Terry Shaunessy iShares DEX Short Term Bond XSB-T COMMENT Jul 05, 2017

Some bond ETFs. Can invest $50K It's fine. It holds quality short-term bonds. both federal and provincial. He's owned this many times. He doesn't know ZCS. Also consider ZAG which holds short-, mid- and long-term bonds. If rates stay flat or decline, ZAG will do well. If you have $50K, buy two or three of these ETFs to spread the risk. Check the duration and credit rating of each.

Some bond ETFs. Can invest $50K Also consider ZAG which holds short-, mid- and long-term bonds. If rates stay flat or decline, ZAG will do well. If you have $50K, buy two or three of these ETFs to spread the risk. Check the duration and credit rating of each.

Last November it was about being cautious and taking advantage of short-term rates. We're in a new world, getting 4-5% in safe T-bills. This was about being safe and getting cash while sitting and waiting.

Look at your portfolio and make sure you're balanced appropriately. Do you have enough fixed income? If a 20% decline in the TSX or S&P, how does that make you feel? Still likes it as first line of defense in portfolio diversification.

Likely that interest rates are coming down. BOC overnight lending rate is 2.75% right now and headed lower. Short-duration bonds are just going to yield less and less, and you can't enhance that yield without taking on more risk. More risk involves either extending bond duration or buying lower credit quality (and that's a big risk with markets the way they are today). Yield spreads widen when we get volatility. When a low-quality bond starts to yield more, that means its price goes down. 

So he likes the short-duration aspect of this ETF. He's used it himself for cash management. You won't make the kind of returns you made in the past. To get a higher yield, you may want to diversify into preferred shares or some very high-quality equities.