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iShares Core Canadian Short Term Bond Index ETF (XSB)
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iShares Core Canadian Long Term Bond Index ETF (XLB)
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Vanguard Canadian Aggregate Bond Index ETF (VAB)
Q: What type of bond funds are best to invest in right now? Long term duration or short term, funds or can I buy individual bonds? Could you make recommendations for investing in todays market for the bond side of portfolio. I would prefer to make a 4-5% dividend but don't know if that is possible. Thank you!
5i Research Answer:
In the current market, with the amount of uncertainty and the prospects for weaker inflation readings due to structural forces (weakening oil prices, the housing component continuing to declining), we think that interest rates can come down over the next couple of years. For short-term price stability and a decent yield, we like short-term bonds (XSB ETF), but for a longer-term play with more upside potential, we like long-term bonds (XLB). In general, for an investor that is uncertain and wishes to gain exposure to the bond market, we like aggregate bonds (VAB ETF).
XLB pays a 3.9% yield, XSB has a 3.2% yield, and VAB has a 2.9% yield.