Diversify Your Fixed-Income Investments

Take advantage of the many opportunities available

A CIBC advisor can recommend fixed-income investments that are right for your portfolio. Here are a few ways to build your diversified mix:

Guaranteed Investment Certificates (GICs) guarantee your principal investment, plus you receive interest on your money. With the security and peace of mind they bring, GICs can play an important role in the registered and non-registered portfolios of all types of investors.

Government and corporate bonds add stability to a portfolio by providing a steady stream of income and a higher degree of capital preservation than a portfolio composed solely of equities. When the outlook for the markets is uncertain, government bonds - which typically carry a lower yield but a higher degree of stability - tend to perform well. When the economy is improving, the higher yields offered by corporate bonds can add to a portfolio's returns. Holding bonds from a variety of issuers can help you take advantage of any market environment.

Vary the maturities

Generally, the longer the term of the investment you choose, the greater the return. However, interest rates tend to change from year to year. By staggering (or "laddering") the maturities of your fixed-income investments, you gain three key benefits: you avoid investing all your money when rates are low; you can take advantage of a rise in long-term rates; and you have access to a portion of your funds on a regular basis.

One-stop diversification

If you are looking for instant diversification in a single investment, a mutual fund that invests in fixed-income securities or an index-linked GIC may be a good choice. A bond fund, for instance, will usually hold a variety of corporate and government-issued debt instruments, across a range of different maturities. With a mutual fund, you also gain the benefits of professional management. Mutual fund principal is not guaranteed like a GIC, so you may want to consider holding an index-linked GIC. These offer the growth potential of investing in the stock market, diversification and full protection of your initial investment. However, there is generally no income guarantee.

Whether you are looking for a steady stream of income or greater portfolio stability, a CIBC advisor can direct you to the fixed-income investments that are right for you.

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