Q: Is there an advantage to holding an ETF like ZAG compared to holding an ETF like GLB X HIGH INT SVGS-A? Which is more profitable in a non-registered portfolio?
5i Research Answer:
There is a big difference between a bond ETF and a high interest savings ETF. The latter is essentially risk-free (but no guarantee) and one can expect steady (but low) returns and minimal volatility. Bond funds can provide higher returns, and possibly decent capital gains, under the right conditions, but this comes at a cost of volatility. ZAG, for example, has had three annual declines in the past five years (and up 2.25% this year). If rates fall ZAG has the potential to do better, but nothing is guaranteed here either. For 'cash' holding purposes, we would stick with a high interest ETF.