Canadian Bond Funds

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In most cases, Canada bond funds are structured as mutual funds. These are simply arrangements in which a group of investors pools their money, and hires a professional manager to buy and sell securities on their behalf.  In this case, Canada bond fund managers concentrate on Canadian bonds. Some funds purchase strictly Canadian sovereign debt; other funds will also purchase bonds issued by Canadian corporations, municipalities, and Canadian asset-backed securities, such as bonds that represent pools of mortgages.

The advantage of the mutual fund structure is that is allows for diversification of bonds in relation to things which may include issuer, term and yield. The disadvantage, however, is in the lack of guarantees. While any individual bond has a reliable payout schedule (unless the issuer goes insolvent), you have to hold the bond to maturity in order to get any kind of guaranteed results. Prior to maturing, bond prices can fluctuate. And long-term bonds can fluctuate wildly.

Mutual Funds Cannot Guarantee Anything

While individual bonds are relatively predictable when held to maturity, you can’t say the same thing about a mutual fund. Because mutual fund returns are based not on an individual bond, but on a whole portfolio of them, there are no guarantees on what the aggregate value of that portfolio will be at a given time. Bond funds can provide no assurance to investors against short-term losses.  Furthermore, mutual funds cannot guarantee a given rate of income. Bond interest rates rise and fall – and the income generated by a portfolio of bonds in a mutual fund is going to be sensitive to the yields generated by the newer additions to the portfolio. If interest rates fall, bond funds will soon provide less income.

What are the options?

For people looking for a guaranteed payout rate, and who don’t want to worry about whether their investments will fall in a bad market should consider annuities. Like mutual funds, annuities can represent an interest in a portfolio of bonds. But there is a crucial difference:  With mutual funds – even bond funds – the shareholder bears the risk of loss. With guaranteed annuities offered through Guaranteedinvestments.com, the issuing company backs the guarantees.

Put simply, with mutual funds, you bear the risk. With the annuities offered by Guaranteedinvestments.com, the insurance company bears the risk. You sleep at night.

Guranteedinvestments.com provides investors with access to many secure and reliable investment alternatives including annuities, guaranteed investment funds, GICs, insured annuities, guaranteed minimum withdrawal benefit plans , guaranteed lifetime withdrawal benefit plans and much more.

Note: Guaranteedinvestments.com does not offer individuals with access to individual bonds or bond funds in Canada. Guaranteedinvestments.com does not provide investors with access or advice on mutual fund investments in Canada.

Canadian Bond Funds which are purchased as guaranteed investment funds provide investors with potential creditor protection, potential capital preservation, death benefit guarantees and many other benefits.