Last week we learned there are new fixed income exchange traded funds in the pipeline.  Ameristock filed to launch 5 new ETFs.  Roger Nusbaum reports that investors looking for steady income need to be careful when adding these to your portfolio.  Here are a few things to look for:

  • The ETFs will blend maturities to reach a favorable yield, but this will not lock in a favorable yield for investors looking for a particular income stream;
  • Dividends will be paid once a year;
  • For individual investors, it is not difficult to purchase a Treasury – usually there is no commission and small orders are easy to accommodate – also, single-issue risk and liquidity are not really problems;
  • Treasuries can go down in value, but at maturity you get your par value back.  This is not the case with a Treasury fund.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.