iShares Core Composite Bond ETF (IAF)
In this current economic climate a good one to persist with the IAF ETF?
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Answer
Hi Roslyn,
The IAF ETF has fallen due to changes in interest rate expectations. Fixed rate bond prices fall when expectations change from rate cuts, to rate hikes. The locked in yield becomes relatively less attractive. We are sticking with our position in IAF in the Core ETF Portfolio, believing the pendulum has now swung too far (markets have become too hawkish on rates), implying IAF is good buying at current levels.
- In simple terms we don’t believe the RBA will hike twice next year, if we are correct bonds have fallen too far.
