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SHY Loses A Year's Worth Of Gains In One Day
Posted: Fri Dec 05, 2014 4:22 pm
by Reub
With the good unemployment report today, SHY lost more of its value than it has gained in the entire year. Although this is still a very small number, down 0.19%, it makes me wonder if CD's and interest bearing MM's might not be as good of a vehicle for cash as SHY. If one has access to the federal TSP program, the "G" fund sure looks better and has no down risk at all.
Re: SHY Loses A Year's Worth Of Gains In One Day
Posted: Fri Dec 05, 2014 5:24 pm
by Kriegsspiel
How does SHY work with its interest/dividend payments? I hold treasuries directly so I'm not sure how it works. I'm assuming that since the value of the shares went down because rates went up, that you'll just get a larger dividend later this year when those bills mature and they roll them into higher interest ones? Will it matter?
Re: SHY Loses A Year's Worth Of Gains In One Day
Posted: Fri Dec 05, 2014 9:06 pm
by MachineGhost
Reub wrote:
With the good unemployment report today, SHY lost more of its value than it has gained in the entire year. Although this is still a very small number, down 0.19%, it makes me wonder if CD's and interest bearing MM's might not be as good of a vehicle for cash as SHY. If one has access to the federal TSP program, the "G" fund sure looks better and has no down risk at all.
Bingo! Anything with zero duration has no capital gains risk. Bonds funds are terrible; they use leverage and they don't hold to maturity.
Re: SHY Loses A Year's Worth Of Gains In One Day
Posted: Sat Dec 06, 2014 1:16 pm
by Gosso
If CD's were priced daily then they would see the same price swings as a short term bond with similar duration.
And a bond fund or ETF is the equivalent of holding a bond with a constant term and duration. From a total return and risk (ie maintaining a constant duration) perspective there is no difference between a bond fund/ETF and individual bonds.
Re: SHY Loses A Year's Worth Of Gains In One Day
Posted: Sun Jun 21, 2015 7:49 am
by mathjak107
actually when it comes to bond etf's there is a difference.
unlike stock etf's which have near zero premium or discount to asset value bond etf's do have a difference.
when bonds are in favor buying at a premium and selling at a discount when bonds are out of favor can cause a bigger loss than a bond or open end bond fund would have.
etf's can be sold short as well which makes them more volatile.
Re: SHY Loses A Year's Worth Of Gains In One Day
Posted: Sun Jun 21, 2015 7:51 am
by mathjak107
TennPaGa wrote:
Reub wrote:
With the good unemployment report today, SHY lost more of its value than it has gained in the entire year. Although this is still a very small number, down 0.19%, it makes me wonder if CD's and interest bearing MM's might not be as good of a vehicle for cash as SHY. If one has access to the federal TSP program, the "G" fund sure looks better and has no down risk at all.
It looks to me that most of the gain was came in the Oct 3 - Oct 17 time frame (when people were spooked about Ebola and ISIS). Since the panic peak, there has been a general downward trend. The good employment news resulted in a collective sigh of relief, putting SHY back on the general trend.
On your broader point, one can gain some return with CD's and MM, but incur a bit more risk compared with holding UST's. Then again, there is risk involved in holding SHY vs. the UST's themselves.
the cd's i buy through fidelity can be bought and resold so the value posted does change daily