BMO HighYield Corp Bond US Hedge to CAD ETF (ZHY.TO)

BMO US High Dividend (ZWH-T) or BMO High Yield Corp Bond US Hedge to CAD (ZHY-T)? He would grudgingly prefer the ZWH, but he really doesn’t like any products that are traditional income interest rate sensitive.

This is a high yield fund so rising interest rates are not going to impact it that much. High yields are much more correlated to equity market performance than it is to bond market performance. This one should do okay. 6.3% yield.

This is high-yield bonds in the US and if you are going to be buying high-yield bonds, this is one that he likes a great deal. As a small portion of your portfolio, he thinks it makes sense to use them.

He is looking increasingly at high-yield and getting away from nominal bonds because the risk/return is a favourable trade-off. Feels that corporations are at least as creditworthy as the governments are and they are paying you a bit more.

If it is part of your bond mix then you should think again. This is part of your equity portfolio. US economy is still weak and has higher than average bankruptcy rates. This ETF will do badly if there is another financial crisis. You might want to go to higher quality companies and dividends.

High yield is still a good play in the current market. Price gains are done and it will yield 5.5-6%, which is still attractive. High yield gives you more asset diversification than others.