How Not to Prepare for a Bear Market in Bonds
The risk of rising interest rates has become an obsession in the financial media. Those risks are undeniably real: it’s quite possible that broad-based bond funds will see multiple years with negative...
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New Tax-Efficient ETFs from BMO
Bonds are one of the least tax-friendly asset classes: most of their return comes from interest payments, which are taxed at the highest rate. They’re even less tax-efficient when their market price is...
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iShares Advantaged ETFs: Where Are They Now?
Before being bought by BlackRock early in 2012, Claymore Investments pioneered many new services and unconventional products. One of these was its so-called Advantaged ETFs, which used a complicated...
View ArticleHow Pension Funds Think About Bonds
With the bond market up about 3% year-to-date, the bears have been growling less than usual. But I still get a steady stream of email from readers who think bonds “make no sense anymore” because they...
View ArticleAsk the Spud: Is My Pension Like a Bond?
Q: My wife and I have been using the Couch Potato strategy for a few years now, but something has always nagged me. I am fortunate enough to have a defined benefit pension that will pay me $50,000 a...
View ArticleA Tax-Friendly Bond ETF on the Horizon
Bonds should be part of just about every portfolio, but if you have to hold them in a non-registered account the tax consequences can be onerous. Fortunately, Canada’s ETF providers are taking steps to...
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Bond Bears: Admit You Were Wrong
One of the most common excuses made by forecasters is, “I wasn’t wrong, I was just off with the timing.” But that fails to acknowledge that timing is an integral part of any forecast. Imagine a weather...
View ArticleAsk the Spud: Should I Use Global Bonds?
Q: I was surprised to see a Vanguard infographic pointing out that international [non-US] bonds are the largest asset class in the world. Do you have any thoughts on why Canadians have not embraced...
View ArticleAsk the Spud: Bond ETFs in Taxable Accounts
Q: Can you share your thoughts about the BMO Discount Bond (ZDB) and the Horizons Canadian Select Universe Bond (HBB) as long-term holdings in a taxable account? – D. F. Earlier this year BMO and...
View ArticleWhich Bond ETF Is Most Tax-Efficient?
Back in September, my colleague Justin Bender and I published a white paper entitled After-Tax Returns: How to estimate the impact of taxes on ETF performance. Justin has now updated his Excel...
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When Discount Bonds Are Hard to Find
Everyone loves a discount, but if you’re buying bonds these days you may be out of luck. Just over a year ago, the BMO Discount Bond (ZDB) was launched as a tax-efficient alternative to traditional...
View ArticleAsk the Spud: GICs vs. Bond Funds
Q: I would appreciate it if you could write an article contrasting the advantages and disadvantages of holding bond funds versus GICs. – A.R. All of my model Couch Potato portfolios include bond funds,...
View ArticleShould You Replace Bonds With Cash?
Not many investors are enthusiastic about bonds these days, and it’s hard to blame them. While rates have ticked up in the last few weeks, they’re still so low that even some sophisticated investors...
View ArticleHow Changing Interest Rates Affect Fixed Income
It’s been a tough few months for bonds. Since early February, the yield on Government of Canada five-year bonds has climbed from 0.59% to about 1.07%, and 10-year bonds yielding 1.24% have ticked up to...
View ArticleThe Trouble With Bashing Bond Indexes
In my last post, I looked at a tired criticism of traditional equity index funds. Similar arguments have been made against fixed-income index funds, most recently in a blog post called The Trouble With...
View ArticleThe Curious Case of the BMO Discount Bond ETF
When the BMO Discount Bond Index ETF (ZDB) was launched back in February 2014, it was unique: the first broad-market ETF in Canada made up primarily of bonds trading below their par value. By avoiding...
View ArticleThe Real Problem With Inflation-Protected Bonds
When I announced my stripped-down model portfolios at the beginning of last year, one of the asset classes I dropped was real-return bonds (RRBs). Part of the reason was simplicity: it’s easier to...
View ArticleBond Basics 1: Why Bond Prices Fall When Rates Rise
Bonds have a reputation for being conservative, even boring. But no one ever accused them of being easy to understand. I get a steady stream of emails and blog comments about bonds, and they reveal...
View ArticlePodcast 7: Making Sense of Bonds
I’ve always felt that being a defenseman is the toughest job on a hockey team. Forwards score most of the goals, and goalies can steal the show with a few timely saves, but fans rarely notice a...
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Bond Basics 2: Why Your ETF Isn’t Losing Money
In my latest podcast, I answer a series of frequently asked questions about bonds. The second of these came from a reader named Andrew: “I have been investing using your Couch Potato strategy for just...
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