John HoodiShares Core Canadian Universe Bond Index ETFXBB.TOCOMMENTJan 31, 2014

Has a duration of 7 years, typical of these kinds of bond ETFs in Canada. Includes federal, corporate, and provincial bonds. Is the grandaddy of this kind of ETF.

About 75% is government bonds and 25% corporate Canadian bonds. It has a 3.3% yield. Although down over the past three years, there should be upside if bond prices appreciate. In general, for fixed income you can hold some cash but should also have bonds.

Gives you a broad, diversified basket of bonds (federal, provincial, corporate) and charges an MER of 10 basis points. Period of 7.5 years with a yield at maturity of nearly 4%.

A universal bond ETF for Canada? If you want an ETF that gives you a cross-section of Canadian bonds, then buy XBB-T. If you want something more global, then Google "global bond ETF" which you can buy and hold long-term.

HED-T Active managers don't beat bond indexes, net of fees. But he likes XBB which offers the a straight, simple Canadian bond universe and is cheap; it'll perform just as well as an actively managed bond index.

The broad Canadian bond market. The interest rate risk on the broader market is at 7 which mean if we see a 100 basis point increase in interest rates, you will lose about 7% in terms of capital. It is not time to step in yet. If interest rates went up 25 basis points then it would be time to move in. Don’t extend duration until interest rates go up a little but.

Continue Exposure to XBB-T? Everyone is disappointed in the return on bonds. The XBB-T is a mid-term bond ETF. The return is low but that does not mean you should be piling into equities. You are adding to risk if you don’t have this exposure. If you sell, then buy some money market.

The entire Canadian bond world. You should not pay active management fees for fixed income because active managers cannot make a big enough difference to make their fee.

Interest Rates. Entire Canadian bond market. There is a scarcity of 10 years bonds and higher in the US market. For the foreseeable future, the long end of the curve should stay well anchored unless we see inflation pressures, which we shouldn’t. The trend is still up, even though we had a high in 2012/13. It is a place to invest and diversify in your portfolio if you are negative on the outlook on stocks.

To buy the Canadian bond market. Government and corporate. Also, likes XHY for high yield, although it is non-investment grade corporate.