Investment Grade Bond Strategy

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

 

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