I am just wondering why VAB is the most mentioned Vanguard Bond ETF.
I believe many people on this forum (and the passive world in general) are way too stuck on Vanguard. Vanguard might be the best in the U.S. where you can use them as a brokerage and access their Admiral-class funds with no-fee transactions. However, in Canada we need to use ETFs to get low-fee products. In that realm, iShares and BMO (and to a lesser extent Horizons) are just as good as Vanguard.
If you're looking for a low-cost, aggregate bond ETF with Canadian holdings, I believe that ZAG.TO, ZDB.TO, HBB.TO, VAB.TO, and XBB.TO are all solid choices. There are some considerations for tax efficiency in a NR account where HBB.TO and ZDB.TO win hands down.
Comparing with other Vanguard Bond ETFs, VAB.TO is just a simple bond solution if you want to run a simple portfolio with few components. It should perform better than VSB.TO over a long time frame because of the longer average duration. That said, VSB.TO is likely to be more stable with lower draw-downs. If you hold corporates (VCB.TO), you are going to get more equity-like returns, so why not just buy more equities and fewer bonds.
Isn’t it kind of foolish to only have Canadian bonds in your asset allocation?
Not really. The Canadian bond market is pretty good overall. Our governments have their debt under control compared with many other jurisdictions. Bonds are not in your portfolio to propel growth, they're there for stability and/or re-balancing use.
You can go global, but then currency issues come into play as well. VBG is currency-hedged, but that adds some cost. It also has a higher MER as noted above. VBG holds a lot of Japanese and European bonds which bring down the yield substantially. I'm not saying this because I dislike global bonds, but more because the benefits are questionable at this point.
In my view, why hold a global bond fund with a 1.0% YTM when you can hold a liquid local bond fund with a 2.6% YTM? And, why add a different bond holding if the benefits for doing so are very minimal?
Full disclosure: I only hold short-term bonds. I might use HBB.TO in my NR account when my strategy calls for a bond holding. That choice is driven by tax, not because I prefer aggregate bonds.