What would you expect to see in short-term bond funds from Pacific Investment Management Co. and Vanguard Group Inc.? I doubt a security that could last in perpetuity is the first thing that comes to mind.
Yet that’s exactly what appears to be lurking in the Pimco Short-Term Fund and Vanguard Short-Term Investment-Grade Fund. The portfolios are two of the four largest public holders of General Electric Co.’s sole liquid perpetual preferred stock, which has been hammered in recent days along with just about everything else tied to the company. Trading volume in the securities reached a record high on Friday as their price tumbled below 85 cents on the dollar from about 94 cents at the end of October.