FT Started Making More Sense to Me Once I Compared It to a Zero-Coupon Bond
This was probably the simplest way for me to understand how TermMax FT works.
You don’t receive periodic interest payments.
Instead, you buy the FT below its face value and, if held until maturity, receive the full redemption value.
For example:
$95 today
→ $100 at maturity
The $5 difference is the return built into the position, assuming the FT is held to maturity and the stated redemption terms apply.
What changed my perspective is that I stopped looking only at the headline APY.
For me, the more useful questions are:
• What is the purchase price?
• How much time is left until maturity?
• What is the redemption value?
• How easy is it to exit before maturity?
That last one matters more than it might seem.
A fixed return can look attractive on paper, but if I need liquidity before maturity, the actual outcome may be different.
So I’d look at an FT less like a typical yield product and more like a maturity-based position.
Would you look at an FT this way too, or do you think the bond comparison misses something important?
#termmax @TermMax
This was probably the simplest way for me to understand how TermMax FT works.
You don’t receive periodic interest payments.
Instead, you buy the FT below its face value and, if held until maturity, receive the full redemption value.
For example:
$95 today
→ $100 at maturity
The $5 difference is the return built into the position, assuming the FT is held to maturity and the stated redemption terms apply.
What changed my perspective is that I stopped looking only at the headline APY.
For me, the more useful questions are:
• What is the purchase price?
• How much time is left until maturity?
• What is the redemption value?
• How easy is it to exit before maturity?
That last one matters more than it might seem.
A fixed return can look attractive on paper, but if I need liquidity before maturity, the actual outcome may be different.
So I’d look at an FT less like a typical yield product and more like a maturity-based position.
Would you look at an FT this way too, or do you think the bond comparison misses something important?
#termmax @TermMax