iShares 0-5 Year TIPS Bond ETF declares monthly distribution of $0.4233

• iShares 0-5 Year TIPS Bond ETF (STIP) - $0.4233.
• 30-Day SEC Yield of 7.32% as of June. 29.
• Payable Jul 08; for shareholders of record Jul 05; ex-div Jul 01.

Comments

[schizoidmantoo]

Since these are inflation adjusted and inflation was even higher this month than last, how is it that the distribution dropped?

[sacking]

@schizoidmantoo I assume it has to do with when the holdings mature and when they receive their interest/dividend payments. That's just my thought. I saw the July payment dropped significantly from the May and June amounts. Maybe someone else has a better theory.

[bluescorpion0]

@sacking sounds to me as they are actually pre-paying 2.5 years of interest since the duration is 2.5 years and TIPS only pay the inflation adjustment at maturity. Not really sure how it works since how would they have so much cash for dividends? If they sell the TIPS they would not be having inflation protection?

[vtcomics]

Damn we bought a bunch of this thinking it was a safe play for capital preservation. Apparently not! These etf's apparently aren't assured of an eventual par payout to provide the safety net regular GOV bonds do. What a colossal mistake.

[bklieb1]

@vtcomics I'm starting to think the same thing.

[swanny8506]

@vtcomics I am intrigued on how you came to this conclusion based of the very limited information provided.

Secondly, you buy this for monthly income. And, if needed, to break even on original capital investment due to its low volatility and overall tight price range.

[robertlgriffin]

@vtcomics Yes, there's interest rate risk, but it's not great since the average maturity is 2.5 years. No doubt they have been highly volatile lately, but look at what short term rates have been doing. I just started buying STIP because I got tired of the bank paying only 0.1% on my so-called emergency cash, some of which I put in 6 month T Bills as well as STIP. I don't see how you can lose money unless short term rates rise greatly.

[DeltaCherry]

It's pointless to post this on the day of the ex-div.

[sacking]

@Rettel I agree. But it seems a number of these don't declare their monthly distribution ahead of time. If you check history, and other of these TIPs ETFs, you'll see the same pattern. Frustrating I agree.

[DeltaCherry]

@sacking For STIP, it's easy. The ex-div is the first of the month. If that day falls on a weekend, it's the first business day after the first of the month. iShares provides a table. Check it out: www.ishares.com/...

I made the comment because I'm seeing this kind of post often now for other ETF's too.