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Discussion Starter #1
What are people doing with their Fixed income portion these days?
I've got lots of dividends etc that should be swept up into something, what are your thoughts on smaller ($500-2k) investments inside registered plans?

I'm really just wondering what is "best", which I think boils down to low fees at this point.
 

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For those little sweep-up amounts, my suggestion is use a mutual fund HISA or money market. No fees to buy/sell and they pay a little. Once the little amounts have added up to something bigger, it can be moved to its final destination, whatever that may be.
 

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What are people doing with their Fixed income portion these days?

Same as I've always done with the cash that is continually thrown off my portfolio.

I add to my 5 year GIC ladders if their asset allocation is low, or I add to my equities if their allocation is low.

With respect to the equities, since I maintain an equal sector percentage system, then I add to the stocks that are the lowest in the lowest sector.

Simple stuff. Buy low!

ltr
 

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ZST-L BMO ultra st bond etf yields about .9 % after fees. It is accumulating so no div.
 

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ZST-L BMO ultra st bond etf yields about .9 % after fees. It is accumulating so no div.

what are the best HISA rates these days?
 

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I was using the BMO HISAs in our registered accounts, but the interest rates are so low now, I don't bother. Cash is fine! When it builds to a reasonable amount, a bond or GIC may mature and I just add it to those funds when buying new bond/GIC or Pfd.

At one time, I would buy additional units in a monthly dividend mutual fund (no fees). But these days, I am avoiding additional equity.

Mostly we are only talking about pennies anyway ;)
 

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What are people doing with their Fixed income portion these days?
I've got lots of dividends etc that should be swept up into something, what are your thoughts on smaller ($500-2k) investments inside registered plans?
Curious, why are you not doing a DRIP inside the registered accounts? That would prevent cash from building up, avoiding cash drag.

Regarding your question:
If you're talking about your actual fixed income allocation (e.g. the 40% in 60/40), then assuming you are a long term investor, that should be in something like XBB, VAB, ZAG which are the go-to bond funds at rock bottom fees. The fixed income inside my RRSP and TFSA is 100% XBB.

If you just mean residual cash sitting around, then I think you should ask: what is the eventual plan for this cash? That will affect your choice.

For me, any residual cash in my registered plans will get invested into one of my main investment assets (stocks, bonds, gold) so it really doesn't matter if a few hundred bucks cash sits around for a few months, until I'm able to reinvest or rebalance.
 

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I would suggest cash amounts of <5% of account value really can't add any value to the account, whether 0.2% or 1% interest. Leave it as cash or just use the brokerage's HISA to make you feel better collecting a few coins of interest each month.
 

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I would suggest cash amounts of <5% of account value really can't add any value to the account, whether 0.2% or 1% interest. Leave it as cash or just use the brokerage's HISA to make you feel better collecting a few coins of interest each month.
Another trick with stray cash is to use mutual funds like the e-series index funds, or other mutual funds. That would let you buy even small amounts. For example if you choose a reasonable 60/40 balanced fund (for this purpose I've used BMO Monthly Income D Series) this would probably be similar to what most couch potato investors do with ETFs.

So perhaps you end up with a few hundred $ in the mutual fund. Later, when it's time for rebalancing, or you have larger $ amounts, you can shuffle it back into ETFs or whatever you prefer.

Just make sure you don't sell within the penalty period for early redemption.
 

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Another trick with stray cash is to use mutual funds like the e-series index funds, or other mutual funds. That would let you buy even small amounts. For example if you choose a reasonable 60/40 balanced fund (for this purpose I've used BMO Monthly Income D Series) this would probably be similar to what most couch potato investors do with ETFs.

So perhaps you end up with a few hundred $ in the mutual fund. Later, when it's time for rebalancing, or you have larger $ amounts, you can shuffle it back into ETFs or whatever you prefer.

Just make sure you don't sell within the penalty period for early redemption.
Fair enough if the plan is to put those funds to work in the equity market eventually (albeit why not DRIP in that case?). I had the impression the question was focused on Fixed Income options.
 

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Fair enough if the plan is to put those funds to work in the equity market eventually (albeit why not DRIP in that case?). I had the impression the question was focused on Fixed Income options.
I was confused by the original question, since he's talking about cash dividend payments. I would think the easiest solution is to DRIP them so that any distributions stay inside the original investments.
 

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Discussion Starter #12
Well not everything is DRIP able.
I am a huge fan of efunds, I think I'll see what the HISA options are at BMO &BNS.
I agree that for small amounts, it's no big deal, but once you get a few $k it's a few bucks a year, and why leave money on the table?
 

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Well not everything is DRIP able.
I am a huge fan of efunds, I think I'll see what the HISA options are at BMO &BNS.
I agree that for small amounts, it's no big deal, but once you get a few $k it's a few bucks a year, and why leave money on the table?
BMO is AAT770 (CAD) and BNS is DYN 5000 (CAD) Both likely at 0.2-0.25%

Other options include the CIBC MMFs with slightly better rates (maybe solely due to duration lag). Example: I use CIB483 for USD. All of these have minimum initial investments of about the $1k range (I think). Using these versus 'nothing' is simply a 'feel good' exercise.

Added: Just checked BMO IL. Under Trading Tab | Bonds & GICs | High Interest offerings.... ATT770 is 0.25% and initial minimum is $1k
 

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Discussion Starter #14
BMO is AAT770 (CAD) and BNS is DYN 5000 (CAD) Both likely at 0.2-0.25%

Other options include the CIBC MMFs with slightly better rates (maybe solely due to duration lag). Example: I use CIB483 for USD. All of these have minimum initial investments of about the $1k range (I think). Using these versus 'nothing' is simply a 'feel good' exercise.
Yes it is. I'll likely let it build up a bit higher and just shuffle into VAB..
Comparing VAB,XBB and ZAG, why does VAB seem to have slightly higher returns?
 

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You would have to look at the specific index each ETF uses and thus the underlying mix of holdings (gov't vs corporate, credit rating mix in corporate bonds, and duration)..

From 2018 Moneysense Comparison VAB has 80% gov't bonds vs 70% for the others. With the Mar 2020 dive in corporate bonds, XBB and ZAG would now be under performing. Longer term though, the ETFs with slightly higher corporate bonds would normally yield higher, albeit with slightly higher risk..Moneysense 2019 and Moneysense 2020 seem to like both ZAG and VAB.
 

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Yes it is. I'll likely let it build up a bit higher and just shuffle into VAB..
Comparing VAB,XBB and ZAG, why does VAB seem to have slightly higher returns?
Be careful of what you referred to as "returns". Those funds are exchange traded and Total Returns could be anything, including negative.
 

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Yes it is. I'll likely let it build up a bit higher and just shuffle into VAB..
Comparing VAB,XBB and ZAG, why does VAB seem to have slightly higher returns?
You've got to look at total returns (same as with stocks). Morningstar is a good place to look because it provides tables of returns assuming reinvestment of all distributions = Total Return.

The 5 year annual returns according to Morningstar are
VAB 3.97%
ZAG 4.03%
XBB 4.05%

So they're all about the same.

And 10 year returns for the ETFs that go that far back:
ZAG 4.33%
XBB 4.38%
 

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These numbers are also skewed by the collapse in the yield curve this year, specifically since February. Just look at the VAB YTD total return of 7.2% which is predominately capital appreciation (12 trailing yield of 2.32%). If the OP intends to sweep cash into this long term, then all is well. If it is meant to be a temporary hold pending re-investment in equities in a year or so, VAB could very well have a negative total return by this time next year.

Anyone buying bond ETFs at the current time is likely buying high. I say likely because who knows how low the yield curve can actually go... to zero?
 

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I would only buy the bond funds if the intention is a long term (minimum 10 or 20 year) holding. Whether the price falls in the next few months or years should not be a concern.

If it's a long term time horizon, you should put the cash into the bond fund without thinking too hard about the timing. It's just about impossible to time these things. Bond funds will be volatile, and will have negative returns over short periods. But over the long term, funds like VAB are virtually guaranteed to beat cash returns.

It's no different than stocks. If you're supposed to have a stock allocation, then you should deploy your money into stocks as soon as you have the money. This isn't to get a positive return in the next months, it's to benefit from the 20+ year performance.

Same for bonds. If you're supposed to have a bond allocation, deploy the cash into bonds without trying to time your entry.
 
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