-
iShares 1-5 Year Laddered Corporate Bond Index ETF (CBO)
-
iShares Convertible Bond Index ETF (CVD)
-
iShares Core Canadian Long Term Bond Index ETF (XLB)
-
iShares 20+ Year Treasury Bond ETF (TLT)
Q: I’m looking to diversify the fixed income portion of my portfolio. I don’t have any bonds/treasuries so was looking at TLT and XLB. Can I get your thoughts on these and others you could recommend?
5i Research Answer:
We are comfortable with TLT and XLB, but both are long term bond ETFs, so have high sensitivity to interest rates. This is fine if interest rates go down, but less so if the yield curve shifts. For example, as rates rose over the past few years, XLB has had a negative annualized return of -4.94% (three years). Recent performance is much improved (4.91% over three months). If these are owned, we might balance things out with a more diverse fund such as XBB, with a lower average maturity schedule of its bonds. CBO, XHY and CVD can also be suggested.