Q: Hello 5i team,
I have held HBND since Feb 24 and it has been on a steady slow decline (along with the payout) ever since. I think you mentioned that lower interest rates are always better for this ETF. In light of the US lowering there rates in the coming year, will this be good for HBND?
Net assets is currently 212 M according to there website. Do you have any knowledge if this is growing? I am asking this because although the payout is decreasing, it is still pretty good and would not want this ETF to close down like what happened to HYI.
Thank You,
Andrew
I have held HBND since Feb 24 and it has been on a steady slow decline (along with the payout) ever since. I think you mentioned that lower interest rates are always better for this ETF. In light of the US lowering there rates in the coming year, will this be good for HBND?
Net assets is currently 212 M according to there website. Do you have any knowledge if this is growing? I am asking this because although the payout is decreasing, it is still pretty good and would not want this ETF to close down like what happened to HYI.
Thank You,
Andrew
5i Research Answer:
Lower rates are usually good for bonds, and even better for long term bonds, which is what HBND focuses on. However, the yield curve can shift at times, and right now shorter term bonds are seeing more declines in rates than long term bonds. Inflation is still a worry for sector investors in the long term. HBND grew its assets by about 27% last year. We would view it as big enough and profitable enough to not see closing as a real possibility in the short/medium term. The fund has a one-year total return of 3.97%. We would expect better this year.