Hi all,
I was scrolling through the full list of BNDW holdings, as I was considering moving from BND to BNDW. I noticed in the holdings that BNDW holds are pretty large chunk of zero coupon bonds, and was curious why that’s the case as it hurts the overall yield of the fund. The only reason I could come up with is that zero coupon bonds could be purchased at a heavy discount. Unsure if holding them to maturity would then increase tax efficiency of the fund (taxed as capital gain instead of ordinary income)? Appreciate if someone smarter than me has a good explanation.