By: Larry MacDonald
If you get a quote for the iShares Canadian Short-Term Bond ETF from Yahoo Finance, GlobeInvestor, or some other financial website, it will show the annual yield as being close to 4%. That may seem strange because annual yields on individual short-term bonds are currently quoted at 1.5% to 2.5% per year.
It’s not so strange when one realizes the yields are two different beasts. The ETF yield on financial websites is based on income distributions from the last four quarters. The yield on individual short-term bonds is the yield to maturity – i.e. what one would get if they held the bond to maturity.
As I understand from talking to Heather Pelant of Barclays Canada’ iShares, anyone considering purchasing the short-term bond ETF needs to check its yield to maturity. This is available from the iShares.ca website. It currently says the “weighted average yield to maturity” for the ETF is 2.1%.
5 Responses to “ Yields on bond ETFs ”
Good point to remember.
By CanadianInvestor on Oct 3, 2009
Agree – yet XCB (Corporate bonds)weighted is 3.79% to maturity and weighted maturity is 5.18years – not bad when you look at the detailed holdings.
By Dave Durnford on Oct 5, 2009