In recent months, bond yields have touched generational lows and yet interest in securities that provide a cash yield, continues unabated. This article aims to explain, from a demographic perspective, why this seemingly irrational pursuit for yield will continue for the next several years.
Pension plan sponsors require higher income to pay pension promises and higher returns to close the gap between their assets and liabilities. It’s not surprise that investors are increasingly focusing on investments that provide a higher yield (or current income return) due to the historically low interest rates on government bonds.
Ottawa should issue more real-return bonds (RRBs) to satisfy investor demand and lower its borrowing costs, according to a report released today by the C.D. Howe Institute.
Why Canada tops US for fixed income.
Extraordinarily low interest rates are one of the legacies of the recent financial crisis: as of July 2012, the Bank of Canada has fixed the overnight rate at 1%, and the 30-year bond yield stands at around 2.6%. Such low rates have particular implications for pension plan sponsors seeking returns in the fixed income asset class.
Uncertain growth prospects at the end of 2011 left many institutional investors taking a defensive position at the start of 2012. But their caution provided fresh fodder for a strong equity rally during the first quarter, when seasonal fund flows helped to whet risk appetites even further. The first quarter has been characterized by an […]
Canadian pension plans lost some of their first quarter gains in the second quarter of this year, as concerns over the European debt crisis and a weakening global economy pushed Canadian equities lower, according to a survey by RBC Investor Services.
GPIF sells bonds to handle increasing payout costs.
Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, is selling domestic government bonds as a way to handle its increasing payout costs, reports Bloomberg.
Forget the leading edge. When it comes to investing, predictable companies will produce better returns, says David Winters, CEO of Wintergreen Advisors in Milwaukee, WI, and manager of the Renaissance Global Markets Fund.