Why Canada tops US for fixed income.
Coverage of the 2012 Risk Management Conference.
Extraordinarily low interest rates are one of the legacies of the recent financial crisis: as of July 2012, the Bank of Canada has fixed the overnight rate at 1%, and the 30-year bond yield stands at around 2.6%. Such low rates have particular implications for pension plan sponsors seeking returns in the fixed income asset class.
In a world where markets turn on a dime, the underlying economic fundamentals are often shoved to the side. “Diamonds are forever,” noted Avery Shenfeld, senior economist with CIBC World Markets, in an economist panel at the Benefits Canada Benefits & Pension Summit. “But when it comes to global economies, nothing else is really forever.”
Fixed-income investing will continue to play a crucial role for investors, even as three decades of bond-market gains appear likely to come to an end, according to a research paper by Russell Investments.
According to a 2011 Greenwich Associates survey of Canadian institutional investors, the most important issue investors face is market volatility (47%), followed by rate of return and funding issues (34%).
CIBC Global Asset Management Inc. has expanded its offering of institutional pools, spanning Canadian, U.S. and global equities, as well as Canadian fixed income.
Integra Capital Limited has entered into an agreement with Boston-based Columbia Management Investment Advisers, LLC to represent the firm in the Canadian institutional market.
Brandes Investment Partners and Sionna Investment Managers have launched a new monthly income fund, the Brandes Sionna Monthly Income Fund (BSMIF), which they describe as a conservative mix of 60/40 Canadian equities and fixed-income securities.
The newly established Canadian Bond Investors’ Association (CBIA) will hold its inaugural meeting on Nov. 29, 2011 at the Fairmont Royal York Hotel in Toronto.