Page 1 of 1
New TLT prospectus; good change?
Posted: Wed Jul 04, 2012 1:05 pm
by Pointedstick
I just got a new prospectus for TLT, and noticed this:
The Fund generally invests at least 90%
of its assets in the bonds of the
Underlying Index and at least 95% of its
assets in U.S. government bonds. The
Fund may invest up to 10% of its assets
in U.S. government bonds not included
in the Underlying Index, but which BFA
believes will help the Fund track the
Underlying Index. The Fund also may
invest up to 5% of its assets in
repurchase agreements collateralized
by U.S. government obligations and in
cash and cash equivalents, including
shares of money market funds advised
by BFA or its affiliates.
Didn't TLT used to allow something like 35% to be derivatives? I can't find the thread now, but if I'm recalling this correctly, limiting it to 5% seems like a welcome change.
Re: New TLT prospectus; good change?
Posted: Wed Jul 04, 2012 8:19 pm
by Ad Orientem
Interesting. A 5% cap seems like an improvement to me. But my memory could be faulty.
Re: New TLT prospectus; good change?
Posted: Thu Jul 05, 2012 9:43 am
by WildAboutHarry
They can still engage in securities lending, which generated much of the non-treasury income if I recall correctly.
So, they may hold 95% treasury bonds, but there is still counter-party risk in securities lending.
Re: New TLT prospectus; good change?
Posted: Wed Aug 15, 2012 11:45 am
by Gebo
WildAboutHarry wrote:
They can still engage in securities lending, which generated much of the non-treasury income if I recall correctly.
So, they may hold 95% treasury bonds, but there is still counter-party risk in securities lending.
What do you feel would be a better choice in an IRA? This is where I was leaning. You may have already answered me in another topic.
Re: New TLT prospectus; good change?
Posted: Wed Aug 15, 2012 12:35 pm
by Pointedstick
Gebo wrote:
What do you feel would be a better choice in an IRA? This is where I was leaning. You may have already answered me in another topic.
The safest/most pure option for an IRA is to just directly own the bonds in your IRA under the brokerage's street name. The more convenient option is to own shares of TLT or EDV. Of course, the safest of all is to own the bonds yourself in a TreasuryDirect account, but you can't do that in an IRA. When implementing the PP, you have to decide for yourself what mix of safety and convenience works best. Personally, I chose to own both EDV and TLT, but that's just me.