Fixed-Income Securities for Canadian Investors: Understanding Your Options

Fixed-income securities play an important role in building a balanced and diversified investment portfolio, offering a reliable source of income, usually in the form of interest payments, and the potential for capital appreciation. They are a popular choice for retail investors looking for a low-risk way to grow their savings.

At Cash Management Group, we provide Canadian retail and institutional investors with access to a wide range of fixed-income securities, each with its own unique characteristics and benefits.

What Fixed-Income Securities are There for Retail Investors?

Government Bonds

Government bonds are issued by federal and provincial governments and offer a reliable source of income with virtually no risk. They are backed by the full faith and credit of the issuing government and as such are considered to be among the safest investments available for investors seeking stability.

Municipal Bonds

Municipal bonds are issued by municipalities and other local governments, and they are tax-free in the province where they are issued. They offer a lower rate of return compared to corporate bonds, but they provide an attractive option for investors in high tax brackets.

Corporate Bonds

Corporate bonds are issued by companies and offer a higher yield than government bonds, but also come with higher risk. The creditworthiness of the issuing company is a key factor to consider when investing in corporate bonds. Retail investors can purchase corporate bonds directly from the issuing company or through a broker.

Guaranteed Investment Certificates (GIC)

GICs are savings products that offer a guaranteed rate of return for a fixed period of time. They are considered a low-risk investment and are available from banks, credit unions, and other financial institutions. Retail investors can purchase GICs in a range of terms, from a few months to several years.

Read more about GICs.

Fixed Income Products for Institutional Investors

In addition to the investments listed above, institutional investors, such as pension funds, municipalities, colleges, and universities, have access to a wider range of fixed-income products as well as more complex investment vehicles. Some of these include:

Derivatives

Derivatives are financial instruments that derive their value from an underlying asset, such as a stock, bond, or commodity. Institutional investors can use derivatives to manage risk, hedge against market fluctuations, and speculate on future market conditions.

Structured Notes

Structured products are investment vehicles that are customized to meet the specific needs of institutional investors. They are typically created by combining different types of financial instruments, such as bonds, stocks, and derivatives, to achieve a specific investment objective.