Recommended List of Funds – January 2019
There is little question that floating rate investments can be a great way to help reduce the effects of rising rates in a portfolio, but it is important to note that these are not suitable as a core holding for the fixed income portion of a portfolio. While the reduction of interest rate sensitivity is undeniable, the credit risk is very real. It should be noted that the underlying loans are almost always unrated, and while they are secured by assets, the risks for default still exist. With their near zero duration, many investors make the mistake of thinking these investments are much like a cash substitute. Again, this is not the case as these are often non-investment grade loans that can sometimes fluctuate significantly. In the fourth quarter the average floating rate fund fell by more than 2%. A key reason for this decline was equity market volatility led investors towards traditional safe haven investments such as government bonds which lowered the demand for riskier investments pushing prices lower.
Read MoreETF Focus List – December 2018
Invesco Senior Loan CAD Hedged ETF (TSX: BKL.F) – Last time around, I noted that I continue to favour this ETF for exposure to the leveraged loan space largely on the higher quality portfolio it offers. During an extremely challenging period for credit markets, this ETF held up better than the other floating rate ETFs, gaining 1.10%. This narrowly outpaced the Mackenzie Floating Rate Income ETF. I continue to follow the Mackenzie offering closely and am looking to see how it continues to perform in a challenging environment.
Read MoreRecommended List of Funds – October 2018
he past few quarters have been a challenge for bond investors with central banks starting to remove stimulus and moving towards normalizing their interest rate policies. Over the past two years, the FTSE/TMX Canada Universe Bonds Index is lower by an annualized 0.7% to the end of September. The environment is not likely to get any easier in the next little while either, with worries over inflation becoming more real, the yield curve continues to flatten and worries over it inverting remain in view. Further, there are growing concerns over the credit quality of many of the issues in the lowest rated part of the investment grade bond universe. With these challenges, a low-cost passive bond fund, or even a core only product may not be your best option.
Read MoreETF Focus List – September 2018
There were no new additions or deletions to our ETF Focus List this time around. In this edition, we highlight ETFs from Invesco, Horizons, iShares and Vanguard.
Read MoreRecommended List of Mutual Funds – July 2018
Download a PDF Version of this Report . Additions NONE Deletions Guardian Global Dividend Growth Fund (GCG 570 – Front End Units) – It’s no secret that I’ve been frustrated by the performance of this Fund for some time. While some of this underperformance is a function of the Fund’s investment style, it has also been lagging other Funds with comparable mandates more frequently. Because of this,...
Read MoreETF Focus List – June 2018
iShares S&P/TSX Small Cap Index ETF (TSX: XCS) – The iShares S&P/TSX Small Cap Index ETF provides exposure to a diversified portfolio of Canadian small cap stocks. It replicates a market cap weighted index that holds more than 200 individual positions, with the top ten making up under 15% of the portfolio. While it may be diversified on an individual security basis, it is more concentrated on a sector basis, with energy and materials representing more than half the ETF. Given the sector mix of the Canadian market, I don’t expect that this composition will change dramatically in the near term. The index and ETF are rebalanced quarterly.
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