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Brookfield Infrastructure Partners L.P. (BIP.UN)
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iShares Core Canadian Long Term Bond Index ETF (XLB)
Q: RIF account looking for consistent income and some growth
Getting the feeling we are at or nearing the end of rate hikes (CDA and US). However, I'm also feeling we are in for a longer period of higher normalized (current) rates
Question: Is long term bond XLB worth holding on in the higher for longer environment? I'm contemplating a switch to equity and BIP.UN (preferring the currency diversification). Your thoughts on rates and the switch
Getting the feeling we are at or nearing the end of rate hikes (CDA and US). However, I'm also feeling we are in for a longer period of higher normalized (current) rates
Question: Is long term bond XLB worth holding on in the higher for longer environment? I'm contemplating a switch to equity and BIP.UN (preferring the currency diversification). Your thoughts on rates and the switch
5i Research Answer:
We think Canada rates will start to decline well ahead of US rates. It might be a slow decline but we think the peak has been made for a while. XLB, with a 4% indicated yield and high leverage to rates, could do much better in the next two years. It is now, at least, up on the year. It is very tough to compare an ETF though with a single company. We like BIP.UN here and it should also do well in a differing environment. But we would not see XLB as a SELL just as rates are starting to pivot.