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6.5% bond maturing March 15/21. (Top Pick Aug 13/13, Up 11.00%) A growing Canadian oil and gas story. It was building up a cash pile before Cap-X got under way. He bought more when it went on sale. It is playing out with how the stock and the debt are performing.

Bonds vs. Life Insurance. Corporate bonds have a yield spread above government bonds that provides a cushion against rising interest rates. Lifecos typically do a bit better in a rising rate environment. It has to do with the present value of bonds as rates rise and the eventual liability lowers.

Laddered GICs vs. Laddered Bonds. Instantly cashable GICs cost you in terms of rate. You have to be willing to commit the money for a GIC. An open ended mutual fund allows you to invest in something else if you want to at some point. A corporate bond ladder means you are constantly investing, but you can’t take advantage of rates being high or low in making a trade. Laddered bonds are a more mechanical portfolio. If you know that in so many years you need the money for something, then you can use a ladder to get to that date.

Nova Scotia Power Bonds 6.95% August 25, 2033. The fall in long term interest rates really benefited this security. Holding it going forward means you have a long way to maturity. If it is the only long term maturity it may be okay. Otherwise move to 3-5 year paper.

Bond 8.0% November 2017. It is an improving story. They sold down some existing gas assets. Nickel prices are rising. They are paying down debt. A good yield enhancer and a short maturity date.

Perpetual preferred bond, issued by a high quality bank, one of the best banks in the world. Perpetual means you have to look at duration risk. It never has to be called. If rates rose significantly, this one would suffer. If it is one of the few long duration things he own, then it is fine.

Sovereign European Bonds. In the last year and a bit we saw significant convergence. There are still opportunities such as Spain. 6% bond with a 5 year maturity. Likes the risk reward of the name. Thinks it is unlikely that the EU will fall back into recession.

2021 Canada Real Return Bond. Real rates have fallen in the last couple of years. This could be held until maturity. Longer maturities should be avoided.

5.125% bond maturing December 29, 2049. It is very, very likely to be called in five years. They are an improving credit story; capital levels and profit are up. Headline risk has diminished.

5.5% Bond Maturing May 28, 2021. Less than two times leverage, assets in oil and gas. A good story and a solid company.

ICASA Bond 8.875% due May 29, 2024. Involved in infrastructure build out. They got downgraded last year. He likes the name and the Mexican story.

Portfolios. Now is probably not a bad time, at midyear, to actually start looking back to your plan in terms of what your asset mix ought to be, and rebalancing. He has been taking some money out of equity, and putting it into cash for the time being. He’ll then be deploying it into income for the remainder of the quarter. Now is the time to take some profits and sell some winners, putting that money into things that have done a little less well.

What’s the best way to play a rising rate environment in both the short and long-term? This is a bit of a misnomer. We are not in a rising rate environment. We are, and have been in a flat rate environment for the past 3 years, and expect it will persist for at least 1 more year. Because of this, you are going to be getting low single-digit on any kind of single debt instrument, no matter what you do. He is using a lot of equity linked GICs, which are structured products, and are tied to the stock market, but guaranteed not to lose money.

BMO US High Dividend (ZWH-T) or BMO High Yield Corp Bond US Hedge to CAD (ZHY-T)? He would grudgingly prefer the ZWH, but he really doesn’t like any products that are traditional income interest rate sensitive.

BMO US High Dividend (ZWH-T) or BMO High Yield Corp Bond US Hedge to CAD (ZHY-T)? He would grudgingly prefer the ZWH, but he really doesn’t like any products that are traditional income interest rate sensitive.