Author: Danny Popescu | April 9, 2020
For years, we’ve been preaching that bonds can be extremely volatile and do not provide the “safety” that investors believe they do. Public debt markets can drop like equities and the period between February 20th and March 23rd is a good example of this. In roughly 20 trading days, traditional fixed income instruments (bonds, preferred shares, balanced funds etc.) dropped more than 35%.
These are equity-type declines which proves the point that traditional fixed-income investments do not provide the diversification equity portfolios need. Our private debt holdings experienced positive returns during this same period of time, therefore doing the job fixed income instruments should be doing.
To date, the large majority of Canadian investors (and their advisors) at some of the most recognizable investment firms still use the “balanced” 60/40 approach due to a lack of knowledge and/or a lack of access to private securities.
Have a good weekend.
February 20 – March 23
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