No. of Recommendations: 6
Just to clarify then, the current yield of 5.52% yield is inclusive of the rise of the basket of foreign currencies against the dollar?
It's a good news / bad news thing.
No, that's truly the recent yield, not counting on price movement at all. But the monthly coupons have been falling on trend for a while, so it won't last.
That in turn is partly made up for by a rising NAV and market price.
Great idea for a security, but maddeningly difficult to really understand the individual moving parts and how they interact with changes in prevailing yields. Inflation protected bonds in general do what they say, but not in the intuitive WAY you'd expect.
For me the annoyance is that all the underlying bonds have no dividend withholding tax, being government issued, but because of the US corporate wrapper there is a 30% withholding tax on all the distributions anyway. I get no credit for that, so it's a straight 30% off the top. So any cyclical switch towards price appreciation rather than coupons is one of the strange subtleties that is good for me.
Jim
