-
BMO Ultra Short-Term Bond ETF (ZST $49.00)
-
BMO Ultra Short-Term Bond ETF (ZST.L $61.78)
-
Vanguard Ultra-Short Bond ETF (VUSB $49.76)
Q: Can you discuss the potential risks / concerns owning VUSB:us. US interest rates changing effecting the stock price. ect. Would the same risks apply to ZST.L? I own these in both RRSP and TFSA accounts. Should US dividend stock held in an RRSP and not a TRSA account?
Thanks
Brian
Thanks
Brian
5i Research Answer:
VUSB holds ultra-short term US investment grade and government bonds (typically between 1-2 years in maturity). They have some interest rate risk if rates rise (prices decline), but since the maturity is so short, price impacts will not be as significant as longer-term bonds. These are high-quality bonds though, and so default risks are quite low, but there are some interest rate risks. ZST has very similar properties to VUSB, but its average maturity of the bonds it holds is even lower (less than one year).
US ETFs that hold US equities, bonds are exempt from withholding tax in an RRSP, thus we would prefer to hold VUSB in an RRSP.