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In a normal stock-market rally, GIC broker Brandon Brot typically sees a drop-off in client investment flows.

Not this time. The U.S. stock markets are back at new highs after the March crash, and the S&P/TSX Composite Index has powered most of the way back out of its hole. But demand for guaranteed investment certificates today is pretty much what it was 12 months ago for Mr. Brot’s company, GIC Wealth Management. “Although the stock market has done very well, there’s not a lot of optimism out there,” he said. “People don’t know if it’s going to last. They’re scared and they want to ride it out.”

The preference for GICs is particularly notable because interest rates have been edging lower for months now. Where five-year GICs offered 3 per cent a few months ago, the highest rate available in late August was 2.1 per cent.

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Another challenge is that the interest-rate reward for locking in money for five years versus one to three years is minimal. Finally, there’s a striking lack of variance between the rates offered by GIC issuers. Among the leaders on GIC rates, the difference between five-year yields is about 0.3 of a percentage point. “Everyone is in such a tight range today,” Mr. Brot said. “In the past, someone might have been offering a 3.5 per cent five-year GIC while someone else was offering 2.5 per cent.”

The lack of incentive to lock up money for five years has led to a preference for shorter terms among Mr. Brot’s clients. Terms of two years, 30 months and three years are popular today. Clients who are die-hard GIC investors have also shown interest in that five-year, 2.1-per-cent GIC.

Mr. Brot said GIC demand as of late August was pretty much level with the same period of 2019. Lately, though, he’s noticed an uptick in people registering on his website to receive interest-rate updates. His take is that they understand rates are low, but want GICs anyway.

“Clients want their money protected,” he said. “They understand it’s a weird time.”

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