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iShares Core Canadian Universe Bond Index ETF (XBB)
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Vanguard U.S. Aggregate Bond Index ETF (CAD-hedged) (VBU)
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Vanguard Global Aggregate Bond Index ETF (CAD-hedged) (VGAB)
Q: Hello, last question on bond ETFs: for diversification purposes, having in my RSP individual canadian bonds, it might be interesting to invest in VGAB or VBU for additional money in fixed income products. For a long term investment, which ETF is preferable for the next few years: VGAB or VBU (given the interest rate context, etc.)? Thanks.
5i Research Answer:
We think both of these products could do well with rates coming down in the future. The fee is a bit higher for VGAB due to its global nature at 0.33% vs VBU at 0.23%. VGAB is riskier due to the international exposure it has, but this does allow for greater upside and a higher yield. VGAB could also be a good option to diversify a predominately North American portfolio. Both have good potential with rates coming down globally. VGAB has higher upside/return potential but we lean VBU due to the lower fee and lower risk by focussing on the US market.