Monday, February 13, 2006

For bond products, it's the price, stupid

For bond products, it's the price, stupid: "Those who plan to ultimately sell the bond need to factor in another 0.28% on the eventual sale commission, along with a bid-ask spread of roughly 0.2%, Shakespeare says. The cost of a round trip (buy, then sell later) on a bond ETF executed at a discount broker is therefore 0.76%, or about half the 1.5% to set up a bond ladder.
For low amounts (below $1,000, say), investors may be better off with such traditional alternatives as bond mutual fundsor Canada Savings Bonds, given the minimum brokerage fees.
At higher amounts, $5,000 or $10,000 investments at a time, it seems almost a dead heat between bond ETFs and bond ladders."

No comments: