This ETF is a bet on declining interest rates. It has a current annual yield of 2.33%, paid quarterly.
Vanguard Extended Duration Treasury Index Fund ETF Shares (EDV)
From Safe Money Report
Vanguard Extended Duration Treasury Index Fund ETF Shares (EDV, Rated “C”) has nothing to do with stocks, so it won’t increase your market exposure. Instead, it’s designed to track the performance of the Bloomberg Barclays U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index.
I know that’s quite a mouthful. But here are the most important, basic facts for you to know:
1. Treasury “STRIPS” are specialized securities that represent single coupon or principal payments made by underlying Treasury bonds.
2. The longer-term ones that EDV focuses on are particularly interest-rate sensitive.
3. EDV is therefore a bet on lower rates.
If a recession comes, the Federal Reserve will respond by cutting rates further. Throw in downward rate pressure from demographics and “Japanification” of the global economy, and you can see why EDV could rally even further. It’s also extremely cheap to own given an expense ratio of just 0.07%.
Mike Larson, Safe Money Report, 1-877-934-7778, www.weissratings.com, October 2019