Q: What will be the impact of the Bank of Canada's likely rate cut from 2.75% to 2% on the ZAG or XBB ETFs?
Is it better to simply buy bonds directly rather than ETFs?
Is it better to simply buy bonds directly rather than ETFs?
5i Research Answer:
Rate cuts 'typically' have a positive impact on bond prices, but often this is priced in ahead of time and there may not be a move on the actual day of a rate cut. But, generally speaking, as rates go down bond pricing goes up. For most investors, we would still prefer ETFs. It can be difficult and time-consuming to build up a proper and diversified bond portfolio.