WildAboutHarry wrote:
Agree about relative risk, but if you are expecting income of a specific kind, and the "treasury" fund only delivers 50% from that source, that is misleading on the part of the fund at best.
If this is "extra" income (income that would simply not be there if they didn't do the fancy lending) why do you care? I don't know the accounting rules, but I'm assuming if they have, say, $1M of LT bonds paying 3% they report $30,000 of however much income the fund generates as "treasury" interest whether these bonds are loaned out or not - and if they're loaned out they might generate an additional (wild ass guess) 1% interest, so $10,000 more. Given these numbers, they'd report 75% of their income from "treasury" sources - but the income would only be 75% of the reported total if they didn't do the lending. I think the bottom line is the lending generates more income than the bonds would generate without the lending - supporting the claim that this is a "net benefit" for the shareholder.
alvinroast wrote:
I'm a bit biased since I have close to zero trust in Blackrock.
I'm with you 100%. I used to keep all of my LT bond allocation in TLT and a very large portion of my cash allocation in SHY. Due to the various threads here about loaning assets and after some reflection about it, I've liquidated all the TLT in favor of actual LT bonds (this was remarkably easy - I would strongly encourage anyone here who
can buy LT bonds directly to do so), and I'm setting up a ladder of 2-year bonds that I'm moving cash into (out of SHY). I-bonds for cash are great as well, although the limits on how much you can purchase are kind of annoying.
Other people may completely trust BlackRock. I'm OK with that as long as it's an "eyes wide open" situation. However, someone with 25% LT bonds in TLT, 25% cash in SHY, and 25% gold in IAU has
75% of their assets with BlackRock. I'd consider this crazy. And I think Harry Browne would agree.