FIXED “INCOME” ISN’T...
Fuelled by decreasing interest rates, bonds enjoyed a 30 year bull run. That performance is the main reason investors use bonds as a cushion against stock market volatility.
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Things have changed.
Volatile rates hurt fixed income investors
The FTSE Canada Universe Bond Index returned -11.69% during 2022.
"Bank of Canada Governor Tiff Macklem said Monday the risk of not rising rates enough and having inflation run wild is greater than the risk of raising them too much and fueling a recession."
CBC, December 12, 2022
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Long-only fixed income fund investors are facing the risk of more losses as rates are expected to remain volatile in 2023.
What is the solution?
Recommendations often fall into three buckets.
1. Alter your fixed income allocation using traditional bonds. The trouble is that rates are too low and rising, offering a low or negative return, and minimal portfolio buffer effect.
2. Shift to bonds with more credit risk or to equities that pay income. These options have interest rate exposure and they can introduce inappropriate risks for your capital preservation bucket.
3. Consider fixed income alternatives. Institutional investors have switched to effective alternatives. It’s time for you to optimize your portfolio by following their lead.
Protection and potential
YTM Funds are compelling alternatives to traditional long-only fixed income solutions. Our Funds have little or virtually no interest rate risk. We have created a track record of capital preservation by consistently applying a proven strategy, but not at the expense of returns. Our investors have earned absolute returns in excess of most traditional bond funds over many years.
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LEARN MORE:
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Active, investment grade credit, with virtually no exposure to rates >
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Proven mix of insured, residential, and construction mortgages >
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Let us show you how substituting a portion of your fixed income exposure with
YTM Capital Credit Opportunities Fund transforms your portfolio outlook.