# Is anyone still invested in bond funds or bond etf's?



## Belguy (May 24, 2010)

Hi everyone! I haven't been here for a while and want to wish the old gang a very Merry Christmas and a healthy and prosperous New Year.

For the fixed income allocation in your portfolio, I am wondering if any of you are still invested in either bond mutual funds or bond ETF's. If so, why and what changes do you plan to make in 2014?

Are there any reasonable choices for fixed income investments for older geezers like me aside from GIC' s and HISA's?

Thanks and I'll hang up and listen for your response.

Whoops, I forgot that I wasn't on BNN!


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## Jon_Snow (May 20, 2009)

Out from under the bed!!!!


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## mrPPincer (Nov 21, 2011)

Hey Belguy, long time no see, good to see you're still alive and kicking!!

Fixed income for me has been HISAs and I for one have been cranking up the percentage a bit lately, closer to what the supposed formula was supposed to be for fixed income percentage (same as age or therabouts so I've heard).

Not holding bonds or gics atm, no incentive really not to keep the cash fluid that I can see atm.


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## MRT (Apr 8, 2013)

I'm still holding VAB, and have a bit of cash in a TD ISA and a USD Money Mkt fund while watching for buying opportunities, but altogether they form only 20% of my portfolio. 

I bought my chunk of VAB in mid-May, and it is down about 2.5% since then (including distributions).

With a 20+ year time horizon, I'm not changing anything; however, I can understand that a retiree might have concerns about what to do. Fixed income options seem rather weak right now :/


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## Four Pillars (Apr 5, 2009)

Merry Christmas Belguy!


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## My Own Advisor (Sep 24, 2012)

Happy Holidays Belguy!

I've been reducing my bond allocation over the last couple of years. Two reasons: 1) my equities are more diversified, more dividend paying stocks, more assets in broad market ETFs, so I feel more comfortable with risk and 2) I have more monies vested in my DB pension plan, which I consider a big bond so I need less bonds in my personal portfolio.

I plan to make no changes in 2014, except buying more Canadian dividend stocks and VTI.


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## couchman (Oct 10, 2013)

*bonds*

I'm new to this so hope this is not a dumb question.If I allocate 30% of my portfolio to bonds in a couch potato account should I not keep rebalancing every 6 months or so and stick with this. My thoughts on this were that if bonds do not look good at the moment and equities do and I increase my equity portion is that not like trying to time the market.If leading up to 2008 crash equities looked great as well but the ones that were holding bond portions seemed to do better. Again correct me if I'm thinking wrong here as I am quite new to this.


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## Spidey (May 11, 2009)

I have about 35% of my portfolio in various PHN bond funds. The performance is comparable, if not better, than ETFs especially when you consider there are no trading fees. Future returns for bonds admittedly look fairly anemic but with the trauma of 2008 still burned into my brain, I'll continue to opt for a balanced portfolio. I may even increase my FI allocation to about 40% if the market moves significantly higher.


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## mike06 (Aug 4, 2011)

Still holding 20% in CLF. Ill keep adding more to rebalance as bonds weaken vs equities.


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## uptoolate (Oct 9, 2011)

Spidey said:


> I have about 35% of my portfolio in various PHN bond funds. The performance is comparable, if not better, than ETFs especially when you consider there are no trading fees. Future returns for bonds admittedly look fairly anemic but with the trauma of 2008 still burned into my brain, I'll continue to opt for a balanced portfolio. I may even increase my FI allocation to about 40% if the market moves significantly higher.


+1

Definitely having to rebalance to more fixed income with the tear the market has been on.


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## Retired Peasant (Apr 22, 2013)

Spidey said:


> I have about 35% of my portfolio in various PHN bond funds. The performance is comparable, if not better, than ETFs especially when you consider there are no trading fees. Future returns for bonds admittedly look fairly anemic but with the trauma of 2008 still burned into my brain, I'll continue to opt for a balanced portfolio. I may even increase my FI allocation to about 40% if the market moves significantly higher.


+2


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## marina628 (Dec 14, 2010)

My Dad just made a interesting move within last 6 months and rolled $50,000 GIC in BNS and TD bank stock.He was tired of get $12 a year interest on$1000 so he figured he just buy the bank stocks .I have a difficult time locking my money up for 1.5% so I am just using HISA and have not bought any GIC in almost 2 years now.I just wanted to say Dad will be 75 in a couple months and really done well in his lifetime on buying dividend stocks .He did what he was 'suppose ' to do in terms of fixed income and had many bond funds etc but he and my mom are in a place they have home paid for ,new car , OAS ,CPP plus my Dad has a Government pension and good benefits.They preserve all their Capital plus manage to save about $4000 a year so what they decided to do may not be an option for more vulnerable seniors.


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## Spudd (Oct 11, 2011)

I am holding CLF for my fixed income allocation.


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## doctrine (Sep 30, 2011)

I don't have any bonds. I do hold savings/emergency money in a high interest savings account (1.35%, PCF).


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## crazyjackcsa (Aug 8, 2010)

20% in the TD Canadian Bond Index e-fund. Same as it ever was.


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## Synergy (Mar 18, 2013)

No bond holdings currently and no plan on purchasing in the near future. Fixed income will include HISA & GIC's.


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## Belguy (May 24, 2010)

At 70 y.o. and with no company pension, my portfolio is currently approximately 50 per cent equities, 40 per cent bonds and 10 per cent HISA.

My main bond holding is the PH&N Bond Fund plus I hold a high yield corporate ETF and an Emerging Markets Debt Fund.

Should I consider any changes such as reducing my equity allocation to 30 per cent and putting the proceeds into the HISA?

Low fixed income returns makes for a conundrun seniors who are depending on their portfolio to see them through their retirement years. I have often read that preservation of capital becomes of prime performance for such seniors.

Any differing thoughts?


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## Synergy (Mar 18, 2013)

Belguy said:


> At 70 y.o. and with no company pension, my portfolio is currently approximately 50 per cent equities, 40 per cent bonds and 10 per cent HISA.
> 
> My main bond holding is the PH&N Bond Fund plus I hold a high yield corporate ETF and an Emerging Markets Debt Fund.
> 
> ...


Sounds about right to me. If I was 70+ yrs young on a modest fixed income I would be inclined to reduce the equity portion of my portfolio to around to 20-30%. If the portfolio was loaded with dividend paying stocks and one wasn't too concerned over near term volitility (capital) then I guess the percent could be higher. Just my 2 cents.


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## mike06 (Aug 4, 2011)

On the plus side, your equity portion has had a heck of a run over the past few years so if you can afford lower, safe future returns as a result, then maybe increasing your HISA position wouldnt be a bad idea.


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## Jungle (Feb 17, 2010)

About 3.6% in bonds right now and no interest in making that anymore.


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## pwm (Jan 19, 2012)

I'll be 65 in June 2014. I've been retired for 8 years. I have a company pension, and with my investment income, CPP, and wife's OAS I have no need to sell any securities to obtain cash to live on. In fact I'm increasing my investment account holding each year with the surplus. I actually have more disposable income in retirement than when I was working. I hold no bonds or bond funds. I'm 100% invested in dividend producing stocks, or funds that hold them. I do however keep some emergency cash in an HISA and in TDB8150.


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## wendi1 (Oct 2, 2013)

I have a small amount in a real return bond fund (for inflation protection, but that doesn't look very likely right now), but for the most part I hold a ladder of government-backed zeros or strips, and lately, a bunch of GICs.

I bought all the bonds when interest rates were higher, and intend to hold them until they expire.


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## My Own Advisor (Sep 24, 2012)

@pwm,

Your portfolio is where we'd like to be in another 25 years.

Rely largely on our pensions for basic living expenses and investment income for extras in life. CPP and OAS is a bonus.

Not sure we'll have more disposable income in retirement than what we have now but that will be a very nice problem to have in our 60s.

Well done.


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## pwm (Jan 19, 2012)

My Own Advisor:

Thanks for that. I was lucky. The company stock purchase plan was the main reason for my good fortune. The dividends from the company stock are about equal to my pension after taxes. I could live on either the pensions or investment income, so the surplus is just extra money.


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## My Own Advisor (Sep 24, 2012)

Yes, I recall something about GWO being your SPP?

I figure our pensions will need to be about $40k before tax to provide basic living expenses in 20-25 years (no mortgage at that time, but need heat, hydro, food and insurance). Hope to be making $30k in dividend income for extras in life within 15 years. At just over $7k now so I figure if I keep DRIPs running, and making new investments every year, it should be close.


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## Rysto (Nov 22, 2010)

In the new year I'm going to move half of my fixed incoming allocation into GICs and the rest will go into an government bond fund. My reasoning is that a 5 year GIC ladder has a marginally higher yield than a short-term corporate bond fund but is comparable in safety to government bonds, so that's a clear win. The one problem is that the lack of liquidity in GICs makes rebalancing difficult, so I will keep some money in a bond fund so that I rebalance out of that.


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## AltaRed (Jun 8, 2009)

Rysto said:


> In the new year I'm going to move half of my fixed incoming allocation into GICs and the rest will go into an government bond fund. My reasoning is that a 5 year GIC ladder has a marginally higher yield than a short-term corporate bond fund but is comparable in safety to government bonds, so that's a clear win. The one problem is that the lack of liquidity in GICs makes rebalancing difficult, so I will keep some money in a bond fund so that I rebalance out of that.


Asset allocations do not have to be precise, nor does re-balancing have to be precise. Allow yourself 5 percentage points or so of variation to make re-balancing cost efficient and effective each year. I use a GIC ladder sprinkled with some corporate bonds as my FI allocation and don't worry about smallish variations in allocations.


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## Rysto (Nov 22, 2010)

AltaRed said:


> Asset allocations do not have to be precise, nor does re-balancing have to be precise. Allow yourself 5 percentage points or so of variation to make re-balancing cost efficient and effective each year. I use a GIC ladder sprinkled with some corporate bonds as my FI allocation and don't worry about smallish variations in allocations.


I'm definitely not worried about small variations. I typically only rebalance once a year, but I worry about the scenario where there's a significant decline in equities (which will happen someday  ). I definitely want to have some of my fixed income to be liquid for that type of case.


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## Jon_Snow (May 20, 2009)

I have a large GIC maturing in 2014.... a 5 year stepper, paying me 6.25% in its final year. In registered account so tax free. A very good move buying this in 2009. Going to move these funds into my dividend portfolio ASAP. Buying GIC's holds very little interest for me right now.


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## humble_pie (Jun 7, 2009)

remember lephturn & his BCE collars?

the way i see it, a 2-year $40 collar in BCE is going to yield 3.15% per annum, guaranteed

a trader who could work the option prices would likely capture 3.25-3.40%. Guaranteed. It's the presence of the 2016 jan 40 put that guarantees the collar.

plus income is all tax-favoured eligible dividends & capital gains, so the tax consequences add to the lustre. The net $2.37 capital gain in the position will only be taxed at 50%. The favourable tax consequences (there is no interest income in this strategy) are, to me, the most important part of the puzzle.

are there any CDIC-insured 2-year GICS yielding 3.15%, all in tax-favoured income? i don't believe so ...

few are the bond funds that can guarantee 3.15% per annum for 2 years ...


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## AltaRed (Jun 8, 2009)

Rysto said:


> I'm definitely not worried about small variations. I typically only rebalance once a year, but I worry about the scenario where there's a significant decline in equities (which will happen someday  ). I definitely want to have some of my fixed income to be liquid for that type of case.


Fair enough. I keep a fair bit of money in HISA for that purpose too.


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## capricorn (Dec 3, 2013)

first post (besides the "introduce yourself").

I have 22% in bond and 13% in cash. No plan to change the allocation to bond. Hoping to use the cash to pickup some good dividend paying stocks when the opportunity presents itself.


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## Pickering (Jun 24, 2011)

Am I the only one that considers re-set preferred as being fixed income. Buy them at par or very close to it and pay particular attention to the spread between the 5 year BoC rate and re-set value. Have some BNS and BMO coming up for re-set this spring. Either get our $ 25 back or they re-set at 5 Year BoC + 4.xx %. No way they are going to not be redeemed. Get over 6% for 5 years and get our money back.

Am retired and need plenty of sleep every night - including re-sets our F/I is close to 60 %. Bond ETF's are CLF and CBO with a touch of CPD. All 5 year ladders. Have no need for these funds for the next 8-10 years. Figure they will roll over and we will get the benefit of higher rates.

The one concession to the nice equity run is that I have not re-balanced since retiring in 2009. Kept equity portion in dividend payers and let gains erode F/I percentage.


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## OnlyMyOpinion (Sep 1, 2013)

We consider re-set prefs to be 'in between' fixed and equity, and more complex than fixed income because of the variety of pref types and conditions that exist now. 
You can get suckered for example if you only look at current yield and don't consider YTW, etc. The big plus however (if you hold them in a non-registered plan) is that they are eligible dividend income not interest income. We own a fair bit.
Sounds like you understand them though and have got them working hard for you - kudos!


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## Canadian (Sep 19, 2013)

The closest thing I own to fixed income are a couple REITs. There's still the equity exposure but it has the price-sensitivities of a bond [and other similar/different characterisitics one might argue]. I DRIP these and plan to hold for a very long time. It will be another 10-15 years before I introduce fixed income to my portfolio.


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## londoncalling (Sep 17, 2011)

I am currently just over 30% fixed income and would like to lower that to 25% over the next 2 years. My fixed income is currently in GICs. I may transition it into bonds when rates increase. For the time being everything is in a ladder (5yr) with a larger allocation being to a time period of 3 years or less. I don't see the need to hold a bond etf or fund for two reasons. First I don't see the need to pay a fee for purchasing/trading bonds. Secondly with current rates as low as they are much of your return is being eaten by MER/fees. If I were to switch over to bonds I would most likely purchase individual bonds with a mix of federal, provincial and high grade corporate. I have also considered allocating some of this fixed income into something a bit more risky such as convertible debentures.

Cheers


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## inverstmentmentjinja (Nov 25, 2013)

What about this Bonds funds , they seem good 
http://ca.ishares.com/product_info/fund/performance/XCB.htm
and it give more than what any GIC give


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## Synergy (Mar 18, 2013)

^ Seems like a decent short term corporate bond fund. Over the long term is probably okay, I'd still be concerned over the near term - rising interest rates.


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