Finding information about the performance of your bonds and bond indices can be difficult.
For our clients’ portfolios, fixed income in the form of bonds or preferred shares will make up somewhere between 30% and 60% of assets. Multiply that by millions of investors and even for retail clients, that represents trillions of dollars invested outside of what most view as the stock market.
Yet, there does not seem to be readily available information on bonds. All investors know how the TSX is doing today, but what about the DEX bond universe? Most bond information is kept out of reach of the common investor.
To find bond index information, one of the best places to look is the PC Bond Analytics website. It is a business unit of the TMX Group, which runs the Toronto Stock Exchange.
To find preferred share information on the S&P/TSX Preferred Share Index, you can visit Standard and Poor’s here.
Another place to look is if you have your own brokerage account, their research tools may include bond quotes and preferred share information.
The question is:
Why are all of those indexes (outside of the stock market) so hard to learn about?
It isn’t an obscure investment. There are 40 bond funds in Canada that have over $1-billion invested. The TD Bond Fund has over $9-billion in assets. The RBC Balanced Fund has $8.4-billion in assets, with a third of that currently invested in bonds. Granted, the information might be more difficult to understand. In addition, because there is usually more buying and holding, the investment industry may be less interested in reporting on it (it is less profitable).
The problem with this lack of information is that many investors get too carried away with the TSX numbers and assume that if they aren’t beating the TSX then they are not doing well. We often remind clients that the TSX has 79 per cent in financials, energy and materials. This is a concentrated index that carries higher-than-average risk. This isn’t the appropriate benchmark for most investors.
This performance information of bonds and preferred stocks however is key to many investors to get a sense of how they should be doing. These indexes and their performance numbers should be widely reported on all business media – but today, it simply is hard to find.
Visit my weekly Personal Finance column in the Globe and Mail, where this article originally appeared.
(Photo: JanKroemer)
