Excerpt from MarketWatch quoting DataTrek’s Nick Colas:
…. “Bonds with negative yields sound like be awful investments. So why are investors piling into bond ETFs?
Nicholas Colas, Co-founder of DataTrek Research, mused on that question in a research note out Thursday.
“The short answer is that negative yielding bonds still pay a coupon,” Colas wrote. “The negative yield comes from principal erosion over time. Plunk down $120 for a bond that pays $1 annually and redeems at $100, and you’re out $10. That’s the negative yield, not a bill sent to every bondholder”….
Read the full article here on MarketWatch!