Should You Ride the Wave in This Long-Term Bond ETF?

Bonds have emerged as a preferred safe-haven as the investing world mulls the US-China trade war and slowing global growth.

Trump announced tariffs on Mexico in order to ostensibly combat illegal immigration, which sent futures into a frenzy. Tariffs are set to take effect within two weeks, but an emergency meeting between the two countries is imminent. Soft manufacturing data in China is also worrying investors.

The TSX has battled volatility in May, but bond ETFs have been a strong alternative. Today, we are going to look at one ETF that should continue to see strength as uncertainty builds into the summer.

The iShares Core Canadian Long-Term Bond ETF (TSX:XLB) rose 0.12% on May 30. The ETF has climbed 6.7% over the past three months. On its investing page the ETF offers increased duration through a portfolio of long-term Canadian bonds with maturities over 10 years. It is designed to be a long-term core holding.

Some of the top holdings in the ETF include a roughly 20% exposure to Province of Ontario and Government of Canada long-term bonds, with the Province of Quebec boasting an 11% weighting. Rounding out the top 10 is the Hydro One long-term bond.

Precious metals have seemingly fallen out of favour as safe havens in the spring. Investors looking for security should consider stacking this bond ETF in their portfolio as we prepare for what is likely going to be a turbulent summer.