the future of Mutual Funds that have Fannie Mae securities in their underlying holdings. For example, FNMA securities comprise some of T. Rowe Price New Income's portfolio. Should we stick a fork in funds like this?

The first thing you have to consider is the fact that the damage is already done. Share prices of Fannie and Freddie have already taken the hit.

The next thing to think about is that the government has stepped in to stabilze them, so they probably won't take another big hit.

Third, what percentage of holdings in your mutual funds are F & F? This is your ultimate risk associated with keeping the fund. If F & F only make up 1% of the portfolio after the share price adjustment, you are carrying very little/no risk holding them.

I don't think you will be mitigating any risk by moving it elsewhere. At least you know what is happening to F & F. You may move the money only to be hit with another "surprise" company in the new fund.

I usually like to take the known over the unknown when it comes to investment dollars.

I am just looking to adjust some of my taxable investments over the course of the next 10 years. I'm looking at bond funds for the times when I need to take some money off the table and put that money into "wealth preservation" mode. I have a solid 30-year horizon for my tax advantaged accounts so I'm not messing with them. I'm just wondering if TRP "New Income" ( http://www.troweprice.com/fundbook/fbhistorictopten?fundcode=NIF ) is a viable option if wealth preservation is the goal for some of that capital as opposed to growth.

Thank you for your input.