Comments on: Building a Fixed Income portfolio with ETF’s

By: IS

IS — Sun, 22 Aug 2010 14:18:49 +0000

@Taylor – Do you mean selling short?

By: TAYLOR DAVENPORT

TAYLOR DAVENPORT — Fri, 20 Aug 2010 15:31:23 +0000

HOW EXCATELY IS AN ETF SOLD AND CAN THE MONTHLY DIVIDENDS BE HANDLED OR REINVESTED OR DEPOSITED IN YOUR BANK ACCOUNT OR BROKERAGE ACCCOUNT? THANKS

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By: IS

IS — Thu, 24 Jun 2010 10:07:14 +0000

@Rob – The risk is somewhat different. For example a 7-10 year treasury will usually have more duration = more interest rate risk. You would also be more dependent on the 10 year rates rather than short term.

I agree, the difference is not that important between the two you are mentioning but when you want to invest according to specific interest rate movements, you might prefer over the other.

By: Rob

Rob — Thu, 24 Jun 2010 08:00:05 +0000

thanks for a great post. Question on the duration aspect. As an ETF we can buy and sell anytime… so why choose longer or shorter duration if the risk is roughly equal? e.g.,
IEF iShares Barclays 7-10 Year Treasury Bond Fund 1yr return 9.077 DivYield 3.19
IEI iShares Barclays 3-7 Year Treasury Bond Fund 1yr return 7.281 DivYield 2.3

By: IS

IS — Thu, 24 Jun 2010 04:30:05 +0000

@John – No I would not. It would really depend on your profile and objectives. For example corporate bonds have a better return but more risk so a young investor would probably have more of those

@TFB – interesting questions. Like I told John, the exact % would depend on your profile but for a retirement account I would be between 3 and 10 ETF’s. I will try to write more about that soon

@Craig – Actually, these ETF’s pay back interest payments in the form of dividends either monthly or quarterly