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iShares 1-5 Year Laddered Corporate Bond Index ETF (CBO)
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iShares 1-5 Year Laddered Government Bond Index ETF (CLF)
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Global X High Interest Savings ETF (CASH)
Q: I hold positions in these two funds as part of the fixed income portion of my portfolio. Looking at their current yields (3.1% & 2.27%) I'm starting to wonder why I don't just put that money into CASH.TO, which is currently at 4.52%.
Am I missing something? Are there other, better funds I should be moving them to?
Am I missing something? Are there other, better funds I should be moving them to?
5i Research Answer:
The difference is that bonds can move up with lower interest rates, resulting in capital gains in bond ETFs. Cash funds such as CASH, due to their very short term nature, do not have any interest rate leverage to the upside. In fact, their yields will decline with lower rates. Each has the own uses for different types of investors. CASH of course does not have the negative implications if rates RISE, and should be consider safer, just with no upside potential.