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iShares 1-5 Year Laddered Corporate Bond Index ETF (CBO)
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iShares U.S. High Yield Bond Index ETF (CAD-Hedged) (XHY)
Q: Right now a large % of my portfolio is in TD 8150 money market paying 4.55%
If rates start to drop it will be hit right away---Some corporate bonds are paying over 5%---I like the liquidity of the 8150s and will continue being in fixed to perhaps a lesser extent---do you think I should lock in one of these corporate bonds for maybe50% of what I have in 8150s now?
Thanks
Peter
If rates start to drop it will be hit right away---Some corporate bonds are paying over 5%---I like the liquidity of the 8150s and will continue being in fixed to perhaps a lesser extent---do you think I should lock in one of these corporate bonds for maybe50% of what I have in 8150s now?
Thanks
Peter
5i Research Answer:
We think the outlook for corporate bonds is decent, but we would in no way compare them to a money market fund. In a recession, or a sentiment change, they can be hit hard. We also would suggest a bond ETF such as CBO or XHY over one or two individual bonds. The question for investors is the possibility of gains vs the possibility of losses. If one just wants to 'park' money we would stay with the MM fund. We would be OK adding some corporates provided they match an investors' goals and risk profile. We do think lower rates will be positive for the sector.