Greg NewmanBMO Ultra Short-Term Bond ETFZST.L.TOBUYAug 01, 2024

Nothing wrong with CBIL at all, especially in a registered account.

He very much likes ZST.L from BMO. The "L" unit gives you the ability to convert the growth in that money market holding into a capital gain. This is for a taxable account.

If you're talking millions and millions of dollars, the miniscule differences in the rate you get can really add up. If you're talking normal amounts, don't sweat the varying differences in yield.

It depends on the holder. To make it more tax-efficient, you need to hold it in a taxable account. Let's say you bought at the beginning of the year, and you earned 3% (earned, but not distributed), the value will have gone up 3% by the end of the year. 

If you sell it before it reaches its tax date at the end of the year, then theoretically it will trigger a capital gain in the asset. Thereby turning fixed income returns into capital gains. Not the core purpose of the fund, but a very nice idea. But you have to be active to do it.

You want to put yourself in a strong position to be able to buy, because other people are late to the game and selling because they have to. You could go into a high-interest savings account with your financial institution. 

But he likes this BMO product. Pays you a bit more. Steady-eddy, 12-month basket of rolling, short-term, investment-grade bonds. Almost as safe as cash, with a slightly better yield.

(Note the short timeframe.)
A substitute for cash when you're feeling a bit cautious. Slow and steady, conservative. When he chose it markets were selling off, presidential election was looming, seasonal weakness was upon us. And then the bull market resumed a week later.

In his portfolios, he can go between 100% equity and 100% cash. When things go awry, he can sell equities and go to cash. For him, this means short-term money markets and bonds. This ETF holds bonds with maturities of less than 1 year. It's like cash that you earn a bit of money on. Yield is 4.9%.

A call on being conservative. He started to see a bit of weakness in some of his indicators; understandable given how fast markets came down, combined with seasonality, economic outlook, and political cycle. A place to go with so many uncertainties out there.

This pick is the ".L" version with accumulating units; reinvests proceeds as interest comes in. More tax-efficient for non-registered accounts, such as cash and margin accounts. The plain vanilla ZST is good for registered accounts.

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.