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iShares Adv. Convertible Bond ETF
CVD-T
BUY
Feb 28, 2024
$16.370
Stock price when the opinion was issued
E.T.F.'s
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DON'T BUY
Adv. Convertible Bond ETF? They are late. Should have come out with these a year or two ago as right now there is very little value in the convertible bond market. Convertible bond market in Canada is very immature and consists mostly of small non-rated or junk issuers. A lot of them in the energy patch. A lot of REITs.
E.T.F.'s
DON'T BUY
Doesn’t like this very much. The convertible market in Canada is very low quality. It consists of nothing, but unrated, junior, subordinated debentures, issued by people who couldn’t borrow money any other way. There are very few decent industrial names in this, and a lot of them are energy names.
E.T.F.'s
DON'T BUY
The challenge is that they have an embedded link to the equity market. In that perspective, it becomes a hedge against inflation. If inflation is going up, which increases the interest rate, and the multiple of stocks will be affected. In this case, they will underperformance significantly. In this environment, he doesn't think this will work out.
E.T.F.'s
We like this list a lot; we might add BN into the group. ENB might be a little slow growth for a young investor but we do like it overall. On cash, we don't have a problem with holding some, but if we assume a new job means more money potentially coming into the account then we might start with 5% not 10%. We would suggest CVD for fixed income as convertibles may do well over time and as rates go down.
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