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Vanguard Canadian Aggregate Bond Index ETF (VAB $23.33)
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iShares Core U.S. Aggregate Bond ETF (AGG $100.48)
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SPDR Bloomberg 1-3 Month T-Bill ETF (BIL $91.75)
Q: I believe that Warren Buffet has most of his fixed income in short term bonds. Longer term or shorter term strategy in today’s context? I would also appreciate your reasoning, so as to better understand bonds
Thanks
Thanks
5i Research Answer:
We think short-term bonds can work well as they are providing a nice yield right now, and there is the potential for a series of rate cuts to take place, particularly in the US. Long bonds can outperform short-term bonds if yields drop rapidly, but we feel this would require a shift in the expectations for inflation. For an investor that is mostly seeking income, with minimal capital gains, we like short-term bonds. For an investor that is looking for a mix of capital appreciation and yield, we think long-term bonds can eventually work out here.
But, in general, we prefer the aggregate bond ETFs (AGG or VAB) as they provide a good combination across the yield curve.