There’s a sweet spot along the yield curve for bonds, offering higher yield when adjusted for the risk of holding longer maturities. By identifying that yield-duration target and tilting their portfolios accordingly, ETF and mutual fund managers can materially enhance returns in their bond mandates.

Though it’s a moving target, the sweet spot can also serve as a guidepost for how advisors and their clients can effectively position fixed-income holdings.

“Yield per unit of risk is a good approach,’ said Ashish Dewan, senior investment strategist with Toronto-based Vanguard Investments Canada Inc. “This approach has provided a yield cushion that has helped steady returns against broad market volatility.”

A year and a half ago, when the yield curve was inverted, short-term maturities were the most attractive on a risk-adjusted basis, said Darcy Briggs, a senior vice-president and portfolio manager with the Canadian fixed-income team of Franklin Templeton Canada in Calgary.

But with the yield curve having reverted to a normal trajectory, Briggs added, the sweet spot is now in what bond managers call the “belly” of the curve, the middle ground between short- and long-term maturities.

“That sweet spot will move around,” said Briggs. “But on average, like over a full cycle, the belly of the yield curve offers some of the better risk-adjusted returns.”

One yield-curve measure employed by bond managers is the difference between the two-year yield and the normally higher 10-year yield. Recently, this gauge of steepness was about 73 basis points in favour of the longer end. Briggs said this falls within the 50 to 150 basis-point range of a normal yield curve, though currently less than the median level of 100.

There’s no specific range of maturities that constitutes the belly of the curve, but depending on the portfolio manager it’s generally considered to be anywhere from three to seven years.

For the fixed-income team at CI Global Asset Management, the best risk-return tradeoff is currently in that range. That provides a healthy stream of income while mitigating the price sensitivity of longer-dated bonds.

“The long end carries too much risk in this environment. The belly gives you more bang for your buck,” said portfolio manager Grant Connor, who has the lead role in domestic rate strategy for the CI GAM team.

Connor and his colleague Fernanda Fenton, who is responsible for managing rates exposure in developed and emerging markets, consider the five-year area of the curve to be the current sweet spot.

This part of the curve, they believe, offers enough duration to benefit from any central bank easing, while avoiding the elevated volatility and downside risk of the long end of the curve, which remains vulnerable to fiscal concerns, inflation persistence and geopolitics.

Bond yields are attractive

Regardless of the next move in interest rates by the U.S. Federal Reserve or the Bank of Canada, bond yields look attractive, bond watchers say. Vanguard’s Dewan noted that recent real, after-inflation yields have exceeded 2%, particularly at the 10-year level.

“That is something we haven’t seen in a while. So it increases the return potential,” he said. As well, Dewan added, higher quality bonds are well equipped to be portfolio hedges in the event of falling stock markets.

Citing factors such as tariff-related economic weakness and the plight of homeowners facing mortgage renewals at much higher rates than several years ago, the Franklin team believes that the Bank of Canada will be compelled to make more cuts in its trend-setting policy rate. For that reason, said Briggs, the yield on 10-year Government of Canada bonds, which was at 3.4% in early August, looks attractive.

If the Bank of Canada rate fell to 2%, 75 basis points lower than its current level, that would suggest a 10-year yield falling to 3%, according to Briggs. This would result in capital gains, since bond prices move in the opposite direction of market interest rates.

“That would represent a high, single-digit return on the Canada 10-year,” Briggs said.

Looking ahead over the next six to 12 months, the CI managers believe the five-year part of the yield curve is expected to remain the anchor for risk-efficient positioning. But central bank cuts might present an opportunity to extend duration, especially if the yield curve steepens as long-bond rates remain high. “Unless tariffs or [rate] cuts change the outlook, five years still makes the most sense over the next six months,” Connor said.

U.S. “uncertainty”

In the context of an overall fixed-income portfolio, the sweet spot is only one element of portfolio construction to consider. Dewan recommends diversification into international bonds outside North America, citing differences in central bank policies and “uncertainty around U.S. policy, which is a big risk for many investors right now.”

The sweet spot will also vary depending on the investment objectives and risk tolerance of the individual investor. In a more conservative portfolio, said Dewan, longer-term investors should consider holding mostly fixed-income securities with an emphasis on short-term corporate credits. Risk-tolerant investors with a longer-term horizon, he added, can take on more duration risk by holding longer-dated securities.

“Active duration management is essential,” said CI’s Fenton. That means dialing risk up or down and rotating into parts of the yield curve that provide the best risk-adjusted rewards.

For example, CI Global Unconstrained Bond Fund has gone from having very short-term positioning in 2021–2022 to a recent duration of 5.5 to six years, now that there’s a normal, upward sloping yield curve.

Active management can also pay off in terms of being able to overweight corporate credits versus market benchmarks, said Briggs. Franklin Canadian Core Plus Bond Fund, for instance, maintains a large overweighting in high-quality corporate securities, while holding far less in federal bonds than the fund’s market benchmark, the FTSE Canada Universe Bond Index.

By accepting somewhat higher credit risk, actively managed ETFs can generate higher yields with less duration risk. “If you structure your portfolio to be more geared towards corporate debt, you should generate higher returns and better risk-adjusted returns, because you just don’t have the interest-rate volatility,” said Briggs.

Go here for the latest TSX numbers, here for the latest CSE numbers, and here for the latest Cboe Canada numbers.

Go here for global market numbers from Bloomberg’s World Stock Indexes page.

Go here for the latest Canadian dollar exchange rates (USD, EUR, GBP) from the Bank of Canada.

—

Real estate and financial stocks help S&P/TSX composite rise more than 140 points

August 12, 2025

Canada’s main stock index gained more than 140 points to finish trading Tuesday on strength in the real estate and financials sectors, while U.S. stock markets reached new highs amid better-than-expected U.S. inflation data. 

The S&P/TSX composite index was up 146.03 points at 27,921.26.  

“It’s been a very positive day for risk assets across the board when you’re looking at equities,” said Macan Nia, the co-chief investment strategist at Manulife Investment Management. 

He said gains were seen across Europe and on the TSX. 

“But the driver has been the S&P 500 and Nasdaq, that the risk-on rally has continued into the U.S. as we got those better-than-expected inflation numbers that investors were very closely watching to see whether it gives any clues to us in terms of what the Fed may or may not do after the next meeting in September.” 

In New York, the Dow Jones industrial average was up 483.52 points at 44,458.61. The S&P 500 index was up 72.31 points at 6,445.76, while the Nasdaq composite was up 296.50 points at 21,681.90. The S&P 500 rose 1.1% to top its all-time high set two weeks ago, and the Nasdaq composite jumped 1.4% to set its own record.

Stocks got a lift from hopes that the better-than-expected inflation report will give the U.S. Federal Reserve leeway to cut interest rates at its next meeting in September.

Lower U.S. rates would give a boost to investment prices and the nation’s economy by making it cheaper for U.S. households and businesses to borrow to buy houses, cars or equipment. 

U.S. President Donald Trump has angrily been calling for cuts to help the economy, often insulting the Fed’s chair personally while doing so. But the Fed has been hesitant to move because of the possibility that Trump’s tariffs could make inflation much worse. 

“This narrative that tariffs would at some point impact prices in the U.S. has been top of mind for investors really all year,” Nia said. 

“We’re in August, the trade uncertainty started in March, so investors were expecting maybe we might start seeing the trickle-down effect of tariffs.”

He added that the recent U.S. inflation numbers have increased the odds of the Federal Reserve lowering borrowing costs multiple times this year. 

“So the markets are cheering the potential of lower interest rates for a U.S. economy without thinking on the other side of, ‘why are interest rates being cut in terms of the recession dynamic of that,’” he said, adding that the probability of a recession in the U.S. over the next six months remains low.

Going forward, Nia added that investors might want to exercise some caution. 

“I think in the short term, we’re vulnerable. Markets are priced for perfection. Valuations are elevated. We’ve gone through earnings season unscathed,” he said. 

Nia also noted that September is a historically weak month for markets. 

“Near term, I think some cautiousness would be prudent for investors, but remaining constructive on the long-term outlook,” he said. 

On the trade front, Nia said he doesn’t think recent tariffs placed on Canada by China will weigh on Canada’s benchmark index. 

China announced a 75.8% preliminary tariff on Canadian canola on Tuesday, following an anti-dumping investigation launched last year in response to Canada’s tax on Chinese electric vehicles.

“When you look at the drivers of the TSX in terms of the contribution, it’s coming from financials, it’s roughly a third of the return. A third of it has been the materials, so gold. And then Shopify, to the surprise of no one, has also contributed a couple per cent,” he said. 

“So it hasn’t really been any agriculture or anything of that nature. So I don’t think that’s going to be a driving factor for the TSX moving forward.” 

The Canadian dollar traded for 72.60 cents US compared with 72.54 cents US on Monday. The September crude oil contract was down 79 cents US at US$63.17 per barrel.

The December gold contract was down US$5.70 at US$3,399 an ounce.

Daniel Johnson — The Canadian Press with files from The Associated Press

Canadian ETFs recorded inflows of $9.9 billion in July as investors poured money into equity, leveraged and inverse and crypto-asset funds. They pulled back from commodities funds, a report from National Bank Financial Inc. (NBF) shows.

Equity ETFs dominated the total inflows, gathering $5.8 billion in the month.

On a regional basis, international equity ETFs accounted for $2.8 billion of the total, followed by Canadian equity ETFs at $2 billion and U.S. equity ETFs at $1 billion.

On a thematic basis, “all equity” asset allocation ETFs recorded $952 million in creations, and financials sector ETFs made a “strong comeback” with $1 billion in inflows. Meanwhile, energy sector and real estate sector ETFs suffered outflows of $163 million and $118 million, respectively.

Fixed-income ETFs registered inflows of $2.1 billion.

All fixed-income fund categories reported inflows, but flows were concentrated among Canadian corporate bond, Canadian aggregate bond, foreign bond and Canadian government bond funds. Those categories took in $639 million, $603 million, $323 million and $254 million, respectively.

Other categories recorded more modest inflows: sub investment-grade bond funds pulled in $173 million, followed by U.S./North America bond funds at $126 million, preferred/convertible bond funds at $32 million and money market funds at $22 million.

In terms of maturity, broad/mixed maturity funds drove inflows, with $1.3 billion in creations.

Leveraged and inverse ETFs pulled in $588 million during the month, “bringing the category’s year-to-date inflows to a whopping $2.6 billion or 42% of the category’s starting assets,” the report said.

Strong month for crypto

Crypto-asset ETFs had “a strong month of inflows,” gathering $222 million. Three of the top five inflow products in the category were recently launched XRP ETFs, NBF noted.

Commodities ETFs, on the other hand, suffered outflows of $212 million. This was the first monthly outflow for the category “in more than a year” and was led by the BMO Gold Bullion Series Units ETF (TSX: ZGLD).

July was “a quiet month for Canada-listed ESG ETFs,” the report said, with the category posting net zero flows overall. One ESG fund was delisted in July — the Dynamic Active Energy Evolution ETF (TSX: DXET), which launched in 2021 but had a “small” amount of assets under management (AUM).

The report also noted that 13 new ETFs hit the Canadian market in July. This includes new single-stock, leveraged/inverse ETFs from LongPoint Asset Management Inc., 0DTE options ETFs from Hamilton Capital Partners Inc. and actively managed ETFs from Ninepoint Partners LP, FT Portfolios Canada Co. and J.P. Morgan Asset Management Canada.

Total ETF AUM came in at $611.7 billion by the end of July.

Multiple asset managers have filed preliminary prospectuses to launch ETFs in Canada.

Harvest Portfolios Group Inc. is seeking to introduce a new suite of single-stock ETFs that would invest in the stocks of well-known Canadian companies.

If approved, the 10 ETFs that are slated to be part of Harvest’s High Income Shares ETF lineup and be listed on the TSX include:

• Harvest Agnico Eagle Enhanced High Income Shares ETF (AEME)
• Harvest BCE Enhanced High Income Shares ETF (BCEE)
• Harvest Cameco Enhanced High Income Shares ETF (CCOE)
• Harvest CNQ Enhanced High Income Shares ETF (CNQE)
• Harvest Enbridge Enhanced High Income Shares ETF (ENBE)
• Harvest Royal Bank Enhanced High Income Shares ETF (RYHE)
• Harvest Shopify Enhanced High Income Shares ETF (SHPE)
• Harvest Suncor Enhanced High Income Shares ETF (SUHE)
• Harvest TD Bank Enhanced High Income Shares ETF (TDHE)
• Harvest TELUS Enhanced High Income Shares ETF (TEHE)
• Harvest Canadian High Income Shares ETF (HHIC)

The prospective funds would seek to provide investors with high monthly cash distributions as well as long-term capital appreciation by investing, on a levered basis, in the common shares of Canadian companies, a release said.

Brompton Funds to intro CLO ETF

Brompton Funds Limited plans to introduce another ETF that invests in credit loan obligations (CLOs).

If approved, the actively managed Brompton Wellington Square BBB CLO ETF would be listed on the TSX with the ticker BBBB. The fund would aim to provide high monthly income and capital preservation by investing in a portfolio comprised of at least 75% investment-grade CLOs, a fund document said.

Two new ETFs from J.P. Morgan

J.P. Morgan Asset Management Canada is looking to launch the JPMorgan US Ultra-Short Income Active ETF and JPMorgan US Bond Active ETF on the TSX.

The JPMorgan US Ultra-Short Income Active ETF would seek to provide investors with income “while seeking to maintain a low volatility of principal primarily through exposure to investment grade U.S. dollar denominated short-term fixed, variable and floating rate debt,” a preliminary prospectus from the firm stated.

The JPMorgan US Ultra-Short Income Active ETF would also “invest in or use derivative instruments to seek to hedge U.S. currency exposure,” the document noted.

ETF units of the PICTON Income Fund on the way

PICTON Investments has its sights set on launching ETF units of the PICTON Income Fund on the TSX.

The fund’s investment objective is to “maximize total return through income and capital appreciation by investing primarily in global income securities while mitigating capital loss by engaging in hedging strategies for downside risk protection,” fund documents said.

Investors are drawn to new investment funds with frequent portfolio disclosures, and to portfolio managers who are chartered financial analyst (CFA) holders and/or female, reports Morningstar Inc. Those preferences tend to align with performance, according to new global research.

The study analyzed 57,512 funds in Morningstar’s international database — all of them with a track record less than 12 months in length. The sample period spanned from January 2005 to March 2013. Lee Davidson, head of quantitative research, Madison Sargis, quantitative analyst and Timothy Strauts, senior analyst, wrote the report.

The study explored the relationship between observed investor preferences for — and eventual investor outcomes from — newly launched funds by examining forward 36-month cumulative flows and forward 36-month cumulative risk-adjusted returns.

Morningstar researchers noted, however, that most fund flows “are not due to the actions of the retail investor but are directed by the result of some complex interaction between an advisor, an institution and a platform.”

“[T]hese are the types of newly launched funds that most successfully navigated the network of distribution channels and most appealed to advisors,” researchers wrote in their report.

Disclosure drives flows

One of the key findings of the study was that disclosing portfolio holdings generated higher flows and was correlated to higher forward returns.

Investors highly value when a fund has reported holdings information within the first year of launch and place additional value on frequent updates to the fund, the report noted.

But the researchers said they don’t expect the relationship between portfolio disclosure and higher risk-adjusted returns to be causal.

“Rather, we believe the underlying causes for frequent disclosure and higher returns could be shared: an indication of a higher-quality strategy, greater manager confidence, vigorous firm stewardship and sound investment process,” they wrote in the report.

The study also found that new funds managed by Chartered Financial Analyst (CFA) designation holders achieve better outcomes and are preferred by investors.

Other designations that signal higher educational achievements such as PhD, Certified Financial Planner or Chartered Alternative Investment Analyst designations would also likely resonate with investors, the report suggested.

“Investors have imperfect knowledge about a manager’s capabilities, so they are likely using the CFA charter as a proxy for skill and education,” it said.

Women outperform

Female portfolio managers tend to garner more assets as well, with fund flows following women portfolio managers for equity and fixed-income asset classes, the study found.

The researchers said this may be because few women advance in the fund management industry, likely due to facing significant headwinds, and therefore, those who do become portfolio managers should perform higher than the average male portfolio manager.

“Our reasoning implies a female portfolio manager signals to an investor higher management skill, which is represented by a positive association between flows and gender,” they wrote in the report.

At the same time, the researchers stressed that gender isn’t a suitable proxy for skill.

“A portfolio manager is not inherently better at managing a fund because of gender, regardless of the headwinds faced in a manager’s career development. Therefore, we are not surprised to see inconclusive results,” the report said.

The study further found that investors tend to gravitate toward funds that are owned by their portfolio managers. Those funds tend to perform better, too.

The study didn’t differentiate between the levels at which portfolio managers owned their own funds, but noted whether a single manager had at least $1 invested in the fund.

“In the absence of historical information about a manager’s decision-making, investors are using managers’ financial stakes in new funds as a proxy for their stewardship,” the report said. “The decision to do so has shown to be meaningful and positive in terms of higher forward returns.”

Some of the other key findings of the study were that high fees hurt new fund flows and future risk-adjusted returns, asset managers with large market share have an advantage when launching new funds and launching funds in periods of economic stress tends to be positive for future performance.

The researchers noted several limitations in the report but suggested that a study on the rise and fall of new funds with such a large scope has not been conducted before.

“To our knowledge, a larger data set has never been assembled to approach this question. Indeed, this study may be the first of its kind,” they wrote in the report.

J.P. Morgan Asset Management Canada (JPMAM) has brought one of its global equity investment strategies to the Canadian market with the launch of a new actively managed ETF.

The JPMorgan Global Select Equity Active ETF (TSX: JGLO) provides Canadian investors with access to one of the asset manager’s “most successful institutional global equity mandates,” said Jay Rana, head of Canadian advisor business with JPMAM, in an interview.

A version of the product is also listed on Nasdaq and the Australian Securities Exchange.

“We’re excited to bring this strategy to Canada,” Rana said. “And we’re just excited to be part of the growth opportunity in the ETF world, in the active management space.”

The ETF invests in global equities benchmarked to the MSCI World Index. Its investment strategy is supported by a team of 80 analysts, along with Helge Skibeli and Christian Pecher, who have decades of industry experience under their belts.

The fund has a 0.47% management fee and is suitable for investors seeking global equity exposure to diversify their portfolios, Rana said.

Asked about JPMAM’s growth plans in Canada, he said the firm is actively engaging with advisors and investors across the country and “will continue to try to look for where demand is and meet that demand with high-quality investment products.”

“We’re always assessing, always looking at it, but we do have a long-term plan to be part of the ETF world here in Canada and partner with investors across the country,” Rana added.

This is the sixth ETF offering from JPMAM in Canada. The firm launched its first Canadian ETF in October 2024.

Ninepoint expanding ETF lineup

Capitalizing on a wave of Canadian nationalism, Ninepoint Partners LP has filed a preliminary prospectus with securities regulators to launch a suite of single-stock ETFs that invest in well-known Canadian companies.

The funds also sell call options on the single stock they own, employing a covered call approach with modest leverage.

“Our goal is simple: we want to help Canadians earn more from companies they already believe in,” said John Wilson, co-CEO and managing partner at Ninepoint, in a release.

If approved, the initial ETFs that are slated to be part of the firm’s upcoming HighShares ETF suite and be listed on the TSX include:

• Barrick High Income Shares Ninepoint ETF (ABHI) — medium- to high-risk rating.
• BCE High Income Shares Ninepoint ETF (BCHI) — medium-risk rating.
• Cameco High Income Shares Ninepoint ETF (CCHI) — medium- to high-risk rating.
• Canadian Natural Resources High Income Shares Ninepoint ETF (CQHI) — medium- to high-risk rating.
• CNR High Income Shares Ninepoint ETF (CRHI) — medium- to high-risk rating.
• Enbridge High Income Shares Ninepoint ETF (ENHI) — medium-risk rating.
• RBC High Income Shares Ninepoint ETF (RYHI) — medium-risk rating.
• Shopify High Income Shares Ninepoint ETF (SHHI) — medium- to high-risk rating.
• Suncor High Income Shares Ninepoint ETF (SUHI) — medium- to high-risk rating.
• TD High Income Shares Ninepoint ETF (TDHI) — medium-risk rating.
• Enhanced Canadian High Income Shares Ninepoint ETF (ECHI) — medium-risk rating.

Separately, Ninepoint announced it was expanding access to five existing funds by launching ETF series for them.

The following funds are now available as ETFs on the TSX:

• Ninepoint Global Infrastructure Fund (TSX: INFR) — medium-risk rating, 1% management fee.
• Ninepoint Gold and Precious Minerals Fund (TSX: GLDE) — high-risk rating, 1.5% management fee.
• Ninepoint Gold Bullion Fund (TSX: GBUL) — medium-risk rating, 0.5% management fee.
• Ninepoint Silver Bullion Fund (TSX: SBUL) — high-risk rating, 0.85% management fee.
• Ninepoint Capital Appreciation Fund (TSX: NCAP) — low- to medium-risk rating, 0.95% management fee.

“From inflation-sensitive infrastructure and precious metals to long-term capital growth, these ETF series allow investors to efficiently allocate capital based on their portfolio goals and market outlook,” Fox said in a release.

Fidelity launches mutual fund with options-based equity strategy

Fidelity Investments Canada ULC has launched the Fidelity Equity Premium Yield ETF Fund.

The new mutual fund invests directly in the Fidelity Equity Premium Yield ETF (Cboe: FEPY, FEPY.U), which employs an options-based equity strategy, aiming to generate potentially higher levels of cash flow than equity-only strategies.

The funds also seek to achieve lower overall portfolio volatility relative to the S&P 500, a release said.

The new mutual fund has a 0.4% management fee, in addition to an administration fee.

First Trust rolls out long/short equity ETF

FT Portfolios Canada Co. has launched a new long/short equity ETF.

The First Trust Long/Short Equity ETF (TSX: FTLS) invests in both a long and short portfolio of U.S. exchange-listed equity securities and index future contracts, aiming to provide investors with “long-term total return,” a release said.

The fund will invest all or nearly all of its net assets in First Trust Long/Short ETF (NYSE: FTLS), a U.S.-listed ETF that’s managed by an affiliate of First Trust Canada and has a similar investment objective.

The ETF has a 0.15% management fee.

NBI announces fund merger, fee reductions for some funds

National Bank Investments Inc. (NBI) has announced a fund merger and fee reductions for several funds.

In a release, it said the NBI Global Real Assets Income ETF would be merged into the NBI Global Real Assets Income Fund, “which has an identical mandate,” on or about Oct. 24.

“Upon completion of the merger, unitholders will hold ETF series units of the continuing fund instead of ETF units of the terminating fund,” the release said.

NBI said the merger is part of its ongoing plans “to simplify and optimize its fund lineup.”

The terminating fund will be closed as soon as possible after the merger, which will come at no cost to investors.

Also, NBI has announced a slew of management and administration fee cuts for certain fund series.

A fund name change from Guardian Capital

Guardian Capital LP has announced a name change for one of its funds.

The Guardian Canadian Sector Controlled Equity Fund has been renamed the Guardian Canadian Diversified Core Equity Fund.

The investment objective, strategies, management and ticker symbol of the ETF units of the fund (TSX: GCSC) remain the same, a release said.

Invesco announces risk-rating changes

Invesco Canada has announced risk-rating changes for two of its mutual funds.

Series FH, H and PH of the Invesco Global Select Equity Class, along with series H of the Global Select Equity Fund, have been upped from medium to medium-to-high.

In a release, Invesco said the changes were made “in accordance with the risk classification methodology set by the Canadian Securities Administrators to determine the risk levels of funds.”

The investment objectives and strategies of these funds remain the same.

Scotia closes two funds

Scotia Global Asset Management has closed two funds.

In a release, it said the 1832 AM Canadian Dividend LP and 1832 AM Quantitative Canadian All Cap Equity Pool would be terminated on or about July 30.

Harvest Portfolios Group Inc. is cooking up a new U.S. equity ETF.

The Oakville, Ont.-based asset manager says it’s filed a preliminary prospectus with the Canadian securities regulators to launch the Harvest High Income Equity Shares ETF.

If approved, the fund would provide investors with unlevered access to a portfolio of “leading and trending” U.S. stocks, along with an active covered call strategy “designed to generate high monthly income,” it said in a release.

The ETF would hold stocks that are generally similar to the underlying single stocks held in the ETFs within the portfolio of the Harvest Diversified High Income Shares ETF (TSX: HHIS), the release noted. Some of the underlying stocks held in that portfolio include Eli Lilly & Co., Nvidia Corp., Coinbase Global, Inc., MicroStrategy Inc. and Tesla, Inc.

The new fund is expected to launch on the TSX in August, with a 0.4% management fee and the ticker HHIH.

IA expands purchase options for several funds

IA Clarington Investments Inc. has expanded the purchase options for several of its funds.

Both the iA Clarington Agile Global Total Return Income Fund and iA Clarington Agile Core Plus Bond Fund, which are sub-advised by Agile Investment Management, LLC, are now available in series F units with a U.S.-dollar purchase option.

The funds are also now offered in ETF series, which are trading on the TSX under the ticker symbols GTRI and ICPB, respectively.

Other iA Clarington funds to now be offered in ETF series include:

• IA Clarington Loomis Global Equity Opportunities Fund (TSX: IGEO)

• IA Clarington Loomis Global Allocation Fund (TSX: IGAF)

• IA Clarington Loomis Global Multisector Bond Fund (TSX: ILGB)

• IA Clarington Loomis Floating Rate Income Fund (TSX: IFRF)

• IA Clarington Strategic Corporate Bond Fund (TSX: ISCB)

• IA Clarington Strategic Income Fund (TSX: ISIF)

• IA Wealth Enhanced Bond Pool (TSX: IWEB)

Dynamic Funds announces fund changes

1832 Asset Management L.P., manager of Dynamic Funds, has announced the completion of a fund termination and a fund merger, along with proposed fund mergers and fee reductions.

The Dynamic Active Energy Evolution ETF (TSX: DXET) was delisted from the TSX on July 15 and terminated on July 18. Investors who held units of the fund on the termination date are to receive final payments from the liquidation of the fund’s assets, net of all liabilities and expenses, a release said.

Also, the Dynamic Active Retirement Income ETF (TSX: DXR) was merged into the Dynamic Retirement Income Fund on July 18. Investors who held units of the terminating fund received the same number of units of the continuing fund. The terminating fund was also delisted from TSX that day, but the continuing fund is now listed under the ticker DXR.

As a result of the merger, the Dynamic Retirement Income Fund is now offered in both mutual fund series units and ETF units. Its investment objective, risk rating and portfolio management team remain unchanged.

Separately, 1832 Asset Management announced a slew of proposed changes to its Marquis investment program “to streamline its lineup and reduce fees for investors,” it said in a release.

A full breakdown of those changes, which includes proposed fund mergers and fee reductions, is available here.

TDAM announces fund risk ratings

After an annual review, TD Asset Management Inc. (TDAM) has announced risk rating changes for certain mutual funds.

The following changes are expected:

• TD Dividend Income Fund’s risk rating has changed to medium, up from low to medium

• TD Dividend Income Class’ risk rating has changed to medium, up from low to medium

• TD Global Entertainment & Communications Fund’s risk rating has changed to medium to high, up from medium

• TD Comfort Growth Portfolio’s risk rating has changed to low to medium, down from medium

The investment objectives, strategies and management of the funds remain unchanged.

Desjardins makes mutual fund lineup tweaks

Desjardins Investments Inc. (DI) has announced various changes to its mutual fund lineup, including fund terminations, a fund portfolio sub-manager change, as well as a new automatic conversion program.

DI is seeking to terminate the following funds on or about Nov. 14, with unitholders able to redeem or switch their units of the funds up to close of business (4 p.m. Eastern) that day:

• Desjardins Target 2025 Investment Grade Bond Fund

• Desjardins Sustainable Global Managed Bond Fund

• Desjardins Low Volatility Canadian Equity Fund

• Desjardins Sustainable Low Volatility Global Equity Fund

• Desjardins Sustainable International Small Cap Equity Fund

• DI also intends to terminate the W-class units of the Desjardins Global Managed Bond Fund.

The terminating funds and W-class units of the Desjardins Global Managed Bond Fund will be closed to new investors and additional investments, aside from investments made by periodic payments, as of 4 p.m. Eastern on or about Aug. 20.

PIMCO Canada Corp. will be the new portfolio sub-manager of the Desjardins Emerging Markets Bond Fund, management fees will be lowered for the fund’s A-, I-, C-, F- and D-class units, and the fund’s investment strategies will be changed “to better reflect the new mandate and investment philosophy of PIMCO,” DI also announced. Those changes, outlined here, are expected to take effect on or around Oct. 1.

Also, DI will launch K-class units for the Desjardins Global Opportunities Fund, which will be offered on “a no-load basis” and will be eligible for registered plans on or about Nov. 17.

In addition to the launch of the K-class units, DI will implement a program to allow for the automatic conversion of A-class and K-class units of the Desjardins Global Opportunities Fund, “provided that the investor satisfies the established criteria for holding K-class units,” it noted in the release. The program is expected to be implemented on or about Nov. 17.

Canada Life announces mutual fund changes

Canada Life Investment Management Ltd. (CLIML) has announced changes to the risk ratings, management fees and investment strategies of select mutual funds.

After its most recent annual review, CLIML said it’s making the following risk rating changes:

• Canada Life Moderate Portfolio’s risk rating has changed to low to medium, up from low

• Canada Life Canadian Fixed Income Balanced Fund’s risk rating has changed to low to medium, up from low

• Counsel Global Small Cap’s risk rating has changed to medium to high, up from medium

Meanwhile, the investment strategy for the Counsel Canadian Value fund will change “to reflect a greater foreign investments allowance, up to 49% from 30%,” a release said, noting this will allow for “additional geographical diversification.”

As well, CLIML has reduced the management fees for the Counsel Money Market fund. Below are the fees for different series units of the fund:

• Series A units now have a 0.6% management fee, down from 0.65%

• Series F, I and C units now have a 0.25% management fee, down from 0.4%

CLIML further announced that investors can now purchase Canada Life mutual funds if their dealers have signed an agreement with CLIML permitting the purchase of the funds.

Investment funds will have access to an emergency liquidity facility operated by the Bank of Canada, expanding the liquidity management tools that may be available to funds during episodes of severe market stress.

On Thursday, the Canadian Securities Administrators (CSA) issued a series of coordinated blanket orders that aim to remove barriers to certain funds from accessing the bank’s Contingent Term Repo Facility — a mechanism that’s designed to bolster the stability of the financial system by combatting liquidity shortages.

The facility, which is activated and deactivated at the discretion of the central bank, can provide short-term, Canadian-dollar funding against securities issued or guaranteed by the federal or provincial governments.

The facility is currently deactivated. It was suspended in 2021, after the market stress that accompanied the pandemic eased. The next time it’s needed, investment funds may be able to participate in the mechanism.

“Investment funds with exposure to Canadian dollar money market and/or fixed-income securities may need to access the [facility] to better manage their liquidity if there is a severe market-wide liquidity stress event,” the CSA said in a notice Thursday.

However, as it stands, accessing the facility would prevent funds from being able to comply with certain regulatory requirements for funds engaging in repurchase transactions.

As a result, the regulators are adopting orders to give investment funds exemptive relief to access the facility subject to certain conditions, including that it’s in the best interest of the fund.

Earlier this year, the Bank of Canada also announced a series of planned changes to the mechanism that aim to enable non-bank financial institutions — including investment funds — to access the facility, given their growing importance in the fixed-income markets and in the global financial system. 

Among other things, it updated the eligibility criteria for participants, and determined that banks that have access to other liquidity facilities operated by the central bank won’t be able to use the CTRF.

The CSA’s orders aim to facilitate that access by removing potential regulatory impediments, giving investment funds a potential liquidity risk management tool.

The bank also made certain operational changes to the facility, including onboarding potential participants prior to its activation, along with added testing and enhancements to its existing systems and processes that support its operation.

At the same time, in the wake of events — such as Russia’s invasion of Ukraine, and recent turmoil in U.S. Treasury markets — global securities regulators have sought to bolster investment funds’ ability to manage their liquidity risks during periods of extreme market stress.

Earlier this year, the International Organization of Securities Commissions unveiled a set of reform recommendations that aim to enhance the ability of funds to cope with liquidity issues that can arise when stressed markets challenge their ability to meet short-term redemption demands. Those recommendations include proposals for fund design, operational practices, funds’ use of liquidity management tools, stress testing, governance and disclosure expectations.

Gold and precious metals have been a bright spot this year, helping the S&P/TSX composite index outperform the S&P 500, with fund managers saying there could still be time for retail investors to get in on the action.

“In Canada, gold has been the huge mover, and I think if you break apart the index, gold is now at 12% of our index, and that has been the huge winner,” said John Zechner, chairman and founder of J. Zechner Associates.

“That to me is the single most important reason why Canada has played such catch-up and has actually done better than the S&P 500, certainly this year so far.”

The TSX was up roughly 11% year to date, as of Wednesday afternoon, while the S&P 500 was up about 8%, according to LSEG Data & Analytics.

Meanwhile, the price of gold has risen about 30% over the course of the year so far, with the August gold contract hovering around US$3,400 an ounce. 

Dennis da Silva, senior portfolio manager at Middlefield, agreed that the gold sector is “the largest contributor” in driving the TSX higher.

“If you look at the S&P/TSX global gold index, that’s up 40% year-to-date. So if you tie that into the TSX, I would say about 30% of the index’s return is driven by gold and silver names or precious metals in general,” he said in an interview last week.

In contrast, U.S. markets have been primarily driven by large-cap technology companies in recent years that “pushed forward that U.S. exceptionalism story,” said Chris McHaney, head of investment management and strategy at Global X Investments Canada.

“I won’t say it’s run out of steam, but it has started to look like some of those drivers are starting to slow down in terms of the amount of growth that’s being provided to the U.S. market,” he said.

McHaney noted the performance of the so-called Magnificent Seven group of stocks has been split this year. The Magnificent Seven is a group of large-cap U.S. tech stocks that have a major influence on equity markets. The list includes Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia and Tesla.

For example, Tesla shares are down nearly 20% year-to-date; meanwhile, Alphabet shares are flat. On the flip side, Nvidia and Microsoft shares are up roughly 27% and 20%, respectively, since the start of the year. 

The mixed picture has helped Canada’s more metal-focused index gain, said McHaney. 

“It really is more of a story of gold has been on fire and in Canada, we just have more exposure to that,” he said.

According to da Silva, there are a few reasons why gold prices have risen, one being that the commodity benefited from demand for safe haven assets, particularly as the global trade dispute flared up. 

Stock markets have been volatile this year, particularly in March and April, when U.S. President Donald Trump started rolling out tariffs on countries around the world, only to delay many. The uncertainty over how the global economy and company profits would be impacted by changing trade policies has driven investors to safe haven assets like gold. 

McHaney said there are a few factors that influence the price of gold — government deficits around the world, inflation concerns and trade uncertainty tend to be positive ones — but it can be difficult to assess which is driving price moves at a given time.

Central banks buying

Central banks around the world were also buying more of the key commodity as another source of reserve currency, da Silva said. 

He noted this trend became more common after the U.S. and European Union froze Russian assets after it invaded Ukraine.

“I think that was kind of a wake-up call that your assets are not safe. They can be frozen, and that caused countries to re-evaluate how they hold foreign reserves. I think at that point that’s when we started to see pretty active buying,” da Silva said. 

Going forward, da Silva said he would be “hard pressed” to say gold is likely to continue appreciating at the pace it has over the past three years unless large-scale economic or geopolitical disruptions were to occur.

However, he said investors could still likely benefit from investing in gold companies.

“I don’t think it’s too late … I think history always shows if it’s a fundamentally strong sector. That is, they focus on costs and profitability per share. That’s an industry that can make good money over time,” da Silva said.

While McHaney said it is difficult to determine whether the TSX will continue to outperform the S&P 500, he said he also doesn’t think retail investors have missed the boat in terms of investing in gold specifically. 

“I think some of those drivers that have been working well for Canada are not necessarily going away tomorrow either. There could be a psychological element of maybe ‘I missed that performance, I’ll just stay where I am,'” he said.

“We think gold itself might not keep rising in value, but it just has to stay kind of where it is now for the gold equities to continue to do very strongly.”

Canadian consumers may have been shunning U.S. products and travel since the new U.S. administration sparked cross-border conflict, but investors are proving that they aren’t nearly as patriotic. According to National Bank Financial Inc. (NBF), domestic investors continue to snap up U.S. securities.

In a report Monday, NBF economists noted that Canadian investors have been eagerly adding U.S. financial assets to their portfolios since the start of the year.

“The idea of ‘buying local’ has resonated with many Canadians since the U.S. threw our longstanding, mutually beneficial bilateral relationship into doubt,” it said. “But this ‘Buy Canadian’ bias hasn’t really shown up where it arguably matters most: in portfolio investment flows.”

Citing data from Statistics Canada, the report said most of the buying activity has come in U.S. equities, but that domestic investors have also added to their holdings of U.S. corporate and government debt too.

“Canadians have even helped finance Uncle Sam’s wholly unsustainable budget deficit; not exactly the tough message to the American administration some might have advocated,” the report said.

Moreover, foreign investors have been shedding Canadian assets — primarily equities — even as “Canadian stocks have generally outperformed the U.S., based on benchmark equity indices,” it noted.

Looking ahead, NBF maintains a slight overweight position in Canadian equities (it recommends a 21% weighting vs. a benchmark weight of 20%), and a more decisive underweight for U.S. stocks (15% vs. a 20% benchmark weight).

In a separate report, NBF cautioned that U.S. equity valuations are elevated and could come under pressure as economic growth weakens, threatening margins and earnings, which could “trigger a reassessment of valuations.”

Additionally, foreign investors could turn away from U.S. markets if concerns about inflation, interest rates and the independence and credibility of the Fed continue to arise.

“A decline in foreign participation could reduce demand for U.S. financial assets, potentially leading to higher funding costs, increased market volatility, and further downward pressure on the U.S. dollar, with broader implications for financial stability and capital flows,” it said.

At the same time, NBF is also expecting some strength in the Canadian dollar in the months ahead as the federal government pursues an ambitious effort to kickstart domestic investment.

“So politics aside, and contrary to year-to-date portfolio capital flows, a ‘Buy Canadian’ investment strategy looks sensible to us,” the report said.