| Fund Company | CIBC Securities |
| Fund Type | Canadian Fixed Income Balanced |
| Rating | D |
| Style | Blend |
| Risk Level | Low – Medium |
| Load Status | No Load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | CIBC Asset Management Team |
| MER | 2.18% |
| Code | CIB 832 – No Load Units |
| Minimum Investment | $500 |
Analysis: Set up basically as a fund of funds that invests in other CIBC managed products, it has a static asset mix that is currently targeted at 3% cash, 62% bonds and 35% equity. The fixed income exposure is pretty much equally split between the CIBC Canadian Bond Fund and the CIBC Canadian Short Term Bond Index Fund. Combined, these two funds represent approximately 57% of the portfolio. There is a small exposure to global bonds. Equity exposure is predominantly focused on large cap stocks.
The short term performance numbers have been decent, with a one-year return of 5.3% compared with a 3.2% return for the fixed income balanced benchmark. Longer-term numbers however, are less than impressive with a five year return of 3.2%, dramatically underperforming both the index and the category average.
Costs for the fund are a touch high with an MER of 2.18%, which is above the category average. For those looking for cash flow, there are two T-Series options available which offer annualized payouts of 4% and 6%. The MERs of those series are slightly higher, coming in at 2.19% for the T-4 series and 2.22% for the T-6 series.
Looking ahead, we expect that this portfolio, with its emphasis on fixed income, will see returns that are more modest. Half of the fixed income exposure is invested in short-term bonds, which should hold up relatively well in periods of rising rates. The downside is that they will do little to add to return during a flat rate environment, as we are expecting for the near term. Within the traditional fixed income component, about 60% of the bond exposure is in corporates, which should help to add some level of return while rates hold steady and downside protection when they rise.
While this is not a bad fund, we do believe that there are better options available for most investors. We also believe that with interest rates expected to rise over the next few years, investors will need to begin to take on additional equity exposure if they are to earn a level of return that will keep pace with inflation. A static asset mix which heavily favours fixed income will likely not allow that to happen.