Will Canadian short term bonds be affected by rate increases in the US? - Page 2
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Thread: Will Canadian short term bonds be affected by rate increases in the US?

  1. #11
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    Oh, great! Thanks for that!

    As replied to john.cray, I enjoy the flexibility I'm left with if I stick with XSB rather than something longer term, e.g. if the sun falls from the sky this spring for reason X and in one or two year's time, things seem to have calmed down a bit (and oil prices are moving upwards, maybe), I can easily switch some funds back into something more profitable than bonds... I'm looking mostly for capital preservation in this instance.
    Any reason why you chose to mention XBB instead of XQB? XQB has a way lower MER (0.13% vs. 0.3% which is significant I find) and they look pretty similar to each other otherwise (XQB has a Weighted Avg Maturity of 8.5 yrs where XBB's is 10).


  2. #12
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    ignore this, i thought my previous post hadn't gone through and i can't find the option to delete this post

  3. #13
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    Quote Originally Posted by reggler View Post
    if the sun falls from the sky this spring for reason X and in one or two year's time, things seem to have calmed down a bit (and oil prices are moving upwards, maybe), I can easily switch some funds back into something more profitable than bonds... I'm looking mostly for capital preservation in this instance.
    +1 I would also rather have more flexibility in my options than riding the VAB/XBB roller coaster. My ex has all of her FI (except for a year's cash flow) in XSB.

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  5. #14
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    Quote Originally Posted by reggler View Post
    That's an interesting idea, to use the exchange rate as a hedge but since I'm looking into holding the etf for the longer term, the exchange rate hedge might disappear over time and I'm looking for a bond etf that is DRIP-able, too and RBC DI doesn't DRIP VCSH.
    If you are looking for long term
    XSB YTM is 1.39% and MER 0.28%
    VCSH is 2.28% amd MER 0.07%
    Strange that RBC doesn't DRIP, CIBC IE DRIPs other Vanguard ETFs

  6. #15
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    It's true that XBB is more of a roller coaster ride than XSB, but bonds are still much less volatile -- and far less risky in terms of temporary price drop -- than investing in stocks.

    I guess it's just a question of what asset classes you want exposure to. Personally I'm at 23% bonds.

  7. #16
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    In the case of the OP, it is mostly about capital preservation, not return, for that portion of his/her capital (per the original OP). Some posters seem to have missed that key point.

    Same as my ex. She'd have it all in HISA otherwise, likely at less than 1% at her brokerage.

  8. #17
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    Quote Originally Posted by AltaRed View Post
    In the case of the OP, it is mostly about capital preservation, not return, for that portion of his/her capital (per the original OP). Some posters seem to have missed that key point.
    That's a good point. Cash (and XSB) is just fine for capital preservation.

    Can the OP use GICs in these accounts? If so, that's another option for capital preservation with nil risk. You don't have the liquidity of XSB but maybe liquidity is not a key requirement, given the 10+ year description.

    The OP could regularly purchase 5 year GICs that are CDIC eligible. This provides a higher return than XSB, has zero risk of loss, and GICs are more tax efficient than XSB. Record keeping is also much easier with GICs than any ETF.


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