Dynamic DXB ETF: Seizing Contrarian Yield in a Rising Rate World

The bond market’s volatility has left many investors sidelined, fearing the dual specters of rising rates and economic uncertainty. Yet within this turbulence lies an opportunity for income-focused contrarians: the Dynamic Active Tactical Bond ETF (TSX:DXB). With its May 2025 dividend declaration of CAD 0.064 per unit, this actively managed ETF is proving that tactical bond strategies can deliver consistent cash flows even as markets wobble.

The Contrarian Case for DXB: Resilience in a Volatile Landscape

While many fixed-income investors have retreated to cash or short-term instruments, DXB’s monthly distribution history stands out. The CAD 0.064 payout, which annualizes to approximately 4.38% based on its May 20 closing price of CAD 17.66, reflects Dynamic Funds’ high-conviction approach. This strategy combines active security selection, yield curve positioning, and sector diversification to navigate rate fluctuations. Unlike passive bond ETFs tied to static indices, DXB’s managers actively shorten duration, tilt toward higher-quality issuers, and exploit mispricings—keeping income flowing even when yields rise.

Yield vs. Risk: Outperforming Peers in a Tough Environment

DXB’s 4.38% trailing yield outpaces its peers. The XBB, for instance, yields around 2.8%, while VSB’s short-duration focus drags its yield down to 2.1%. This gap isn’t accidental. DXB’s mandate allows it to venture beyond Canada’s benchmark indices, investing up to 30% in global bonds and securitized assets. This flexibility lets it chase yield while hedging currency risk—a critical edge in a world where central banks are diverging.

Critics may point to DXB’s modest size (CAD 250 million AUM), but this is a feature, not a flaw. Smaller ETFs can pivot faster, and Dynamic Funds’ low expense ratio (0.39%) ensures costs don’t erode returns.

Why Now is the Time to Lock In Income

The May 2025 price action reveals DXB’s resilience. Despite a dip to CAD 17.66 on its announcement date, the ETF held above key support levels (see chart below). Even on days with minimal trading volume, such as May 12, its price remained stable—a testament to institutional demand for reliable income streams.

With the Bank of Canada’s rate path uncertain and global yields in flux, DXB’s active management becomes its secret weapon. The fund’s April 25 dividend distribution (also CAD 0.064) was followed by a price rebound to CAD 17.79, illustrating how Dynamic Funds’ strategies neutralize volatility.

The Contrarian Play: Income Today, Stability Tomorrow

In a market where fear drives short-term decisions, DXB offers a countercyclical bet. Its monthly payouts provide compounding power, while its tactical bond focus shields investors from the “duration trap” plaguing passive ETFs. For long-term holders, the 4.38% yield is not just an income stream—it’s a hedge against the erosion of purchasing power in a rising-rate environment.

Final Call to Action

The bond market’s volatility isn’t going away. But for those willing to look beyond the noise, DXB’s CAD 0.064 dividend is a signal. With Dynamic Funds’ active management and a yield that outpaces its peers, this ETF is a contrarian’s dream. Act now to lock in stable cash flows before the next wave of rate uncertainty hits.

Data as of May 20, 2025. Past performance does not guarantee future results. Investors should consider their risk tolerance before investing.