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I may offer in consultation with you. |
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| Treasury Bills and Commercial Paper Treasury Bills issued by the Federal and Provincial Governments in maturities ranging from 30 days to 2 years offer rates generally higher than paid on deposit accounts at financial institutions. Commercial paper issued by corporations for up to 90 days have rates somewhat higher. |
| Money Market Mutual Funds Money market mutual funds generally offer a higher return than Treasury Bills as these funds purchase T-Bills and Commercial Paper or short term bonds at wholesale rates. Also, generally they are redeemable at par without charge by the mutual fund, although my firm does assess a transaction fee on purchase. |
| Guaranteed Investment Certificates ( GIC's ) If they are cashable in 30 or 60 days, these have some merit as a short term safe haven for investment cash reserves. For the longer term there are other instruments such as discounted coupons which offer not only liquidity but most often a superior return with equivalent or preferable safety of principal. |
| Mortgage Backed Securities MBS's enable investors to participate in a portfolio of mortgages guaranteed as to principal and interest by The Government of Canada and administered by a government approved institution. These popular instruments feature monthly payment at interest rates usually higher than GICs of similar term. |
| Bonds and Debentures These are the most familiar fixed income investment beyond GICs and Canada or Provincial Savings Bonds. Bonds trade at, above, or below their maturity or face value, depending on prevailing interest rates compared to their own rate. Investors will need to assess if the current rate, yield to maturity and discount or premium is advantageous from a tax and market vantage point. |
| Real Return Bonds Inflation protection is offered by these bonds issued by the Canadian Government. They feature the principal value being adjusted by the inflation rate to assure purchasing power of the investment remains constant; and further, the interest paid maintains its purchasing power too. Maturity date and true compounding may be secured by selecting Real Return discounted coupons. |
| Discounted Coupons and Residuals Popularly referred to as Strips, these portions of a traditional bond offer the most efficient method of achieving the full benefit of compound interest available. Often there are excellent opportunities for capital appreciation as well. For a good description refer to Discounted Coupon example. |
| Callable Residuals Residuals represent the maturity value of a stripped bond. They may be purchased at a discount (to compensate for no interest payments as the coupons were 'stripped' off until call date). Callable Residuals may be called for redemption prior to maturity. If so, the original purchase discount will result in a much higher rate than originally estimated. If not called, the residual reverts to an ordinary bond with coupons after the anticipated call date has past. |
| Preferred Shares Preferred shares are available to portfolio investors in many different varieties from straight preferreds through floating rate, fixed floaters, retractables, callable and non-callable, cumulative and non-cumulative, and combinations thereof as may suit best. The 'Dividend Tax Credit' makes them all highly competitive with interest instruments. |
| Income Energy Funds These trusts, listed on the stock exchange, develop and market energy pools purchased from exploration companies, or pools they already own. Proceeds consist of profit, recovery of costs -administration and inventory, and provision of funds for pool replenishment at favourable prices. Profit and a portion of recovered cost is paid to shareholders with significant tax deferral provisions further enhancing their already high current yield. |
| Real Estate Investment Trusts REITs are composed of a portfolio of rental properties. They generally offer a high tax-deferred rate of return with some making monthly payments. Much of the income received is offset for tax purposes by Capital Cost Allowance (depreciation) deductions which in turn reduce the investor's cost price for taxable capital gain purposes. Hence tax is deferred until disposition of the investment is realized when capital gain tax rates apply. |
| Bond Mutual Funds Bond funds are similar to a bond with no fixed maturity and with a management fee detracting from income. Offsetting these disadvantages is a hoped for ability of management through astute trading to enhance the fund's yield and capital. Bond funds fluctuate in price according to market conditions notwithstanding management's ability to increase yield and manage duration (average maturity of bond holdings). |
| Money Market Convertible Redeemable Debenture This little known investment is available in $100,000 renewable tranches on a 30 day rollover basis. It generally offers a significantly higher short term rate than is available on corporate paper of a similar high credit rating. |
| Cashable GIC's Cashables offer competitive rate for those requiring 'on demand' liquidity after 30 or 60 days with an optional one year maturity. |
| Step up Notes Best treated as a short term instrument, Stepups offer significantly higher rate than other one to two year instruments, confer on the issuer the right to redeem on annual basis or to extend maturity at incremental rates often for up to 10 years, but subject to prior call by the issuer with an annual redemption right until maturity. |
Click on a name for brief comment, click on name again to return |
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| Canadian Common Shares I concentrate on common stocks of well researched Canadian Companies recommended by our excellent Research Department. Selection is made on the basis of at least 20% capital gain or total return potential within 12 months from a fundamental and technical analysis perspective. I publish a Canadian "Buy List" for my clients at what I consider to be important market junctures offering a good buying opportunity. (examples are available on request to prospective clients). |
| US Shares Canadian investors are often attracted to purchase shares in the US Markets for many different reasons, among which are the larger size of the companies and the broad cross-section of industries to choose from. The approach to selecting US shares can be overwhelming given the vast array and ongoing sector rotation. My approach which has been successful in the past (examples available on request to prospective clients) is described under Process elsewhere on this site and involves a rigorous holistic screening approach |
| Convertible Debentures Convertible debentures or bonds, offer the advantage of a high yield together with being exchangeable into common shares of the company issuing the bond. In some cases, the bonds are actually exchangeable into shares of an affiliated company. |
| Convertible Preferreds Convertible preferred shares usually offer a significantly higher dividend than the underlying common shares and yet, if properly selected, can offer nearly as much capital gain potential since the convertible can be exchanged for common shares on a fixed ratio at any time within a specified period. Because of their higher dividend and more senior ranking, convertible preferreds often withstand market adversity better than the underlying common shares. I can help you determine which convertible preferreds are attractive. |
| Equity Mutual Funds Mutual Funds are suitable for those seeking diversification with small amounts of capital to invest. Portfolio investors may utilize mutual funds to fulfill a specialized function within their portfolio, such as investing in small companies or for international or sector participation. Comprehensive assistance in selecting mutual funds is a service I can provide for you. |
| Note about Mutual Funds Important information about a Mutual Fund is contained in its simplified prospectus. Obtain a copy of any you are considering and read it carefully before investing. Past performance of a mutual fund is not indicative of future performance. Unit value, yields and investment returns will fluctuate. |
| International RRSP Eligible Mutual Funds Canadian RRSP legislation currently limits foreign content of RRSP investments to 20% of book value. However it is possible to attain participation in foreign markets beyond this restriction through investing in mutual funds that do not infringe upon any portion of this allowable foreign content. These funds invest 80% or more of their assets in Canadian treasury bills and the balance of their assets provide margin for purchase of future contracts on foreign markets with contract face values not exceeding the fund's asset value. Call me for a full description and examples. |
| Closed End Funds Closed End Funds are mutual funds which do not issue new shares or redeem outstanding shares on a continuous basis, although some do make provision for periodic redemption. Usually these funds are listed on the stock exchange where the opportunity to buy and sell is available. Most often closed end funds trade at a discount to their asset value, but if their area of investment is "in vogue", very often they will trade at a premium. |
| Gold It can be shown that more volatility or leverage to movements in the price of gold can be realized through purchase of gold mining shares. However many prefer to have an investment in Gold itself. This is facilitated through the purchase of Gold Certificates which represent physical gold held against the certificate at a Canadian bank or other such institution. |
| Options An option conveys upon the holder the right to purchase or sell a tradeable (eg. stocks or future contracts or gold etc.) at a specified price during a specific time period. The price of the option or the option "premium" is composed of two amounts, the intrinsic or real value, and the time value. The latter value will diminish as the option moves closer to its expiry date. The use of options in one's investment program can be done on a conservative basis or can be extremely speculative. It has been estimated that 85% of those speculating in options end up losing money. It is not my practice to advocate such speculation notwithstanding my extensive experience in the use of options. I will however be pleased to illustrate the conservative strategies available. |
