Bonds

Some investors think by focusing our portfolio management strategy on stocks, and staying out of bonds and fixed-return investments, we’re missing out on bonds’ ability to lower portfolio volatility.

It’s true that bonds do tend to reduce your portfolio’s volatility, since they tend to rise when stock prices fall. That’s why many brokers sell bonds to their clients. Of course, bonds …read more »

As investors near retirement, their advisors often recommend that they move a larger part of their investments from stocks to bonds and other fixed-return investments.

To some extent, this is an understandable strategy, since bonds provide steady income and a guarantee to repay the principal at maturity.

Stocks are bound to be more profitable for retirement investing than bonds

Bond prices will …read more »

ISHARES DEX UNIVERSE BOND INDEX FUND $29.48 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the DEX Universe Bond Index.

This index consists of a wide range of investment-grade Canadian government and corporate bonds with terms to maturity of more than one year. The 406 bonds in the portfolio have an average term …read more »

ISHARES DEX SHORT TERM BOND INDEX FUND $28.78 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index.

This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 221 bonds with an average term …read more »

Recently, we heard from an investor who inquired about our Successful Investor Wealth Management service. She said she likes our approach to investing, but she admits to some concern about what she called our “all-equities philosophy.” Her broker says that all investors need to hold some bonds to reduce the volatility in their portfolios.

Our view on stocks and bonds is …read more »

ISHARES DEX SHORT TERM BOND INDEX FUND $29.15 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index.

This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 201 bonds with an average …read more »

If you need steady income and want to hold bond funds, we advise you to focus on those with short-term maturity dates (see below for more on bond funds). That’s because bonds with shorter terms face a lower risk from interest-rate increases. You should also avoid funds that take part in any kind of speculative trading.

Low fees, high-quality holdings …read more »

Great-West Lifeco and IGM Financial get a big part of their earnings from fee income that varies with the value of the securities they manage.

Rising stock markets have increased earnings at both companies. As well, both are taking fewer writedowns on bonds and mortgage-backed securities because of improving credit markets.

GREAT-WEST LIFECO INC. $25 (Toronto symbol GWO; Conservative Growth Portfolio, Finance …read more »

Under the new financial-reform law, the Securities and Exchange Commission will develop rules to prevent conflicts of interest in the credit rating industry. The law also creates new standards for credit analysts, including passing qualifying examinations.

The new law will raise these three rating providers’ costs. However, all three have improved the quality of their ratings since the 2007/2008 financial crisis. …read more »

One of our Successful Investor Wealth Management clients recently turned 70, and he wonders what effect this should have on his portfolio management. He now has 85% of his portfolio in stocks, 15% in short-term T-bills and zero in long-term bonds and other long-term fixed-return investments.

This Successful Investor Wealth Management client has a pension that provides most of the …read more »