iShares Cdn Corp Bond ETF (XCB.TO)

Duration of this fund is just under 6 years. The risk is that it drops 6-12% over the next 2 years if rates rise.

Thinks interest rates on a 10 year bond will probably be close to 3% by year-end. He is not a believer that interest rates are going to explode at the back end and rise dramatically. Feels the demographics in the marketplace have put us into a position where people are starved for yield and are buying any kind of income instrument they can, including bonds. That huge demand for these kinds of products may actually suppress interest rates. Higher interest rates are good for banks and that is why he is in banks. He would switch from the XCB to iShares 1-5 yr laddered corporate bond fund (CBO-T). You are still in corporate bonds, but they are bonds that are callable within 5 years, so you are getting a very good yield, equal to what you are getting on the XCB and theoretically you are having a lower duration.

They are relatively active with managing these things. They have managed the problem of bonds having to be bought at premium prices and then they mature at a loss. Likes this one. XSB-T is also good. They also had very little capital losses from maturing bonds.

What is the basic difference between the Horizons Active Corporation Bond (HAB-T) and iShares DEX All Corporate Bond (XCB-T) ETFs? He is more familiar with the XCB. He knows they are both fine. Doesn’t know enough about HAB to give you a real contrast. This one is Corporate bonds in Canada, so it is very broadly diversified. Reasonably low cost. He would feel that the one with a lower cost is the better product.

This has had a great year and the units are up about 10%. Moving forward, you have to be ready for a different rate of return. Double-digit rates of return are not a realistic expectation for 2013. Feels corporate bonds will outperform treasury bonds but that would be 2%-3% in 2013.

He generally prefers the ladder. XCB follows all corporate bonds that make up the benchmark. The various ladders from Claymore and BMO smooth out the returns but otherwise there is not much difference.

He doesn't have any signal that rates are going higher so for the time being you will collect a nice yield from this. Thinks you will be okay for a while yet.

Has done very well. Will depend on where interest rates are going. These are high quality bonds and will act little bit closer to what long-term government bonds are going to do. If you are a believer that interest rates will remain low for some time, you get a good yield of around 3.8%-4%. If rates start to move up, then you have to be careful.

This would be if you just want to just buy the bond market itself. Federal government, provincial government and corporate bonds all blended in. It will produce the average return of the bond market and is very safe. It will provide you decent income.