It’s cheap to buy exposure to the broad bond market in Canada, but returns have been weak in recent years
Awful as their returns have been, bond ETFs keep attracting a healthy flow of money from investors.
You’ll see in the guide how cheap it is to buy exposure to the broad bond market in Canada, including federal and provincial government bonds, and corporate bonds as well. You’ll also see how weak returns have been in recent years. The ETFs in the guide produced average losses of 4.3 per cent for the 12 months to Jan. 31 and 1.3 per cent for the three-year period.
Just as rising rates have hurt the price of bonds and bond funds, so would declining rates help push prices higher. You’d get the interest paid by your bond ETF, plus an increase in the unit price. This total return is unavailable with GICs, which pay a set rate of interest and don’t fluctuate in price.
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