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BMO Mid Federal Bond Index ETF (ZFM)
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iShares Core Canadian Long Term Bond Index ETF (XLB)
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Vanguard Canadian Short-Term Bond Index ETF (VSB)
Q: Hi 5i,
In today's environment; October 17, 2023.
If one wanted to purchase a Canadian Passive Fixed Income ETF to hold in a TFSA for 1 to 3 years and then potentially sell. Can you suggest some ETF's that might give out sized Total Return. My goal is Total Return and not necessarily High Yield.
In today's environment; October 17, 2023.
If one wanted to purchase a Canadian Passive Fixed Income ETF to hold in a TFSA for 1 to 3 years and then potentially sell. Can you suggest some ETF's that might give out sized Total Return. My goal is Total Return and not necessarily High Yield.
5i Research Answer:
It is a difficult call, as the best return will depend on how interest rates move over the time frame noted. Also, of course, higher returns come with potentially more risk. XLB is a long duration bond fund. Bond prices move inversely with rates, so if rates fall, it will likely recover very well. But, this year, with higher rates, it has lost 6%. VSB is a short term fund, so is less volatile. But will have less upside. Considering we do not know exactly where rates will be in three years, we would side with a medium duration bond fund such as ZFM.