Current capacity in the short-term bond market allows the fund to accept new investors
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RBC Global Asset Management (RBC GAM) has reopened the Phillips, Hager & North Short Term Bond & Mortgage Fund to new investors.
On July 4, 2016, the fund was capped to new investors in order to manage inflows, according to a statement from the firm. Since then, the fund managers have determined that the fund can be reopened for purchases by new investors given current capacity in the short-term bond market.
The fund aims for relatively high returns and capital stability. According to its fund facts document, it “invests primarily in short-term fixed income securities issued by Canadian governments and corporations, and first mortgages on property located in Canada.”
As of May 31, the investment mix of the low-risk-rated fund consisted of 37.5% corporate bonds, 34.7% federal bonds, 11.1% provincial bonds, 10.6% mortgages, and 6.1% in cash and other assets.
Shortly after the interest-rate increase by the Bank of Canada earlier this month, the yield spread between Canada’s two-year government bond and similar-maturity US Treasuries recently narrowed to as little as 15 basis points, according to a report from Bloomberg.
“Markets are either too pessimistic on the Fed, or too optimistic about the Bank of Canada,” Andrew Kelvin, a senior fixed-income strategist at Toronto-Dominion Bank, said in a note to clients. “And either way, it implies that the front-end of the Canadian curve will outperform versus Treasuries over the medium-term.”
RBC GAM said it reserves the right to cap the fund or otherwise restrict investment in the fund at a later date.
For more of Wealth Professional's latest industry news, click here.
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On July 4, 2016, the fund was capped to new investors in order to manage inflows, according to a statement from the firm. Since then, the fund managers have determined that the fund can be reopened for purchases by new investors given current capacity in the short-term bond market.
The fund aims for relatively high returns and capital stability. According to its fund facts document, it “invests primarily in short-term fixed income securities issued by Canadian governments and corporations, and first mortgages on property located in Canada.”
As of May 31, the investment mix of the low-risk-rated fund consisted of 37.5% corporate bonds, 34.7% federal bonds, 11.1% provincial bonds, 10.6% mortgages, and 6.1% in cash and other assets.
Shortly after the interest-rate increase by the Bank of Canada earlier this month, the yield spread between Canada’s two-year government bond and similar-maturity US Treasuries recently narrowed to as little as 15 basis points, according to a report from Bloomberg.
“Markets are either too pessimistic on the Fed, or too optimistic about the Bank of Canada,” Andrew Kelvin, a senior fixed-income strategist at Toronto-Dominion Bank, said in a note to clients. “And either way, it implies that the front-end of the Canadian curve will outperform versus Treasuries over the medium-term.”
RBC GAM said it reserves the right to cap the fund or otherwise restrict investment in the fund at a later date.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Sun Life announces mutual-fund changes
Invesco opens alternative pool to individual investors
