Bonds are once again wrecking your investment returns

  • 📰 globeandmail
  • ⏱ Reading Time:
  • 47 sec. here
  • 2 min. at publisher
  • 📊 Quality Score:
  • News: 22%
  • Publisher: 92%

Business News News

Business Business Latest News,Business Business Headlines

We could see a most unwelcome three-peat in 2023

Broadly diversified bond funds lost money in 2021 and 2022. This year was looking good for a while, but unstoppable inflation has turned the tide. Unless inflation backs off, we could very well see a third straight year of declines for bond funds. As of Oct. 6, the benchmark FTSE Canada Universe Bond Index was down close to 2 per cent on a year to date basis.

Some quick thoughts on limiting the damage from bonds: Emphasize short-term bonds and bond funds, which means maturity in five year or less; supplement with guaranteed investment certificates in cases where liquidity is not an issue; and, consider high interest savings account exchange-traded funds and investment savings accounts packaged like mutual funds. Floating-rate bond funds are also worth a look if you think rates will rise further or hold steady for a while.

If you’re of a mind to buy low as bonds slump, you could add more money to the broadly diversified bond ETFs that account for the fixed income portion of so many retail investor portfolios. The weighted average yield to maturity for these funds in early October was roughly 5 per cent after fees. If rates plateau and then ease off even a little, rising bond prices will combine with interest payments to produce a nice total return.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 5. in BUSİNESS

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

2023 Housing market is more like the 1980s, not 2008: BofA economistsBank of America (BAC) economists say that today's housing market is reminding them more of the 1980s, not what the U.S. saw in the 2008 financial crisis. The...
Source: YahooFinanceCA - 🏆 47. / 63 Read more »