MarketWatch: "Negative-yielding bonds do not mean negative-yielding bond funds"

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MarketWatch: "Negative-yielding bonds do not mean negative-yielding bond funds"

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!