Mackenzie’s Short Duration Fixed Income Solutions | Mackenzie Investments

Mackenzie’s Short Duration Fixed Income Solutions


Investors often want their portfolios to include some assets they consider "safe" from market risks such as asset overvaluations, an uncertain geopolitical climate, and now from rising interest rates. Cash and GICs can offer that measure of safety – but with yields that are often below the rate of inflation, potentially leading to an erosion of purchasing power over time.

What if a high credit quality investment exists that is designed to provide higher yields with only modestly higher risk than cash-like instruments, and lower sensitivity to interest-rates than traditional bonds?


Consider short duration fixed income solutions

Benefits of Actively Managed Short Duration Investments:

Less Exposure To Interest Rate Risk – Investing in bonds with shorter terms to maturity or coupons that reset regularly to the market rate of interest results in returns that are not as sensitive to, and potentially even benefit from, rising interest rates.

Liquidity – Investing in a mutual fund or ETF structure means assets are generally readily available to redeploy when market opportunities shift, as opposed to paying early redemption penalties on a GIC, for example.

Less Exposure To Interest Rate Risk – Even in short-duration funds, a skilled active manager can adapt to changing market conditions, and tactically manage credit risk and yield curve exposure and aim to deliver higher yield and risk-adjusted total returns.

What is Duration?

Duration is a measure of interest rate sensitivity to the value of a fixed income investment, expressed in number of years.

Generally, the shorter the bond's duration, the less its value will be impacted by rising rates.

Mackenzie's Short Duration Fixed Income Solutions:

Mackenzie Canadian Short Term Fixed Income ETF (MCSB)

Mackenzie Canadian Short Term Income Fund

Morningstar: ★★★★★


The Fund/ETF invests in shorter duration bonds with maturities of 1-5 years. Predominantly holds Investment Grade bonds and up to 15% in High Yield bonds and Loans.


Mackenzie Investment Grade Floating Rate Fund

Morningstar: ★★★★★

 

 


The Fund invests in floating rate securities where the coupons reset regularly in lockstep with short-term interest rates.


Graph
For Illustrative purposes only.

Why Short-Term Bonds?

The prices of bonds with shorter terms to maturity move less than bonds with longer terms to maturity if interest rates rise, and there is a shorter time horizon over which the bonds mature and can be reinvested in securities with higher coupons, reflecting higher market yields.

Why Floating Rate Securities?

The coupons on floating rate securities reset regularly to the prevailing short-term market interest rate (e.g. LIBOR). As a result, the price of the securities moves less than fixed rate securities in reaction to rate hikes and higher bond yields.

Speak to your financial advisor to learn more about Mackenzie’s Short Duration Fixed Income Solutions

No portion of this communication may be reproduced or distributed to the public. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

Morningstar Star Ratings reflect performance of Series F as of August 31, 2018 and are subject to change monthly. The ratings are an objective, quantitative measure of a fund’s historical risk-adjusted performance relative to other funds in its category. Only funds with at least a three-year track record are considered. The overall star rating for a fund is a weighted combination calculated from a fund’s 3, 5, and 10-year returns, as available, measured against the 91-day treasury bill and peer group returns. A fund can only be rated if there are a sufficient number of funds in its peer group to allow comparison for at least three years. If a fund scores in the top 10% of its fund category, it gets 5 stars; if it falls in the next 22.5%, it receives 4 stars; a place in the middle 35% earns a fund 3 stars; those in the next 22.5% receive 2 stars; and the lowest 10% receive 1 star. For more details on the calculation of Morningstar Star Ratings, see www.morningstar.ca. Quartile rankings and peers beaten are calculated by Mackenzie Investments based on the fund series-level data Morningstar provides. The CIFSC categories, Star Ratings, number of funds in each category, and annual compounded performance for the standard periods are: Mackenzie Canadian Short Term Income Fund Series F, Canadian Short Term Fixed Income category: 1 year - n/a stars 1.6%, 3 years - 5 stars (187 funds) 1.5%, 5 years- 4 stars (143 funds) 2.1%, 10 years - 5 stars (52 funds) 2.9%. Mackenzie Investment Grade Floating Rate Fund Series F, Canadian Short Term Fixed Income category: 1 year - n/a stars 2.0%, 3 years - 5 stars (187 funds) 1.6%, 5 years- n/a stars (143 funds) n/a, 10 years – n/a stars (52 funds) n/a%.