Daniel Straus

People entered 2023 a bit skittish. Fixed income raked in new assets every single month through the start of the year, which only started to turn this November.

Yields have been going up since March 2022. Some of the long bonds have been on a steep decline, some 40-50%, from the moment that rates started to increase. Despite that, investors have been piling in every month, hoping to catch that bottom in the bond market.

A huge 50% drawdown is something that equity investors are used to, not US or Canadian long-bond ETF investors. And these are fortress-like, ultra-long-term bonds that you'd expect to be the ballast in your portfolio. Problem was that two years ago, with rates at rock bottom, there was really nowhere else for them to go.

Long bonds like this one have been in steep decline, some 40-50%, from the moment that rates started to increase. Fortress-like, ultra-long-term bonds that you expect to be the ballast in your portfolio. Yields are a bit higher than before, but we're still talking 3-4%. On such a price decline, it's cold comfort.

Throughout the year, equity ETFs have been pulling in meager amounts of assets month over month. We did see huge inflows into Canadian equities and US equities. A bit of a risk-on atmosphere took hold in November, even crypto was doing well and some tech stocks. It bodes well for 2024.

An oft-repeated question is "Is the 60/40 portfolio dead?" When he assists advisors, a diversified, multi-asset portfolio is the way to start. There are a lot of ETFs that can be used to set it and forget it. 

Normally, the 40% bond part of a portfolio should be a bit of a cushion, but in 2022 for the first time in 100 years, both bonds and equities declined precipitously. Those ETFs had their worst year on record (there weren't ETFs a century ago, but there were the DJIA and US Treasury markets from which to extract data).

A covered call ETF. Its total distribution yield, which is double digits, is coming from a covered call, option-writing overlay. Important to consider your demand for yield -- do you really need it? Moves in lock-step with XGD but, over time, GLCC will give you less growth. Your capital erodes over the long term.

Perfect short-term play for income needs. For the long term, he'd prefer a non-covered-call strategy like XGD.

While GLCC is perfect short-term play for income needs, for the long term, he'd prefer a non-covered-call strategy like XGD. Gives you growth and builds on your capital.

When we talk about crypto, important to specify that most indices use bitcoin itself as a heavy component. Yes, bitcoin has been doing well this year, but still well off its peak. Enormous volatility in the crypto space, which routinely has 70-80% drawdowns every couple of months. Responds to crazy demand/supply markets. 

Extremely risky asset class, speak to an expert.

Blockchain technology is very cool. He loves cryptography. He's been watching Bitcoin since the beginning, but he doesn't buy some of the more "out there" narratives. 

If you look at its behaviour and its correlation to other assets and indices, it behaves like a technology high flyer. It's a bet on the future of money, perhaps. But a sequel to Bitcoin could come along that may be superior in some respects, so that's the risk.

He's not always familiar with the new breed of inflation-fighting ETFs. Really started to come out of the woodwork when inflation numbers started to pick up after pandemic. Mainstream US ETF provider. Tries to take more of a quant bent. Compare it to traditional peers like gold or Treasury inflation-protected securities.

Might have made sense a few months ago. But now inflation seems to be on the wane, so more diligence would be required for a long-term hold.

Uranium has been doing very well. He wouldn't say it's because of the inflation thesis specifically. There are huge geopolitical concerns, oil markets, and ESG to explain its performance YTD. It is a raw commodity, so a little bit of exposure as an inflation play does make sense.

The space responds a lot to headline risk. Cyberhacks generate trading activity and those stocks get a pop. Growing industry. Demand has whipsawed around. Risky. Alternatives in Canada include CYBR and HBUG.

Canadian cybersecurity ETF choices include CYBR and HBUG, which tracks BUG. Different levels of volatility. Equal weight ones will have higher highs and lower lows. Market-cap weighted ones will ride the trend more smoothly. See which aligns with your risk profile, and be careful of position size.

Canadian cybersecurity ETF choices include CYBR and HBUG, which tracks BUG. Different levels of volatility. Equal weight ones will have higher highs and lower lows. Market-cap weighted ones will ride the trend more smoothly. See which aligns with your risk profile, and be careful of position size.

New. Gives almost identical exposure as TLT. Hedged, so if you want just CAD long bonds, the largest one is ZFL.

The largest ETF giving you exposure to purely CAD long bonds. Same theme as the TLT.