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Bonds and other fixed income securities

Whether you’re looking for an income stream in your retirement, a competitive return on your cash as you work towards a savings goal, or an income generated by your funds while you consider your investment options, we can help by establishing a fixed income component in your portfolio.

We can connect you with a range of fixed income solutions (so called because the rate of interest is normally fixed at a certain level) and term deposits that offer competitive interest paid over the life of your investment. Fixed income investments and term deposits are usually less volatile than stock market or property investments, but offer a lower expected return over the long term.

With fixed income investments, you "loan" your money to a federal or provincial government, crown corporation, municipality or public company for a certain time and receive interest in return. Your interest payments may be made annually, semi-annually, monthly, or be allowed to compound until the maturity date, when your original investment is returned plus all interest that has accrued and compounded.

Fixed income investments include Treasury bills (T-bills), Canadian and foreign bonds and debentures, strip bonds, NHA Mortgage-Backed Securities and GICs.

We offer a variety of fixed income securities to suit investors of all risk profiles. We don’t just offer Macquarie Private Wealth income solutions. We source the most suitable fixed income and term deposit solutions for each client’s needs, both from within Macquarie Private Wealth and from other leading providers within Canada and around the world.

Our fixed income solutions let you:

Select from a versatile range of solutions that include capital notes, convertible style investments, bonds, debentures and income securities
Receive regular income payments over the term of your investment
Select fixed interest investments that convert into shares or cash when they mature (convertible style investments)
Choose a solution that lets you select the payment frequency of your investment income (debentures)
Select a low-risk fixed income solution (government and related crown corporation bonds)
Select a highly liquid fixed income solution that you can buy and sell easily on the open market

Your Macquarie Private Wealth Investment Advisor can provide you with a broad range of information and advice so that you can choose the best fixed income products to meet your long- and short-term investment goals.

Bonds and debentures

Bonds and debentures could provide a dependable, competitive flow of interest income and a known maturity value, and are normally issued for periods of one to 30 years. If you hold the bond to maturity, you will receive specified periodic interest payments and can expect the full repayment of your invested capital. However, you may sell your bond or debenture prior to its maturity date to take advantage of interest rate movements. As interest rates go down, the value of bonds and debentures goes up, and vice versa.

Strip bonds

Strip bonds are created by “stripping” the principal amount of a bond or debenture from its coupon payments. They are priced at a discount to their maturity value. As an investor, you know what their value will be at maturity and they will provide you with a competitive return. Strip bonds are a good choice if you are saving for the long term and don’t need steady income. They may also be traded over the short term to yield gains when interest rates fluctuate.

National Housing Act (NHA) Mortgage-Backed Securities

This is an investment in a pool of Canadian residential first mortgages. It provides a regular income stream secured by real bricks and mortar. For many years, investing in mortgages was limited to investors with large financial resources. Now, thanks to Mortgage-Backed Securities (MBS), the investment is accessible to all Canadians. MBS investments guarantee you a timely payment and provide more money through mortgage markets to help Canadians purchase a home. They provide monthly interest, a competitive rate of return and good liquidity, which means you can easily convert your investment into cash.

NHA Mortgage-Backed Securities are sold in $5,000 denominations in terms of six months to 25 years and are backed by the Central Mortgage and Housing Corporation, an agency of the federal government.

Treasury Bills and other money market instruments

These are good choices for investors looking for returns in the short term. Issued for terms of one month to one year with a wide variety of maturity dates, Treasury bills, bankers' acceptances and commercial paper provide higher yields than bank accounts and term deposits.

Ask your Macquarie Private Wealth Investment Advisor about bonds, debentures and other fixed income vehicles and how they might be advantageous for your portfolio.

Mutual funds and other pooled funds

Mutual funds pool your capital with that of many other investors in a group of stocks or other investments selected and managed by a professional called a fund manager. The fund manager decides what, and when, to buy and sell. A mutual fund often offers a broader range of investments than you could buy individually. Through your Macquarie Private Wealth Investment Advisor, you buy portions of the fund called units.

Advantages of mutual funds include:

Choice — You can choose to invest in funds that buy the kinds of investments that you’re comfortable with (e.g., socially responsible companies) and will help you meet your goals, based on what you consider most important (e.g., keeping your money safe, getting regular income, or growing your capital).

Convenience — You can invest in mutual funds in small monthly increments, and elect to automatically reinvest any dividends or income to purchase additional units.

Diversification — Mutual funds span a variety of industries, asset classes and geographic regions and have a wide range of professional managers and investment styles.

Income stream — You can have income systematically withdrawn on a regular basis according to your needs. Generally, when you sell your units you will receive the cash in three business days.

You make money when the price of your units goes up and you sell. If the mutual fund is not doing well, the unit price falls, but you don’t lose money unless you sell your units when the price has dropped.

There are thousands of mutual funds offered in Canada, so ask your Macquarie Private Wealth Investment Advisor to help you make wise decisions regarding your choice of funds and the best timing of when to invest and divest.

Segregated funds

Segregated (or seg) funds are professionally managed pooled funds offered through life insurance companies, with advantages similar to mutual funds. Governed under provincial regulations, seg funds provide you with unique features and guarantees that you won’t find in traditional mutual funds.

Seg funds are so called because their assets are held separately from the general assets of the life Insurance company. Their benefits include:

A minimum of 75% is guaranteed at maturity (at least 10 years from the date of deposit);
If you die, they may provide relief from the costs and delays of probate, depending on the terms, and a minimum of 75% or the market value (whichever is greater) will be paid out, minus any withdrawals.