What is a short-term bond fund?
A short-term bond fund is a mutual fund or exchange traded fund (ETF) holding bonds with maturities between one and three years. Short-term bond funds can invest their assets in government or corporate bonds. As a general rule, the safest bonds are issued by or guaranteed by the federal government. Next come provincial issues or bonds with provincial guarantees.
If you need steady income and want to hold bond funds, we advise you to focus on those with short-term maturity dates. That’s because short-term bond funds face a lower risk from interest-rate increases (changing interest rates influence the value of existing bonds inversely. When interest rates fall, bond prices rise, and vice versa. The longer the term to maturity on the bond, the bigger the effect of a change in interest rates).You should also avoid funds that take part in any kind of speculative trading.
Interest rates are near historic lows, so bond funds that hold long-term bonds simply can’t go a lot higher than they already are. Right now, it seems more likely that interest rates will continue to hold steady or rise slightly in the short term, and move higher in the long run. This means the funds would only earn interest income on their bonds; instead of capital gains, their bond holdings could produce capital losses.
In general, short-term bond fund ETFs charge considerably lower MERs than bond mutual funds. That’s why, if you want to find and hold the best bond funds, we recommend taking the low-MER approach offered by a bond ETF.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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ISHARES DEX UNIVERSE BOND INDEX FUND $31.05 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 821 bonds in the portfolio have an average term-to-maturity of 10.13 years. The fund’s MER is 0.33%.
The… Read More
Canada’s inflation rate has risen to 1.8%, but it’s still below the Bank of Canada’s 2% target. This should let the bank keep interest rates low, which holds down our dollar, making our exports cheaper in world markets. That’s good for Canada’s economic growth.
Even… Read More
Canada’s inflation rate is just 1.1%, well below the Bank of Canada’s 2% target. That lets the bank keep interest rates low, which holds down our dollar, making our exports cheaper in world markets. That’s good for Canada’s economic growth, but bad for income investors.
We… Read More
ISHARES DEX UNIVERSE BOND INDEX FUND $30.37 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 784 bonds in the portfolio have an average term-to-maturity of 9.79 years. The fund’s MER is 0.33%.
The… Read More
Canada’s inflation rate is just 1.1%, well below the Bank of Canada’s 2% target. That lets the bank keep interest rates low, which holds down our dollar, making our exports cheaper in world markets. That’s good for Canada’s economic growth. Even so, the long-term outlook… Read More
ISHARES DEX UNIVERSE BOND INDEX FUND $30.34 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 762 bonds in the portfolio have an average term to maturity of 9.53 years. The fund’s MER… Read More
Canada’s inflation rate is just 1.1%, well below the Bank of Canada’s 2% target. That lets the bank keep interest rates low, which holds down our dollar, making our exports cheaper in world markets. That’s good for Canada’s economic growth. Even so, the long-term outlook… Read More
ISHARES DEX UNIVERSE BOND INDEX FUND $31.42 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 732 bonds in the portfolio have an average term to maturity of 9.78 years. The fund’s MER… Read More
Canada’s inflation rate is just 1.2%, well below the Bank of Canada’s 2% target. That lets the Bank keep interest rates low. This in turn holds down our dollar, which makes our exports cheaper in world markets. That’s good for Canada’s economy. Even so, the… Read More
ISHARES DEX UNIVERSE BOND INDEX FUND $31.52 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the DEX Universe Bond Index. The 719 bonds in the portfolio have an average term to maturity of 9.78 years. The fund’s MER… Read More
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What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Does TSI Network Use the Information It Receives?
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