iShares 20+ Year Treasury Bond ETF (TLT)

He thinks we are in a recession already and it will get ugly, though economic numbers and the street's perception is that things are fine. You want to be long USD and long TLT. If deflation and the USD rises in the US, long-term interest rates will crater.

Many seek safety in the bond market, unless you get years like 2022 and 2023 when interest rates rise quickly. Also, a long-dated bond is risky if rates run up like last year. That said, bonds have better return prospects than stocks. If we enter a recession, the more likely there will be rate cuts and the longer the term of the bonds the greater the price impact. Hang on, don't sell, if you already own.

It's scary when an equity guy comes on with a bond ETF idea. He's more comfortable with the bond market as a safer bet this year. Interest rate impact will feel its way into the economy at some point this year. Rates will stay higher for longer, but the curve inverts a bit more, and a rally at the longer end of the curve will benefit the bond market. In a weaker environment, that will help. Very safe, very liquid. Great hedge to your portfolio.

He has no idea whether it will outperform equities in 2023. This is too short a time horizon for him to comment. If you feel that interest rates and inflation are likely to stay low for the next 5-10-15 years, absolutely long-dated government debt will provide you with the best bang for your buck. Canadian investors benefit not only from the price going up if rates and inflation go down, but typically the USD gains against the CAD so you get a boost from the currency translation. You also get an interest payment of 3-4%. For people who don't need the money for 5 years, fixed income still plays an important role in an investment portfolio.