What we’re looking at
Top-performing Canadian bond funds. Technically speaking, the best of the bunch in the Canadian fixed income, Canadian short-term fixed income and Canadian long-term fixed income categories.
Our screen
We started with all Canadian bond funds that had a history going back 10 years or more and then zeroed in on funds that ranked in the first- or second-quartile returns for the 12 months and 10 years to April 30. Quartiles divide funds in a category into four groups by performance – one is best and fourth is worst.
Funds are ranked here from highest average annual 10-year return on down.
What we found
The numbers shown here are, let’s be honest, spectacular. There are funds on this list that have delivered returns similar to what you might conservatively expect from equity funds. If you own any of these funds, enjoy the glow. If you’re thinking of putting new money into bond funds, beware.
There’s a sharp divide these days in the interest rate outlook between people who see rates rising and those who seem rates holding steady. Either way, you should expect bond funds to perform markedly worse in the years ahead than they have in the past decade.
Remember this basic piece of investing background: Falling interest rates send bonds and bond funds higher in price, rising rates mean lower prices and stable rates mean your returns will be in line with the yield on government and corporate bonds (2 to 3 per cent for the most part right now) minus fees. Interest rates have largely declined in the past decade, and that has provided a huge tailwind for bond funds. Unless the global economy collapses, we simply won’t see rates fall in the years ahead. They may very well rise, which could mean losses from bond funds.
Virtually all investors need bonds in their portfolios to act as a cushion when stock markets plunge. But overemphasizing bond funds because they’re performed so well is a mistake. Past returns will not be repeated any time soon.
Top-Performing Canadian Bond Funds
| Fund | Assets ($ thousands) | MER | Minimum initial investment ($) |
|---|---|---|---|
| Beutel Goodman Long Term Bond-D | 288.5 | 0.79 | 5,000 |
| Mandate National Mortgage Corp | 7.5 | 2 | 5,000 |
| Beutel Goodman Corp/Pro Active Bd-D | 194.3 | 0.79 | 5,000 |
| Altamira Long Term Bond | 255 | 1.24 | 1,000 |
| SEI Canadian Fixed Income-O | 1,948.10 | 0.11 | 150,000 |
| Integra Bond | 182.5 | 1.12 | 10,000 |
| Beutel Goodman Income-D | 1,931.60 | 0.79 | 5,000 |
| PH&N Bond-D | 864.1 | 0.61 | 25,000 |
| Harmony Cdn Fixed Income Pool-W | 62.3 | 0.17 | 50,000 |
| PH&N Total Return Bond-D | 787 | 0.6 | 25,000 |
Source: Globeinvestor.com
| Fund | Assets ($ thousands) | MER | Minimum initial investment ($) | 12-month return (to April 30, 2012) | Annualized 10-year return (to April 30, 2012) |
|---|---|---|---|---|---|
| Beutel Goodman Long Term Bond-D | 288.5 | 0.79 | 5,000 | 15.86% | 8.57% |
| Mandate National Mortgage Corp | 7.5 | 2 | 5,000 | 5.42% | 7.99% |
| Beutel Goodman Corp/Pro Active Bd-D | 194.3 | 0.79 | 5,000 | 7.79% | 6.82% |
| Altamira Long Term Bond | 255 | 1.24 | 1,000 | 16.13% | 6.81% |
| SEI Canadian Fixed Income-O | 1,948.10 | 0.11 | 150,000 | 8.32% | 6.35% |
| Integra Bond | 182.5 | 1.12 | 10,000 | 9.30% | 6.33% |
| Beutel Goodman Income-D | 1,931.60 | 0.79 | 5,000 | 6.75% | 6.29% |
| PH&N Bond-D | 864.1 | 0.61 | 25,000 | 7.88% | 6.24% |
| Harmony Cdn Fixed Income Pool-W | 62.3 | 0.17 | 50,000 | 7.86% | 6.20% |
| PH&N Total Return Bond-D | 787 | 0.6 | 25,000 | 7.87% | 6.20% |
| TD Canadian Bond | 10,945.60 | 1.11 | 100 | 7.75% | 6.00% |
| Russell Fixed Income Pool-A | 455.5 | 1.41 | 25,000 | 6.49% | 5.93% |
| GBC Canadian Bond | 50.3 | 0.94 | 100,000 | 6.71% | 5.80% |
| F�RIQUE Bond | 538.7 | 0.54 | 500 | 8.47% | 5.74% |
| RBC Advisor Canadian Bond | 119.4 | 0.94 | 10,000 | 8.08% | 5.60% |
| Mawer Canadian Bond | 80.4 | 0.95 | 5,000 | 8.74% | 5.57% |
| FMOQ Canadian Bond | 209.8 | 0.95 | 500 | 7.82% | 5.50% |
| TD Canadian Bond Index | 490.7 | 0.83 | 100 | 7.97% | 5.44% |
| CIBC Canadian Bond | 2,170.10 | 1.51 | 500 | 7.99% | 5.38% |
| MD Bond | 1,525.30 | 0.97 | 3,000 | 7.32% | 5.38% |
| CIBC Canadian Bond Index | 432.7 | 1.14 | 500 | 7.69% | 5.35% |
| HSBC Canadian Bond-I | 861.8 | 1.18 | 500 | 7.22% | 5.29% |
| Scotia Canadian Bond Index | 557.4 | 0.84 | 1,000 | 7.63% | 5.27% |
| Leith Wheeler Fixed Income | 52.1 | 0.84 | 25,000 | 8.01% | 5.27% |
| Dynamic Canadian Bond Fund | 1,488.70 | 1.54 | 500 | 6.90% | 5.25% |
| Fidelity Canadian Bond-A | 322.6 | 1.59 | 500 | 7.55% | 5.20% |
| Trimark Canadian Bond | 1,050.60 | 1.38 | 500 | 5.53% | 5.20% |
| RBC Canadian Government Bond Index | 419.3 | 0.66 | 1,000 | 6.85% | 5.20% |
| Quebec Professionals Bond | 541.3 | 1.04 | 2,500 | 5.88% | 5.18% |
| Altamira Income | 254 | 1.1 | 1,000 | 7.70% | 5.16% |
| Scotia Canadian Income | 2,023.10 | 1.43 | 500 | 7.15% | 5.15% |
| Standard Life Corp Bond-A | 233.6 | 2.11 | 1,000 | 6.32% | 5.15% |
| RBC Bond | 8,524.40 | 1.2 | 500 | 8.34% | 5.15% |
| Tradex Bond | 1.24 | 1,000 | 8.30% | 5.13% | |
| Fiera Sceptre Bond Fund Cl B | 1.39 | 5,000 | 8.16% | 5.07% | |
| BMO NB Bond | 45.7 | 0.97 | 1,000 | 7.42% | 5.05% |
| Castlerock Canadian Bond D | 6 | 1.4 | 500 | 6.24% | 4.93% |
| Mackenzie Sentinel Bond | 752.4 | 1.69 | 500 | 6.92% | 4.90% |
| Renaissance Canadian Bond | 353.4 | 1.52 | 500 | 7.84% | 4.87% |
| NEI Canadian Bond | 293.9 | 1.6 | 500 | 7.16% | 4.82% |
| National Bank Bond | 1,515.00 | 1.45 | 500 | 7.39% | 4.80% |
| Manulife Bond | 706.5 | 1.74 | 500 | 5.96% | 4.80% |
| Standard Life Cdn Bond-A | 296.7 | 1.58 | 1,000 | 6.69% | 4.72% |
| Investors Canadian Bond | 3,100.80 | 1.82 | 5.75% | 4.69% | |
| BMO Bond | 1,496.10 | 1.59 | 500 | 6.42% | 4.68% |
| CI Signature Canadian Bond | 883 | 1.67 | 500 | 6.76% | 4.67% |
| AGF Canadian Bond | 986.6 | 1.86 | 500 | 5.40% | 4.48% |
| Desjardins Canadian Bond | 2,149.10 | 1.58 | 1,000 | 7.42% | 4.46% |
| PH&N Short Term Bond & Mtg-D | 292.8 | 0.61 | 25,000 | 3.16% | 4.36% |
| IA Clarington Bond | 227.8 | 1.85 | 500 | 6.77% | 4.33% |
| Meritas Canadian Bond | 49.3 | 2.19 | 250 | 6.17% | 4.28% |
| Quadrus London Capital Cdn Bond | 107.2 | 2.04 | 500 | 7.18% | 4.25% |
| Quadrus GWLIM Corporate Bond | 110.5 | 2.1 | 500 | 5.88% | 4.18% |
| Quadrus Laketon Fixed Income | 123.4 | 2.01 | 500 | 6.97% | 4.13% |
| IG Mackenzie Income | 1,126.20 | 1.9 | n/a | 6.63% | 4.13% |
| Educators Mortgage & Income | n/a | 1.1 | n/a | 3.02% | 4.04% |
| TD Short-Term Bond | 3,836.50 | 1.11 | 100 | 2.68% | 3.94% |
| Investors Income Portfolio | 776.1 | 2.06 | n/a | 4.47% | 3.83% |
| CIBC Cdn Short-Term Bond Index | 1,392.60 | 1.05 | 500 | 2.69% | 3.75% |
| National Bank Mortgage | 1,172.20 | 1.68 | 500 | 2.94% | 3.71% |
| MD Bond and Mortgage | 314.9 | 0.98 | 3,000 | 2.66% | 3.63% |
| TD Mortgage | 1,320.80 | 1.82 | 100 | 2.89% | 3.59% |
| Fidelity Canadian Short Term Bond-A | 344.8 | 1.45 | 500 | 2.95% | 3.56% |
| National Bank Secure Diversified | 134.4 | 1.47 | 500 | 2.73% | 3.49% |
| National Bank Protected Cdn Bond | 0.5 | 2.65 | 500 | 6.09% | 3.42% |
| Mackenzie Sentinel ShortTerm Income | 236.2 | 1.62 | 500 | 2.52% | 3.38% |
| RBC Canadian Short-Term Income | 3,982.10 | 1.21 | 500 | 2.90% | 3.26% |
| HSBC Mortgage-I | 1,581.20 | 1.56 | 500 | 2.19% | 3.26% |
