Tag: money market

illustration of credit concept with money

The bond portion of my portfolio

RobH2 Comments

I’m a bit curious as to what’s under the hood of the category I refer to as “bonds” in my portfolio. I try to keep the level at 15% of my retirement net worth. Bonds have historically acted as a volatility reducer at the cost of overall performance. You can see that pretty clearly by comparing the performance of XEQT (100% equity) with XGRO (which holds the same equity funds, but less of them to make room for 20% bonds).

The drag on total return is pretty clear. And for this reason, 15% bonds is enough for me; adding to this is the other 5% of my portfolio which I call “cash” but is also actually very short term bonds.

But what kinds of bonds do I actually hold? I’m most interested in understanding a few parameters:

  • What kind of interest are they paying?
  • What is the duration of the bonds I hold? “Duration” means “when are these loans due”? The further in the future the loans are due, the more the bonds are impacted by changes in interest rates.
  • What’s the quality of the bonds I hold? “Quality” means “how creditworthy are the entities I’m loaning my money to”? Lower credit rating means higher yields, but greater risk of default. The least creditworthy are usually called “junk” bonds. The lower the credit rating, the more the bond begins to look like an equity ETF, with volatility to match. That’s not really what I’m looking for.

So the first thing to figure out is where my bonds are. Looking at my handy dandy asset tracker, (download a template here), I can check on my overall retirement allocation by ETF:

So from memory, I know that my bonds are held in XGRO (20% of that fund), and XCB. Let’s take a look at XGRO first. Heading over to the ETF fact sheet, you can quickly see what’s inside:

So to get to the bottom of this analysis, I have to look up what’s inside each of XBB, XSH, GOVT and USIG. I also hold XCB which is not a fund of funds, and by referring to its fact sheet so we can easily add construct the table below:

ETF symbolNamePercentage in portfolio Current yieldWeighted avg maturityQuality
XBBCanadian bond universe6.56%3.55%9.4 years89% A or above
XSHCanadian short term corporate bond1.55%4.01%3.24 years57% A or above
GOVTUS Treasury Bonds0.99%5.04%7.44 years100% A or above
USIGUS Broad investment grade0.98%5.97%9.70 years50% A or above
XCBCanadian Core Corporate4.4%4.26%7.96 years56% A or above
total/ weighted average14.5%4.08%8.18 years74% A or above

So a few comments on the results:

  • The percentage of bonds is actually sitting at 14.5%. I don’t track how closely XGRO keeps to its 20% target, I just assume that on average, that’s where it will be. But this calculation shows that there’s a bit of drift.
  • The Current Yield is as of October 14, 2026.
  • The weighted average maturity is meaningful because the longer the duration here, the more sensitive the bonds are to interest rate changes. 8 years isn’t super long, but in a rising interest rate environment, these holdings will suffer.
  • The quality is universally pretty high, with 75% rating A or above.
  • Missing in action are any bond holdings outside of the US and Canada, and even the US exposure is quite small.

My impression overall is that my bond holdings are quite conservative. Which I suppose is what they should be, but I am a little surprised how little the overall picture looks from what I consider cash, namely ZST. Here’s the table again, comparing my average bond holdings to ZST/ZMMK.

ETF symbolNameCurrent YieldWeighted avg maturityQuality
Average of bond holdingsXBB/ XSH/ GOVT/ USIG/ XCB4.08%8.18 years74% A or above
ZMMKMoney market2.38%0.22 years100% A or above
ZSTUltra short term2.59%0.36 years71.5% A or above

So here you see the improved yield picture compared to my “cash” holdings, which looks a bit better. I suppose I could look into adding some lower quality bonds1 to goose the yield a bit, but I’m not so keen on expanding the number of ETFs I hold. Less complexity is better than more, right?

  1. For example, ZJK (great ticker symbol, by the way) invests in much lower quality bonds. ↩︎

News: Interest rate cut in US, Canada stays the course

RobH1 Comment

The Bank of Canada and the US Federal Reserve both had their last rate setting meeting of 2025 today. These meetings are of interest to the DIY investor because they set the bar for the interest rate paid on short term loans / high interest savings accounts. I track a universe of HISAs and ETFs of interest over at https://moneyengineer.ca/hisa-and-short-term-bond-table-canada-us/.

The Bank of Canada announcement is here, and the US Fed announcement is here. The Bank of Canada kept things the same, with a rate of 2.25% while the US cut their rates by a quarter point, so they’re now sitting in a range of 3.5-3.75%. Anyway, the gap between the US and Canadian rates is narrowing, but the US overnight rates are still 1.5% higher (aka 150 basis points) and so it pays to use USD money market funds and HISAs if you’re able.

The next opportunity for the banks to mess with interest rates is January 28, 2026.