Opinions
John Hood
iShares Diversified Monthly Income ETF
XTR-T
COMMENT
Apr 13, 2015
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.
This is actually the leftovers of the income trust fiasco of a few years ago. They have now added a whole bunch of other components, such as corporate and government bonds. The only thing is that you should never trust yield. If you are looking at just the current yield, you have to go back into the web sight of the ETF provider. They are very candid about what is in their funds. Look at the yield to maturity and the credit risks, and then see what the trailing yield is. You want to see the “yield to maturity”.