Stockchase Opinions

David Cockfield BMO Ultra Short-Term Bond ZST-T COMMENT Dec 20, 2019

These are very defensive short-term investments. Big assets manage these ETFs. ZST has a higher short-term yield although it is more risky. The risk is off-set by the term being very short.
$50.900

Stock price when the opinion was issued

E.T.F.'s
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BUY
It holds all investment-grade bonds, cheap cost at 15 basis points, and lasts only for a two-year duration.
BUY ON WEAKNESS
Corporate bonds that are maturing in a year or less. Total returns including yield equates to a healthy return. Good defensive name for investors.
BUY
Something safe to generate a nice income.

If you're looking for something safe, for 1-2 years and aside from GICs, he'd recommend ZST or ZST.L (this version accumulates the units). Yield would be ~4.9-5%. Very safe, very short-term with 3-4 month, investment-grade corporate bonds. Inexpensive. A way to get a diversified basket of bonds.

BUY

ZMMK and ZST are his two favourite BMO ETFs for money market exposure. He uses both in the bond fund he manages. Which one you chose depends on your risk tolerance. Both are excellent, look at both.

HOLD
Effect of lower CAD?

A short-term money market ETF is not going to be impacted by currency volatility. They're Canadian plays in Canada. Even though the BOC is a lot more aggressive in terms of cutting rates because the Canadian economy is significantly weaker than that of the US. 

WEAK BUY
Fixed income ETF for the next 2-5 years.

Not a fan of the bond market here and where yields are. But if you do need to rebalance, try this one. He likes it a lot, and it'll do you well for the next few years.

However, he'd suggest looking at the bonds in some of the ETFS and going out and actually buying the bonds. This way you avoid the management fee, and you can customize your outcomes better in terms of a laddered bond portfolio.

BUY

Nothing wrong with it. Duration risk issue with longer-term bonds, but these are short term. A good quality bond portfolio.

BUY

An ETF to park money and pays a good dividend. It has a little credit risk, but exposes you to corporate bonds for year, so it acts like a money market fund in a sense. However, it pays you a little more yield by 20-30 basis points.

BUY
Parking cash with safety.

An enhanced money market yield for short-term exposure. It's money market, but corporate bonds, so a slightly higher yield. Not a HISA, but similar to one.