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Does "buy low, sell high" apply to bond ETFs as well? In other words, is it good to buy when the price is low (thus also the current return), before the interest rates go up? Or is it more like bonds, the higher the interest rate the better, when you don't care about the price but only about the interest you get back and therefore these days that much of a good idea?

Most of the material I read was about bonds themselves, but ETFs are somewhat different.

Thanks,
Freddie
 

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Does "buy low, sell high" apply to bond ETFs as well? In other words, is it good to buy when the price is low (thus also the current return), before the interest rates go up? Or is it more like bonds, the higher the interest rate the better, when you don't care about the price but only about the interest you get back and therefore these days that much of a good idea?

Most of the material I read was about bonds themselves, but ETFs are somewhat different.

Thanks,
Freddie
Actually, bond prices fall as interest rates rise. The best time to buy bonds is before interest rates fall (bond prices rise as interest rates fall) if you're looking for capital gains in your bonds. If you're just buying for asset allocation then I would just buy an ETF of gov't bonds. If you're worried about rising interest rates then you may want to buy short-term bonds (their prices fall less than long-term bonds as interest rates rise). XSB is an ETF of short-term bonds (1-5 years); its MER is 0.25%. Claymore offers another bond ETF for an MER of 0.15% (CLF). I believe that XSB has corporate bonds while CLF has only government bonds. Therefore, the yield is higher on the XSB, but the safety of CLF is higher. You have to decide what's more important to you.
 

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I believe that XSB has corporate bonds while CLF has only government bonds. Therefore, the yield is higher on the XSB, but the safety of CLF is higher. You have to decide what's more important to you.
Actually, XSB has a large % of Govt. bonds.
And the corporate bonds that it does hold are of very good quality.
Less than 4% of bonds are below grade A.
 

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Actually, XSB has a large % of Govt. bonds.
And the corporate bonds that it does hold are of very good quality.
Less than 4% of bonds are below grade A.
I misspoke. What I should have said (but didn't) was that XSB had some corporate bonds. No CDN corporate bond is rated higher than gov't Canada bonds, so you get a slightly higher yield in XSB, but (very) slightly higher risk too.
 

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At this point, XSB or CBO would be my choice for a bond ETF if I were to buy one.
Interest rates will be going up at some point soon, but probably go up gradually and not steeply.
Also, the spread between Govt. and corporate debt is likely to remain the way it is for some time to come.
Just IMHO.
 
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