The intermediate-term bond that matures in 2002 was priced to yield 7.25 percent.

The growth of $1 from 1980 through 1989 was as follows: stocks, $5.04; intermediate-term bonds, $3.08, and Treasury bills, $2.34.

So Ginnie Maes tend to behave like intermediate-term bonds, liquidating in 10 years or less.

He recommends intermediate-term bonds, which have about half the price volatility of longer-term issues over time.

He said the best buys were high-quality, intermediate-term tax-free bonds.

Now the fund is weighted 65 percent in large-cap stocks and 35 percent in intermediate-term bonds.

Prices of most intermediate-term corporate bonds fell by 3/8 point, while long-term issues fell by about 1/2 point.

The fund will hedge some risk by buying short- and intermediate-term bonds.

He also said investors should think carefully before buying intermediate-term bonds.

A mix of short- and intermediate-term bonds would best serve investors now, he said.