Gyroscopic Investing

Today I was looking at the treasury bonds available at Fidelity vs E-Trade, looking for the highest-yielding.

Fidelity has the 2/15/2041 zeroes available for purchase at a 3.131% yield ($41.446).

E-Trade has the 5/15/2042 zeroes available for purchase at a 3.149% yield ($39.613).

This is actually a 4.4% difference in price. Makes me wonder whether a better price might exist at yet another broker.

At both brokers, selling the bond in an emergency will set you back 1.4% to 2.1% in spreads. To add insult to injury, last time that I tried this, neither broker accepts standing Limit orders - all bond orders are Fill Or Kill, meaning, you pay the ask / sell the bid, or the transaction automatically cancels.

Is this normal? I remember looking into this a few years ago and deciding to stick with TLT/EDV.

Looks like this was posted in AM with no responses. Seems important, so I am going to bring back to the top.

atrchi, the two prices you listed are consistent with the corresponding yields and maturity dates. See for yourself by using this online zero-coupon bond calculator: http://www.miniwebtool.com/zero-coupon-bond-calculator/

The two prices are different because of the 15-month difference in the maturity dates. If you really want an apples-to-apples price comparison between two different brokerages, make sure you're looking at the same bond at both places (i.e., same maturity date).

Good catch. I found comparables at the 2/15/2041 maturity.

E-Trade: $41.242 3.149%
Fidelity: $41.123 3.159%

Now the difference is only 0.3%. That's a bit more reassuring.

But the spread is still horrible and nothing you can do about it, some I'm sticking with EDV which at least you can work around the spread.