ZAG:CA: Be Careful With Rate Hike Calls Increasing
The BMO Aggregate Bond Index ETF (ZAG:CA) is currently rated a sell due to concerns regarding the Bank of Canada's hawkish stance and inflation risks. Investors are advised to limit their allocations to ZAG:CA and consider alternative investments. The ETF's yield is projected to be around 3.4%, with potential downside if interest rates increase.
- ▪ZAG:CA is a low-cost, liquid vehicle for Canadian investment-grade bond exposure.
- ▪The Bank of Canada's hawkish tone raises concerns about fiscal deficits and inflation risks.
- ▪Investors should consider trimming ZAG:CA allocations above 15-20% and explore shorter-duration bonds or precious metals.
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