Q: I am down on QTIP but liking the ~ 7% yield. What is it going to take to move the needle on this one (I own it for income but hate seeing the price down with no line of sight to recovery). What will make this bounce back to the $100-$105 range ??
5i Research Answer:
Many inflation-linked bonds have not performed as expected, and the recent rapid decline in inflation has hindered some of its performance. It is trading similarly to other bond ETFs, however, and a persistent downtrend in Canadian bond yields will help to move QTIP higher. QTIP has most of its bonds in the 1 to 10 year range, and thus any indication from the Bank of Canada that interest rates will be pausing will help to decrease short-term bond yields, and therefore increase QTIP. A change in the expectation for interest rates will help to give QTIP a boost in price.