Q: I am re-evaluating my Fixed income holdings and looking to increase my holdings from 10% up to 20% of my total portfolio. Currently hold CBO and XHY and based on your answers to other questions am looking to add XIG and XBB.
In doing my research I notice that, with the exception of XHY, the Yields to Maturity after MER are well under 2% for CBO and XBB and around 3% for XIG, based on Blackrocks website. Given that XIG is US Bonds with Ave Maturity of 12.7 years I would think that any increase in US rates in the next few years would have a larger negative impact on this ETFs performance.
Given this info why would I not simply buy a 5 year ladder of GICs where I can get slightly more than 2% guaranteed for terms of 2-5 years with no possible loss of capital. (based on rated quoted in my discount brokerage acct.
In doing my research I notice that, with the exception of XHY, the Yields to Maturity after MER are well under 2% for CBO and XBB and around 3% for XIG, based on Blackrocks website. Given that XIG is US Bonds with Ave Maturity of 12.7 years I would think that any increase in US rates in the next few years would have a larger negative impact on this ETFs performance.
Given this info why would I not simply buy a 5 year ladder of GICs where I can get slightly more than 2% guaranteed for terms of 2-5 years with no possible loss of capital. (based on rated quoted in my discount brokerage acct.