-
iShares 1-5 Year Laddered Corporate Bond Index ETF (CBO)
-
iShares 1-5 Year Laddered Government Bond Index ETF (CLF)
-
iShares Core Canadian Universe Bond Index ETF (XBB)
-
iShares Core Canadian Long Term Bond Index ETF (XLB)
I have equal amounts in CLO and CLF. Wondering if it might be a good idea to swap one of these for the longer term XLB Bond Fund to hopefully play the downturn in interest rates? If so which would you swap and why? Is there a safer trade with equal potential with less risk then XLB?
Thanks
Jeff
CLF has an MER of 0.17%, net assets of $548.7M, distribution yield of 2.29%, year-to-date return of 2.76% and a 5-year average annual return of 1.10%. CBO has an MER of 0.28%, net assets of $714.3M, distribution yield of 3.01%, year-to-date return of 2.76% and 5-year average annual return of 1.81%. We are fine holding both CLF and CBO but if one were to be swapped we would suggest CLF because of it offers less growth potential being focussed in government bonds while also paying a lower distribution yield.
We like the idea of swapping 'some' into XLB because the previous two mentioned are quite similar in terms of strategy, so diversifying into a long-term bond fund like XLB is a good option. We are quite comfortable buying into XLB right now but another option that we like is XBB. Keep in mind this does shift interest rate exposure to the long end of the curve. If rates fall, XLB should perform better, but of course the opposite is true if rates do not move as expected.