Reader Chris had an interesting observation about Bond ETFs and their lack of showing a certain dynamic in the rankings. Here’s what he had to say:
I am getting used to the new format of your blog and really like the two new postings you are going to publish.
I look at your postings practically daily and have passed them on to as many people as I talk to about investments.
The one thing that eludes me while poring over your figures is the value of interest and dividends that an issue may throw off.
I have an approx. $100K position in JNK and find it extremely rewarding. Yet, in your rankings it does not look very dynamic at all.
I guess, from a trend perspective, you don’t want a bond fund to fluctuate. But the value of such an issue is not really clear in your data.
Am I correct in this, or am I missing something?
No, you are not missing anything and are absolutely correct.
When I started publishing the StatSheet back in 2003, only no load equity mutual funds were included.
I added bond funds and their ETF cousins later on more as a courtesy to readers who had asked for it. They are not to be compared with equities in the ranking food chain.
Bond ETFs, like JNK, need to be evaluated on their own merits including the dividend they pay. You can use the Bond ETF StatSheet to quickly view as to what is available, if the overall trend is up or down and how the individual ETFs rank in relation to each other without consideration to dividends.
Once you hone in on an ETF that you like, you then need to analyze the dividends and distributions to see if they meet your needs.
In other words, you should use the rankings to merely determine whether a given bond ETF is in bullish territory or not; no more no less. Any comparison to equity ETFs and their superior momentum numbers fulfills no purpose.
Disclosure: No holdings in JNK
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