Factor: Explanation Underlying Bond Prices: CVD.TO tracks Canadian government bonds. Fluctuations in bond prices directly impact the ETF's Net Asset Value (NAV) and market price. Rising interest rates generally cause bond prices to fall, decreasing the ETF's value. Interest Rate Changes: As a bond ETF, CVD.TO is sensitive to interest rate movements. Anticipated or actual changes in the Bank of Canada's policy rate significantly affect the yield and attractiveness of the bonds held within the ETF. Inflation Expectations: Higher inflation erodes the real value of fixed-income securities. Rising inflation expectations can lead to lower bond prices and consequently, a decline in CVD.TO's value. Credit Risk Perceptions: While CVD.TO holds Canadian government bonds (considered low risk), shifts in investor perception of Canada's creditworthiness, though rare, could influence bond yields and the ETF's price. Supply and Demand: General market sentiment and demand for fixed-income assets can impact CVD.TO's price. Increased demand can push the price above its NAV, while selling pressure can drive it below. Liquidity: The liquidity of the underlying bond market and the ETF itself influences price discovery. Lower liquidity can lead to wider bid-ask spreads and potentially greater price volatility for CVD.TO. Management Fees and Expenses: The ETF's expense ratio directly affects its overall return. Higher fees reduce the net return to investors, impacting its relative attractiveness compared to other bond ETFs. Global Economic Conditions: Broad economic conditions, particularly in countries that heavily trade with Canada, can influence Canadian bond yields and subsequently, CVD.TO's performance. Global recession fears often drive investors to safe-haven assets like government bonds.