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.
Its not so strange when one realizes the yields are two different beasts. The ETF yieldon 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%.
Blogs & Comment
Yields on bond ETFs
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.
Its not so strange when one realizes the yields are two different beasts. The ETF yieldon 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%.