Opinions
Larry Berman CFA, CMT, CTA
iShares Diversified Monthly Income ETF
XTR-T
COMMENT
Aug 14, 2017
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.
He loves the ETF because it gives you a balanced fund, is diversified, and has 20% US exposure in the high yield market. It yields about 5.5% to 6% so you are getting a payout of capital. You have to think about bond yields and credit risk and how they might increase. Think of it as a Canadian balanced fund. He prefers ZWC-T because it is covered call premium and not payout of capital that gets the yield up to where it is.