| Fund Company | Phillips, Hager & North Investment Management |
| Fund Type | Canadian Bond |
| Rating | $$$$ |
| Style | Multiple |
| Risk Level | Low |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | PH&N Fixed Income Management Team since December 1970 |
| MER | 0.61% No Load, 1.17% Front End / Low Load |
| Code | PHN 110 – No Load Units PHN 6110 – Front End Units PHN 4110 – Low Load Units |
| Minimum Investment | $1,000 with minimum $25,000 account size |
Analysis: This is an update to our review which was published on November 30, 2011. You can read that review at https://paterson-associates.com/?p=402. Since November, there have been no material changes to the fund.
The weighting of the portfolio has remained relatively consistent over the past six months, with Government of Canada bonds now making up 7.0% of the fund, while corporates are 44%. The exposure to the higher yielding provincial bonds is just under 32% of the fund. The fund’s duration is 5.9 years, which is lower than the DEX Bond Universe duration of 6.6 years. The portfolio is very high quality, holding 89% in bonds that are rated “A” or better.
Interest rates, while not likely to move sharply higher in the short term, are expected to begin moving higher in the next few months. The manager has positioned the portfolio for this to happen with a shorter than benchmark duration and a higher exposure to corporate and provincial bonds. This combination will help to lessen the impact of rising rates.
We believe that this is one of the best bond funds for investors with its great management team, defensive positioning and lower cost structure. We are confirming our $$$$ rating on the fund.
However, for a rising rate environment, we continue to favour the PH&N Total Return Bond Fund (PHN 340) for its more flexible mandate which allows the manager the ability to invest in high yield opportunities as well as some derivative strategies. It is our opinion that it will hold up better in a rising rate environment.