Daniel StrausBMO Long Federal Bond IndexZFL.TOTOP PICKDec 06, 2023

Canadian equivalent to TLT.

The largest ETF giving you exposure to purely CAD long bonds. Same theme as the TLT.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Bonds offer a nice diversification against a recession or slowdown in economic growth. ZFL pays a 3.6% yield, so it offers investors a solid yield while central banks determine their final monetary policy decisions. Largely, we think that we are near the end of the hiking cycle, inflation is coming down, it is near the target rate of 2%, and while the consumer is resilient, a tightened credit market can lead to negative outcomes occurring eventually, and bonds are essentially insurance against this. It's possible that the BoC increases rates two or more times by the end of the year, however, if inflation slows faster than expected, these goal posts may change and thus bond prices can be buoyed. We would be comfortable holding bonds here as insurance, however, we would prefer to wait until Canada's next inflation reading as well as the BoC decision to add to the position.
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How are long-duration bonds different from long-duration equity? Night and day difference. From day to day like now both haven't been doing well because of inflation. While inflation is a driving force, not a good idea to buy. When protecting from recession, you want federal long bonds and not equity. That's the main differentiator.

Long Canadian bonds. The real flight to safety is into the US and into US$. He would go into the US version, although this one is fine. He is still quite bullish on the treasury market.

It is long bonds (federal government). Longer duration bonds as things fall is one of the best things you can own in your portfolio. It is not as attractive today but is a buy on dips. He thinks there is more of these interest rate dips to come. This is a tactical, rather than buy and hold kind of thing. When we see the recession starting to hit you want to get out of this because it is all priced in.

Long Federal Bond Index. Long term government fund and will fluctuate greatly with change in long term yields. In a Bull market will go up substantially but in a bear market will fall. No defence mechanism possible. If interest rates go up, the fund will fall.

Long Federal Bond Index? People will go after long-term bonds for the yields but they should be looking at the duration and yield to maturity instead. You don’t want to be holding a long-term bond when interest rates are going up.