If you’re looking for ways to defend your portfolio against the rough ride in the markets, it may be time to consider bond funds. Canadian Bond indexes, weren’t doing well until last summer. They were in the red for most of 2007, and then began to turn around as investors started worrying about the sub-prime mortgage mess.
Over the six months to Nov. 30, the average Canadian stock fund lost 2.78 per cent of its value. During the same period, the average Canadian fixed income fund gained 2.44 per cent. Here are two picks from Gordon Pape, a financial writer for the 50Plus website.
He says RBC Canadian Bond Index Fund is a great choice for conservative investors who want safety, stability, and cash flow. It tracks the performance of the RBC DS Government of Canada Bond Market Index and carries a low management fee of 0.7 per cent.. Distributions are paid quarterly and the 12-month yield to Dec. 21 was 3.67 per cent.
He also likes the iShares CDN Government Bond Index ETF which tracks the DEX Universe All Government Bond Index (formerly the Scotia Capital Index). It has an even lower fee of 0.35 per cent, and gained 2.53 per cent in the last year.