Q: I am 79 years old and retired. I have outstanding capital losses in my non-registered account. I plan to sell most of my bond ETFs, which currently pay taxable interest, and purchase shares in HBB (Horizons Canadian Select Universe Bond Index ETF - Corporate Class), which only accrues capital gains.
Could you please comment on this strategy? Would you consider it a wise or risky move?
Thank you.
Could you please comment on this strategy? Would you consider it a wise or risky move?
Thank you.
5i Research Answer:
We have no objections; HBB is not perfect, but it does what is says. 3-year return is 3.93%. Five year return is slightly negative due to the weak bond market over the time frame. But it is a good, large, diversified bond fund and capital gains of course are taxed better. After tax returns will likely be higher over time. We would use caution on the sales. If one of the ETFs is too similar to HBB then a loss could be disallowed under the superficial loss rules. If similar, we would wait 30 days before buying.