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Why Consider Bond ETFs?
Bonds provide stability and income—two things especially valuable for Canadian retirees. When stocks decline, bonds often hold steady or even increase, cushioning your portfolio.
Bond ETFs offer an easy way to own a diversified collection of bonds without the complexity of buying individual bonds.
How Bond ETFs Work
What You're Buying
When you buy a bond ETF, you own a share of a fund that holds many bonds. The ETF collects interest from all those bonds and passes it to you as monthly or quarterly distributions.
Key Bond Concepts
- Duration — How sensitive the bond is to interest rate changes
- Credit quality — How likely the borrower is to repay
- Yield — The income you receive as a percentage
Popular Canadian Bond ETFs
Broad Market Bond ETFs
- VAB (Vanguard Canadian Aggregate Bond) — MER: 0.09%
- XBB (iShares Core Canadian Universe Bond) — MER: 0.10%
- ZAG (BMO Aggregate Bond) — MER: 0.09%
Short-Term Bond ETFs (Lower Risk)
- VSB (Vanguard Short-Term Bond) — MER: 0.11%
- XSB (iShares Short Term Bond) — MER: 0.10%
Government Bond ETFs
- XGB (iShares Canadian Government Bond) — MER: 0.39%
- CLF (iShares 1-5 Year Laddered Government Bond) — MER: 0.17%
Bond ETFs in 2026
After years of low interest rates, bonds now offer more attractive yields. For conservative investors, this makes bond ETFs more compelling than they were in the 2010s.
💡 Note: Short-term bond ETFs are less sensitive to interest rate changes. If you're concerned about volatility, they offer a good balance of income and stability.
How Much to Hold
A traditional rule suggests holding your age as a percentage in bonds (a 65-year-old would hold 65% bonds). However, many advisors now suggest more flexible allocations based on your specific needs and risk tolerance.
For most retirees, a 40-60% allocation to fixed income provides meaningful stability while still allowing for growth.
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About Maple Wealth Guide
Maple Wealth Guide is an independent Canadian financial education website. Our team of educational writers researches and explains investment concepts, retirement-related topics, and personal finance information for Canadians aged 50 and over. We are not licensed financial advisors and do not provide personalized recommendations. All content is for educational purposes only.