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BMO Mid-Term US IG Corporate Bond Index ETF (ZIC)
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Vanguard Intermediate-Term Corporate Bond ETF (VCIT)
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iShares Short Treasury Bond ETF (SHV)
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iShares 20+ Year Treasury Bond ETF (TLT)
Q: Good morning 5i
I am getting older and not sure i want to endure too many more stock market roller coaster rides. I am therefore thinking of moving into a higher bond allocation. You have mentioned yourself that even something like tlt could be a roller coaster. I am not adverse to getting some but I would like to know from you, what bond etfs you would recommend if one wanted , for instance, a 40/60 split between bonds and stocks. I am open to Canadian, too, but my intention is to keep fixed income in our rif, therefore, i would concentrate more on us bond etfs
Thanks as always
I am getting older and not sure i want to endure too many more stock market roller coaster rides. I am therefore thinking of moving into a higher bond allocation. You have mentioned yourself that even something like tlt could be a roller coaster. I am not adverse to getting some but I would like to know from you, what bond etfs you would recommend if one wanted , for instance, a 40/60 split between bonds and stocks. I am open to Canadian, too, but my intention is to keep fixed income in our rif, therefore, i would concentrate more on us bond etfs
Thanks as always
5i Research Answer:
TLT is volatile because it owns very long term bonds (20 years). Long duration bonds have more sensitivity to interest rate movements. A less volatile approach is to own bond funds of various maturities, or specifically short term or mid-term funds. We can suggest these: VCIT, for US bond mid-term exposure. ZIC is a TSX-listed US corporate bond ETF. IGIB is similar but US-listed. SHV is short term government bonds. Yield is relatively low but so is volatility. GOVT is a low cost (0.05%) general US bond ETF with an average duration of 6 years and an indicated yield of 2.93%.