Q: What would the change of interest rates going up or down have on yield and the etf price on ZFH.ca. And the possible magnitude of yield and ETF price.
Thanks.
Thanks.
5i Research Answer:
It is not quite a direct relationship. If we look at 2022 when interest rates spiked, ZFH fell 5.3%. Parts of the yield curve and corporate debt did not respond well to rate hikes that year. But then the ETF rose 5.4% in 2023 and 3.2% in 2024. Yields of course vary with price, but ZFH did not increase its distribution in 2022. But as the curve normalized it raised the distribution twice in 2023. Since March 2024, it has lowered the distribution from 10c to 8c (Dec 24) to 7c (Feb 25).