Opinions
Stan Wong
iShares US Aggregate Bond Index ETF (CAD-hedged)
XAGH-T
HOLD
Jan 11, 2024
N/A
Stock price when the opinion was issued
0
It's the ideal tool to help you make quicker, more informed decisions for
managing and tracking your investments.
You might be interested:
DON'T BUY
Similar to AGG, one of the largest in the US. Down about 9% YTD, all about interest rates moving higher. Duration of 6.5-6.6 years, so rising interest rates will have a negative effect on the pricing. 18 bps for this version. AGG is only 3 bps. You don't really need to hedge the CAD these days. Not a fan of long bonds today, as rates can push higher. He prefers short-duration or inflation-protected bonds, like the XSTP.
0
BUY
Seeing improvement in the bond space, as interest rates are forecast to move a bit lower. Bonds have definitely improved. This ETF is up 9.1% over the last 12 months. It's been a long time since we've seen high single-digit returns, given that rates were moving higher.
XAGH owns the entire US bond market, including corporates and governments, with a Canadian hedge. Do you need that hedge? In other words, do you think the CAD will move up toward the USD? If you think the USD will move higher or remain steady, then might as well own the US version, which is AGG -- it's probably cheaper, and you'll get the lift of the USD moving higher.
0
Advertising
Bonds and fixed income had a tough time the last couple of years. Now that we've seen interest rates fall (despite a bit of an uptick last 2 weeks), he does like bonds. CAD version of AGG, investment-grade government and corporate bonds. Yield of about 4+%. Up about 6.5% last 3 months.
AGG is significantly cheaper at 3bps, compared to XAGH at 20 bps. So consider switching, if you don't mind the USD exposure.