iShares Canadian Long Bond ETF (XLB.TO)

If you expect rate cuts and softer growth, you may want ZLC or XLB. If you're a bit higher income and willing to accept business cycle risk, then you can go into high yield bond ETFs -- XHY or ZHY.

As a DIY investor, it's really hard to get access to the best-quality bonds. Generally if you buy them on the secondary market, you're buying at a premium. He'd be comfortable owning bond funds through ETF structures such as XCB or XLB on the TSX. 

MER is about 20 bps. Very long bonds, 14 years of duration or so. Rough performance with interest rates moving higher, as have a lot of other bond strategies. YTD, down 7.4%. Rates were supposed to move down, but have inched up.

Over time, long end of curve should start to drop, but still a risk with long-term bonds. Nice yield of about 4%. Short-term bonds will give you much the same yield, but without duration risk.

This one would do phenomenally if rates were to come down on 10, 15, and 20-year bonds.

While we would be quite comfortable buying long term bond funds right now, and can suggest TLT and XLB (for Canadian) it does require a belief that interest rates have peaked. Long bonds have the most leverage to interest rates. If rates do not drop as expected, losses on such funds can be amplified. TLT, for example, is still down 8% over one year even with  very significant rally this month. A spike in inflation would hurt these funds quite a lot. Thus, we see them as much more aggressive fixed income holdings. That being said, we do think rates have now peaked.
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Commodities will be lower for longer, but we're in a global cyclical upturn. This will lift commodity ETFs including this one. It's a decent holding, but also look at emerging markets.

(Top Pick Apr 16/12, Up 5.46%)

(A Top Pick Feb 23/12. Up 4.83%.) Chart shows this is still basing at around $23 and has potential to go up. Risk/reward is pretty good.

Possible this is the worst investment for long-term hold one could make. When you factor in inflation, tax on distributions and MER, then you have no real return on your money. Shy away completely from it. Doesn’t mean you can’t trade it.

Long bonds are the only things negatively correlated to XIU-T

Bond prices have been flat for 5-6 months, locked into a trading range with no indications of a change.

20 year and longer bonds. If you are bullish on stocks short term then you don’t want to own this. Bond yields can only go so low. Good as a trading vehicle. You can use this from time to time to hedge equity exposure but it has volatility.