Opinions
John Hood
iShares Diversified Monthly Income ETF
XTR-T
N/A
Sep 02, 2014
Stock price when the opinion was issued
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Does iShares collect an MER from all the other ETFs held within XTR? He's asked Blackrock this and, no, they're not double-dipping. Generally speaking, there's no question that MERs of ETFs will continue to decrease because of of competition among ETF compnaies. It's amazing how far they've fallen just in the past few years.
The bond markets are impaired and will be for a while. Low interest rates are here to stay. Income focused ETFs with exposure to bonds will not return 4-5%. Are you getting return of capital or yield? Must look into the structure where the returns are coming from. Both are similar. Both ZMI and XTR give you exposure to diversified income. All fixed income has negative return after inflation.
As a full position in an RRSP? When you get the quote, it shows the yield as about 5.8%, but if you look at the components of this ETF, corporate bonds, high yields, rates, etc., none of them add up to 5.8%. The reason is that there is a return of capital. There is a big difference between return “on” capital and return “of” capital. You are not really getting 5.8%, but actually about 4.5%.