iShares 1-5 yr Ladder Corp Bond ETF (CBO.TO)

Conservative corporate bond strategy, only out 5 years which is where you want to be. Losses over the next couple of years should be cushioned.

The problem is, how do you deal with these premium bonds. Very limiting in terms of what you can do to manage that portfolio. He would be more inclined to go towards something that has a broader and much more diversified bond portfolio. He would look at the iShares Cdn Short Term Bond (XSB-T).

Writing naked puts to keep a fair bit of US/Cdn cash on hand. Concerned about rising interest rates. What about high yield bond funds? He would not put it in a high-yield bond fund because, in effect, what you are doing is cash securing a put option that you’ve sold. CBO is a good place and there’s nothing wrong with this. An interesting product only because the portfolio tends to be holding longer-term bonds issued by banks and credit worthy customers, but they are callable bonds within 5 years. CBD-T is another product you could use.

Likes this as a concept idea, but there is no single income product out there that he genuinely likes. This has been pretty much flat now for 6 months. In the rate cycle, he is struggling and using equity linked GICs in his own practice.

Stock vs. Stock: XTR or CBO. Laddered fixed income. The yield is lower and the cost is higher than XTR.

Based on Bank of Canada statements, we are probably not going to see an interest rate hike in the next 12 months, but it is also about how the US handles the next year. Once the Fed really pulls back on QE, the economy will falter and interest rates won’t go up there either. This one is a fine holding. Don’t worry about the underlying volume, as long as it trades with a penny or two spread.

iShares DEX Universe Bond (XBB-T) or iShares 1-5yr Laddered Corp Bond Fund (CBO-T) for the best long-term hold? These are 2 very different things. The XBB would have lost you money. It is two thirds government and one third corporate. Has about 750 names and would’ve lost about 1.5% last year with a yield of about 3%. The CBO is short in duration with a yield of around 4% and the duration of about 3 with about 45 names in it. It is laddered 1 to 5 years and this is his preference if you must be in bonds.

Basically a 1-5 year laddered corporate bond portfolio, so you are buying corporate bonds. In theory they have short-terms to maturity. If looking at fixed income instruments throughout next year and probably the next couple of years, you want to keep your duration short. This fund yields more than you would expect given the short 1-5 year terms. This is because the manager of the fund is buying longer-term bonds, where the Call dates are 1 to 5 years. Most of those particular bonds, high-quality, are virtually all called within the 5 years. Good fund.

This is a major holding of his. Surprisingly, for all the interest-rate rise we have been worried about all summer, it hasn’t been that bad. This is in the corporate sector, rather than the government. He is starting to look for alternative managers in the corporate bond space and you may want to look at some active managers rather than an ETF. If you are willing to put up with a little volatility in the near-term, it is a great little play.

BMO Canadian Dividend ETF (ZDV-T) or iShares 1-5 Yr Ladder Corp Bond ETF (CBO-T) for income, not so much increase, but also for a big downturn? He would go half and half. This one is a laddered 1-5 years corporate bond. What is interesting is that the yield is higher than one would expect on a 1 to 5 year laddered corporate bond portfolio. They are effectively buying longer-term bonds, but they are looking at and tracking the duration to the Call date of the bonds.

What will rising interest rates do to this ETF’s dividends? Doesn’t matter what it is, this is an environment that is going to hurt bonds. Likes this one and has used it in the past until about 1.5 years ago but he can no longer justify using any kind of a bond ETF in his portfolio if he can help it.

Very heavily weighted in banks. The one problem with this is that there are relatively few bonds in it. His issue would be the price paid for some of the bonds. You have to look at the quoted yield relative to the yield to maturity. If there is a big discrepancy, you might want to look at easing up on this a bit. He wouldn’t have this in his portfolio because he likes banks through the Covered Calls.

What happens to the value of this, assuming that interest rates stay in a tight range for the next 5 years? If yields stay in the general range, the 1 to 5 years ladder will perpetually drop off the shortest bond and replace it with bonds maturing in the 4-5 year bucket. The performance of this one will change marginally on the steepness of the 1-5 year part of the curve. The steeper the curve, you will be picking up more yield as you drop off the old bond.

Laddered corporate bond exposure. CBO-T 1-five-year ladder or CBH-T 1-10 year ladder? He prefers the 1-10 year ladder because for one thing, the yield spread between 5 and 10 year bonds has averaged over 1% for the last 25 years so if you stop at 5 years, you are giving up a lot of extra yield. Also, you can diversify more by credit. Five-year is really too short.

Is iShares S&P/TSX Preferred Fund (CPD-T) or iShares 1-5 Yr Laddered Corp Bond Fund (CBO-T) better for safety for a retiree? This is not apples to apples. He likes CPD better. Feels there is a fair amount of risk in bonds. If there is a situation where there is corporate province not being as good, then CPD could go down more quickly than bonds. Both of them have been pretty much flat over the last year or 2.