Daniel Straus BMO Short Term Provincial Bond ETF ZPS-T COMMENT Aug 20, 2019

When rates go up, bonds prices fall, and vice-versa. Because this is on the short end of the spectrum it's less sensitive. BMO has a grade of 9 products for the 3 major exposures (corporate, provincial and federal bonds) and the 3 major terms lengths (short-term 0-5 years, medium-term 5-10, and long-term 10 and above). BMO's aggregate bonds until recently, ZAG, was made up by mixing those 9 products, they've started to unwrap that and now they owns the bonds directly. You need to look at the yields to maturity and total return chart. Many bonds are trading at a premium of their par-value, and if this ETF is rolling those bonds its net asset value is going to decate over time even if you are collecting a coupon that compensates you for that. So not very tax-efficient. ZPS is probably one of the better ones since it doesn't have those medium or long-term bonds. Provincial bonds are in between, they have medium risk in the world of fixed-income investing. For a core bond holding you might want to have ZAG which has a 7-8 year duration and mix in a little bit of the short-term. Maybe a little too sensitive to interests rate but not the case if you are banking on them falling and you want to participate in the price appreciation.