Objective:
The Investment Grade Bond strategy seeks to provide a reasonable level of income while taking on lower risk. The strategy will invest in high-quality Canadian corporate, provincial and government bonds with a focus on lower duration and shorter terms to maturity. This strategy is particularly tax efficient in registered accounts, where the interest income grows on a tax free, or a tax deferred basis.
Clients are able to access this strategy via a Separately Managed Account, where the bonds are purchased and laddered directly, or via shorter term corporate and government bond ETF’s.
Why now:
- Investment grade bond yields have meaningfully increased due to rapidly rising interest rates, providing investors an opportunity to earn a reasonable total return in a lower risk framework
- Investment grade bonds are historically well positioned to withstand economic downturns
- Investment grade bonds can play an important role in a portfolio by enhancing diversification and stability, leading to reduced volatility
Investing principles:
- Focus on higher quality, investment grade bonds
- Total return, not just income
- Diversify broadly across issuers and industries
- Lower duration and shorter term to maturity