Q: Trading volume is good. Yield is similar to other cash savings etf but this has an advantage when held in a taxable account because it does not pay distributions. However it is trading for approx 1.5% premium. If there was no premium, I would buy it for a 9 month hold but the premium is more than half the yield I can expect for 9 months. Am I right that in my situation, pick another cash savings etf? To pay a premium is not a good idea for a cash etf no matter how good it is? What do you think? Thank you!
5i Research Answer:
The premium can and does vary, but for an investor with a short time frame the amortization of the premium (assume no change) is too high versus current yield. We would look elsewhere for very short term positions, as one cannot predict what the premium will be when it comes time to sell.