Fixed Income

Why have fixed income in a portfolio?

As part of a balanced portfolio, fixed income has the potential to offset some of the volatility associated with equities, and to provide a measure of principal protection for investors. Since most bonds make semi-annual interest payments, fixed income instruments can also be a source of income for investors seeking predictable cash flows.

Investors can purchase bonds with different durations* so that cash is available to meet scheduled future obligations in what is known as "liability matching."

Portfolio applications for fixed income

Strategic allocations to fixed income are common to counterbalance the more volatile segments of a portfolio and, in some cases, to provide a source of cash flow.

Investors may also use a laddering strategy with different maturities to help manage interest rate risk and cash flows over time.

Investors can tilt their portfolios tactically to different sectors of the bond markets (government, high yield, corporate, etc.) to take advantage of relative value opportunities that result from changing market and/or economic conditions.

With fixed income ETFs, an investor can obtain exposure to a certain segment of the bond market in one trade, reducing the need to research, price, purchase and manage a large number of individual bonds.

* A bond's duration measures how long, in years, it takes for the price of a bond to be repaid by its internal cash flows.
Related Funds
CMR iShares Premium Money Market ETF
CAB iShares Advantaged Canadian Bond Index Fund
CHB iShares Advantaged U.S. High Yield Bond Index Fund (CAD-Hedged)
CSD iShares Advantaged Short Duration High Income Fund
CVD iShares Advantaged Convertible Bond Index Fund
CLF iShares 1-5 Year Laddered Government Bond Index Fund
CLG iShares 1-10 Year Laddered Government Bond Index Fund
CBO iShares 1-5 Year Laddered Corporate Bond Index Fund
CBH iShares 1-10 Year Laddered Corporate Bond Index Fund
CPD iShares S&P/TSX Canadian Preferred Share Index Fund
XFR iShares DEX Floating Rate Note Index Fund
XSH iShares DEX Short Term Corporate Universe + Maple Bond Index Fund
XEB iShares J.P. Morgan USD Emerging Markets Bond Index Fund (CAD-Hedged)
XHB iShares DEX HYBrid Bond Index Fund
XBB iShares DEX Universe Bond Index Fund
XSB iShares DEX Short Term Bond Index Fund
XLB iShares DEX Long Term Bond Index Fund
XCB iShares DEX All Corporate Bond Index Fund
XGB iShares DEX All Government Bond Index Fund
XRB iShares DEX Real Return Bond Index Fund
XPF iShares S&P/TSX North American Preferred Stock Index Fund (CAD-Hedged)
XHY iShares U.S. High Yield Bond Index Fund (CAD-Hedged)
XIG iShares U.S. IG Corporate Bond Index Fund (CAD-Hedged)