Opinions
Larry Berman CFA, CMT, CTA
iShares Canadian Real Return Bond Index ETF
XRB-T
DON'T BUY
May 16, 2022
Get paid a rate of inflation plus a small coupon. How much future inflation is priced in? Unless you know, can't buy and expect to be protected against inflation. Would not recommend individual investors to buy it. Need to be very sharp on technical financial aspects to play with those.
$23.220
Stock price when the opinion was issued
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COMMENT
Real return bonds are all about anticipating what future inflation is going to be. The additional payment you get is relative to actual inflation expectation. How much is priced in matters. Unloaded in December since he though inflation expectations were priced in. There is a short term buying opportunity now that it has come off a little. Need alternatives for fixed income.
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PAST TOP PICK
(A Top Pick Jul 16/21, Down 15%) You get a real-return bond that will perform linked to the inflation rate. As inflation rises, this will yield more. However, this holds very long-duration bonds (over 15 years), rising rates overwhelmed the inflation coupon on the bonds, so that created a serious decline. See top picks for an alternative.
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