Beutel's bond strategy: Higher on quality, lower on duration

Corporate balance sheets are weaker, David Gregoris warns.

Sonita Horvitch 5 July, 2017 | 5:00PM

David Gregoris, managing director, fixed-income at Beutel, Goodman & Co. Ltd., says that at this later stage in the economic cycle and credit cycle the focus when investing in fixed-income securities should be on capital preservation.

The Beutel Goodman fixed-income team's strategy is to increase the creditworthiness of its portfolios' holdings of provincial and corporate fixed-income securities and to reduce the duration of its portfolios. (Duration is a measure of the sensitivity of the price of a fixed-income security to a change in interest rates, expressed in a number of years.)

"On the macro front, we are at the beginning of the end of the expansion phase in the economic cycle and do not know, as is the case with any stage in the cycle, how long this phase will last," he says. Also, he adds, corporate balance sheets are weaker. Canadian corporations, for example, are increasing the debt on their balance sheets, in some instances, to finance takeovers.

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Sonita Horvitch

Sonita Horvitch  

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