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Technical view: iShares Ultra Short-Term Bond ETF (ICSH)

Technical view

ICSH is in stage #1. BlackRock’s ultra short-term bond ETF is not necessarily an investment for dividend growth or capital appreciation. But I think I should mention it here for one specific reason and that is that I use this ETF to park my cash in. For years, I was looking for a stock that can work as a cash account, hold value, and pay decent dividends (or interest). ICSH fulfills this goal. If you look at the chart above, it looks choppy, but if you look at the chart below, you will see that this fund holds value. But don’t get fooled by the choppiness. If you look at the drops, the fund declines by 20 cents only! That is merely a 0.40% drop! Compare it to stocks that can lose 20% just because of a not so good earnings report! During Covid plunge, ICSH lost 2.93%. Many other stocks lost 20% or more. Apple lost 30.3%!
Of course, you may always keep your unused funds in cash, but then they keep sitting in your account doing nothing. I didn’t like it, mainly during low interest rates. Brokers paid 0.002% APY in your cash. And since I use margin for my trading, I need to keep large amounts of cash in reserves. And I didn’t like that these reserves are doing nothing.
So, ICSH does:

  • Holds value. The price fluctuation is minimal and acceptable. Today, these fluctuations are lower than the current inflation.
  • It pays dividends. It is not much, only about 0.21 per share, but at current prices it represents 3.80% yield. Not bad for this type of stock!
  • It is cheap. Its expense ratio is 0.08 (compare it to ARK, for example).

Technical view weekly

The long-term weekly chart may look scary, but the movements you see are only about 0.2% range. It is an acceptable money preserving vehicle.

Technical view weekly

And when we zoom to 2022 bear market, the fund only lost $0.65 or -1.28%. To me this is perfectly acceptable, and I will keep using this fund as my money storing vehicle with peace of mind that I won’t wake up the next day seeing that the position lost 20% overnight because of bad earnings.

The stock is now BUY

This post was published in our newsletter to our subscribers on Sunday, September 24th, 2023. If you want to learn more about our stock technical analysis subscribe to our weekly newsletter.

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