Opinions Daniel Straus
BMO Aggregate Bond IndexZAG.TOCOMMENTJan 13, 2017
Daniel StrausStock price when the opinion was issued
As of Sep 28, 2026. Market Open.
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Government and investment-grade corporates. You're finally getting paid again in the bond market. Bonds have become genuine competition for capital again. Liquid, diversified.
It's not that he thinks bonds will outperform stocks, or that interest rates are going to collapse. It's more about allocation within your portfolio. Bonds have really done nothing for the last 5 years, and equities have done really well. That can tilt your portfolio all of a sudden from 60/40 to 70/30 or 75/25. That materially changes the risk you have. It's all about having the right balance in your portfolio.
Inflation does remain a key risk for bonds. MER is 0.09%.
74% government bonds in Canada, rest in investment-grade corporate. Likes bonds at this stage, with interest rates calming and starting to come down. There will be small upticks pushing down the price of bonds, but up 6.6% in last 3 months. With yield plus potential for capital appreciation, makes sense to have as core part of your portfolio. Yield is 3.5%.
Stan WongCanadian benchmark bond ETF. About 30% corporate bond exposure. Very cheap. Largest fixed income ETF in Canada now. 7-year average duration, so a better opportunity now than 1-2 years ago. Works for portfolio ballast. He recommends "barbelling" it in with some shorter-term fixed income exposure ETFs such as CASH or ZMMK.
With rates coming down, bonds are seemingly back in favour. He likes shorter- to medium- (7-10 years) duration bonds. This ETF follows that strategy. You'll see some performance if rates continue to move lower. Decent yield of 3.6+%.
If you want something without duration risk, you could look at shorter-term bonds with a floating rate. Shorter-term yields are higher than long at this point. But you won't get that lift if bond yields come down.
Owns shares in ETF.
Good mix of bonds.
Would recommenced buying.
Believes interest rates will turn down which is good.
Expecting capital appreciation going forward.
Planning a 5-7% return within next 12 months.
Stan Wong
Fixed income or bond ETF? When he talks about bond ETF’s, he begins with what he thinks of as the core holdings. The core holdings will be the most liquid with the lowest fees and access to the whole market. These are for long-term Hold positions. The asset class he favours is aggregate bonds, a mix of government and corporate. In Canada, there are a good number of them. This Index recently had its fee dropped, and he believes it makes them the lowest cost one in Canada. A long-term aggregate Bond ETF, and will have duration risks, so if there are rate movements in Canada, it could suffer. He thinks Aggregate Bonds are the way to go. Dividend yield of 3.1%.