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Larry Berman CFA, CMT, CTA BMO Mid-Term US IG Corp Bond Index ZIC-T COMMENT Apr 02, 2020

ZLC-T & ZIC-T. You have a little bit of credit risk in corporate. When you want safety the best bet is government, not corporate as you get exposure to corporate earnings. Do you want it for the yield or for the protection? Don't sell either one at the moment.

Larry Berman CFA, CMT, CTA

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COMMENT

This is investment-grade corporate bonds in the US. The yield is basically 60%-70% higher than on Canadian corporates. What he likes about US investment-grade corporates is the array of underlying credits. In Canada, it is roughly 50% of the corporate bond market which are financials. In the US, you get a broader array of industries.

DON'T BUY

He would avoid most of the fixed income ETF’s at this time. There are some potential rate changes in the US. The returns are significantly lower than what you would get by simply buying a high-quality dividend paying Canadian ETF.

PARTIAL BUY

This corporate bond ETF still holds some equity risk as it has corporate exposures. You have to be careful as bond markets have shown limited liquidity lately. The US has announced another $700 billion in assets, but sill be careful, but you could consider a partial buy here.

SELL ON STRENGTH

The interest rates should stay low and may even go lower. There is probably a couple more years of low interest rates anchored at 0%. He would look to exit this holding, especially since he expects the Canadian dollar to firm up next year.

PAST TOP PICK

(A Top Pick Jan 09/23, Down 0.2%)

Cast position for risk adverse investors.
Higher interest rates providing risk-less return.
Would recommend.

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Larry Berman CFA, CMT, CTA BMO Mid-Term US IG Corp Bond Index ZIC-T COMMENT Apr 02, 2020

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