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iShares Core Canadian Universe Bond Index ETF (XBB)
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Vanguard Global Aggregate Bond Index ETF (CAD-hedged) (VGAB)
Q: Hello, I plan to rebalance my portfolio in the new year, increasing my bond component in my reg accounts. I already have Canadian individual bonds in my RSP, so I was looking at VGAB for diversification, but when I compare it to XBB, it underperformed XBB for every period in the last 5 years. What do you think of VGAB and should I just keep it simple and use XBB instead? Thanks
5i Research Answer:
VGAB is an international fund and XBB is Canada-only. VGAB's non-North American assets have certainly hurt its performance, both from prices and from currency moves. VGAB also has 30% corporate bond exposure, and this sector can be more volatile. We would not really consider VGAB 'bad' and this is not really a fair comparison. But for an investor who wants only government exposure and all Canada, we would be fine with XBB over VGAB.