Re: New BMO ETFs
Posted: 22 Nov 2011 16:46
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https://www.financialwisdomforum.org/forum/viewtopic.php?t=109462
Maybe not. I don't really follow them that closley except for one (ZCM) that I've been watching closely for potential purchase. In that case the trading volumes have been low, but seem to be improving. If I was willing to go to the ask, there is plenty of volume there, but the spread off NAV is usually a bit much for me. Combine that with trying not to buy near recent highs, and I'm still just watching.oldguy wrote:I love these funds & would like to buy them . Only problem -- NO VOLUME
Am I missing something ?
ThanksIdOp wrote: Maybe not. I don't really follow them that closley except for one (ZCM) that I've been watching closely for potential purchase. In that case the trading volumes have been low, but seem to be improving. If I was willing to go to the ask, there is plenty of volume there, but the spread off NAV is usually a bit much for me. Combine that with trying not to buy near recent highs, and I'm still just watching.
So for your question, you'd have to look at the particular funds that interest you, and see how big the spreads are typically and how much is offered at the ask (since you want to buy too). If you are willing to pay the spread on a long term investment and there is enough on offer, then maybe the trading volume isn't a deal-breaker.
FWIW.
That's the point - Buy & Hold - Hold - Hold.squid wrote: So you can trade stocks effectively for a buy and hold strategy, at least.
There is plenty of buyers at a few cents below NAV too. If you need to sell, you can easily do so. I imagine it's BMO doing the buying. As a day trader you are out of luck as the major volume is just above and below NAV, but if you are holding for a few weeks, months, years, the premium is a small percentage of your holdings, and much cheaper than a MF.oldguy wrote:That's the point - Buy & Hold - Hold - Hold.squid wrote: So you can trade stocks effectively for a buy and hold strategy, at least.
What if you want to sell - that's where the problem is .
Detractors will argue that being careless with a few pennies either way negates the value (and point) of $10 commissions, but if one really thinks about it, it is neither here nor there. The $10 commission is real (costs matter) but the purchase or sale of a security within the noise of the spread around an instantaneous market price is meaningless. Two hours later, the market price will have moved on anyway negating the whole 'cheapness' of a few pennies on bid/ask.squid wrote:There is plenty of buyers at a few cents below NAV too. If you need to sell, you can easily do so. I imagine it's BMO doing the buying. As a day trader you are out of luck as the major volume is just above and below NAV, but if you are holding for a few weeks, months, years, the premium is a small percentage of your holdings, and much cheaper than a MF.
How sure are you that it's much cheaper than a mutual fund ?squid wrote:
and much cheaper than a MF.
Not sure what you are getting at here. Level 2 quotes give you several layers of bid/ask prices. If you want to sell 1000 shares for example and the level 2 looks like this:oldguy wrote:And how sure are you that they will rebuy just a couple of pennies below price ?
AltaRed wrote:Not sure what you are getting at here. Level 2 quotes give you several layers of bid/ask prices. If you want to sell 1000 shares for example and the level 2 looks like this:oldguy wrote:And how sure are you that they will rebuy just a couple of pennies below price ?
Ask 5 $10.30
Ask 7 $10.20
Ask 10 $10.00
Bid 2 $9.95
Bid 10 $9.90
Bid 4 $9.60
Then all you have to do to sellyour 1000 shares (10 lots) is to put in an Ask price of $9.90 and you have your cash (probably 200@9.95 and 800@9.90). Do you really care if you get $10 or $9.95 in this instance.... or is $9.90+ good enough?
Two hours later the ask/bid might be in the $9.80/$9.75 range and your fretting over $9.90-$10.00 is meaningless, never mind 1-2 pennies.
If they are distributing the full coupon from premium bonds the current yield will exceed the YTM.Also, shouldn't the current yield be the same as yield to maturity. 3.54% for ZCM and 3.08% for XCB.
So if they are distributing the full yield of 4.62% we should buy in.Shakespeare wrote:If they are distributing the full coupon from premium bonds the current yield will exceed the YTM.Also, shouldn't the current yield be the same as yield to maturity. 3.54% for ZCM and 3.08% for XCB.
To estimate the true yield subtract the MER from the YTM. For ZCM, about 3.2%.
I don't believe they are tracking the same index. XCB tracks the DEX all-corporate bond index. ZCM follows the DEX mid-term corporate bond index, which focuses on bonds maturing in 5-10 years. Over 40% of the holdings in XCB mature between one and five years, which drags down the yield. Also note that ZCM has 93 holdings, while XCB has 511, so it's not really an apples to apples comparison.northbeach wrote:So why is there such a big % difference in the February interest payout when both track the same index?
Also, shouldn't the current yield be the same as yield to maturity. 3.54% for ZCM and 3.08% for XCB.
The catch is that over time the yield will have to fall closer to the YTM minus MER (about 3.2% as Shakespeare mentioned). If you click on this link and change the distribution year to 2011, you'll see that this is already happening, as the yield steadily fell from 6.5 cents a share to 6 cents a share.northbeach wrote:There must be a catch, but what is it?
OOPs! Guess I should pay more attention to what I am reading.Lazy Ninja wrote:I don't believe they are tracking the same index. XCB tracks the DEX all-corporate bond index. ZCM follows the DEX mid-term corporate bond index, which focuses on bonds maturing in 5-10 years. Over 40% of the holdings in XCB mature between one and five years, which drags down the yield. Also note that ZCM has 93 holdings, while XCB has 511, so it's not really an apples to apples comparison.northbeach wrote:So why is there such a big % difference in the February interest payout when both track the same index?
Also, shouldn't the current yield be the same as yield to maturity. 3.54% for ZCM and 3.08% for XCB.
As long as we are getting more than YTM then YTM is not a good indicator of current yield. I would be much happier if the yield for 2012 came in at 4% than 3.2% (YTM - MER) and indications of what happened in 2011 suggest this could well be the case.Lazy Ninja wrote:The catch is that over time the yield will have to fall closer to the YTM minus MER (about 3.2% as Shakespeare mentioned). If you click on this link and change the distribution year to 2011, you'll see that this is already happening, as the yield steadily fell from 6.5 cents a share to 6 cents a share.northbeach wrote:There must be a catch, but what is it?
http://www.etfs.bmo.com/bmo-etfs/distri ... ndId=75744
That's actually one of the things I preferred about this ETF, as I've been wondering for some time when I might expect to see the current yield on XSB and CLF come down too. The distribution on CLF moved down about 10% in January from where it had been (a fairly significant change). Oddly enough the yield of ZCM moved up a bit at the start of the year.
Edited to add preceeding paragraph.
I have recently taken an interest in BMO's target maturity product.northbeach wrote:
I am also considering the BMO 2020 Corporate Bond Target Maturity ETF?
I intend to hold either purchase to 2020.
No suggestions but why the need to be so precise with respect to replicating a strip ladder? Re-invest the income every few years, or when you have extra cash on a lump sum basis. DRIPs are an accounting nightmare outside registered accounts, and these days, with $10 commissions, DRIPs have lost most of their value.ockham wrote:In order to replicate a strip, I would want to DRIP the interest payments. Problem is RBCDI (which is where I am) tells me that these BMO products aren't on their DRIP list, and BMO tells me they will DRIP but only if I'm at BMOIL.
Any suggestions???