Do Bonds Still Make Sense? Plus Canada’s New Factor ETFs
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What is the main topic discussed in this episode?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors.
This has to be one of the biggest quarters I've seen from this company in quite some time.
Welcome back to the Canadian Investor Podcast. I'm Simon Bénage. I'm back with Dan Kent. We're back with another fun episode here. Not quite sure when it will be released. So this one is one that we're recording in advance. So we're recording this on June 10. So if Dan feels a little bit under the weather, he's probably fine as you are listening to this. His voice is still a bit off, but it'll be a fun one. So we're recording this on June 10. A evergreen episode, an episode that even though we record in advance, it should still be useful when you listen to it. Probably sometime late June, early July, just because they're trying to book about a week off from the podcast. So it does require some preparing to make sure that you still get some fresh episodes.
Yeah, it's nice. We're both going on vacation at the exact same time.
Exactly. Yeah. So I booked a cottage with the family and the puppy. And then where are you going again? Kelowna. Kelowna, BC. There you go. Yeah. So let's get started here. So the two main segments that we have is we're going to do, while mostly lead these segments on a bit of a deeper dive into bonds and bond ETF? Because I got a question from Anna from our joint TCI community, one of our longtime subscribers, and was asking about bonds, what things to look at, the type of yields that you're getting. Obviously, some companies yielding more than others. And then also compare that to bond ETFs. I'll do a bit of historical how the 60-40, so 60% equity and 40% bonds as performed. And looking forward, what could reasonably be expected and some of the risks ahead for investors.
And then you're going to be going over some new ETFs that were released by CABC. So the Aventis funds that are... You said coming to Canada, but I think they're already here, right?
They're already here, yeah. I think there's one that hasn't been released yet. There'll be eight funds, and I think seven of them are out. By the time you're listening to this, there might be all eight out. But yeah, it's a very interesting fund release. I'll get into it during the segment. But they've operated in the U.S. for probably seven or eight years now, and CIBC partnered with them to bring a bunch of pretty unique ETFs into Canada.
Mm-hmm. Yeah, they're interesting products. I think there's some like everything. There are some tradeoffs involved. So I think we'll be going over those and give our thoughts on it. So let's start off now with should you have some exposure to bonds in your portfolio? And it's a pretty common question. I think if we look at this probably 10, 15 years ago, I think most advisors would have said 100 percent. You should pretty much always have exposure. some kind of bond exposure, not necessarily the 60-40, but it could be even 10% as you're younger. That was the traditional view, I would say. And I'll really look at this segment from the bond perspective. So not the broader fixed income asset class, which include things like
treasury bills, GICs, money market funds, preferred shares, short-term debt, private credit, even mortgage products that you can get income from. I'll really look at bonds specifically. So definitely, I would say I think you start getting into the bond territory when you're like two plus years in terms of duration, and then it could go well beyond that. And the first thing to consider, of course, is whether you need fixed income or not in your portfolio. And then feel free to Chime in interject as you see fit. And the traditional view is that the further you are away from retirement or needing the money. So let's say you have decades, maybe you're a young lad like Dan over here that is in his mid 30s.
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