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Paterson says TD Canadian Core Plus Bond Fund ‘one of the best’
5/26/2017 2:47:30 PM
HOME : FEATURES : COLUMNS : Paterson says TD Canadian Core Plus Bond Fund ‘one of the best’
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DUE DILIGENCE
Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert



By Dave Paterson  | Wednesday, April 26, 2017


 



TD Asset Management has long had one of the most respected fixed-income teams on the street and has consistently delivered returns that are in line with the FTSE/TMX Canadian Bond Universe, with comparable levels of volatility. A good example is the TD Canadian Core Plus Bond Fund, which is very similar to the highly-regarded TD Canadian Bond Fund. The main difference is that the Core Plus offering allows the managers the ability to invest up to 30% of the fund in “non-core” investments such as high-yield bond and investment-grade global bonds. Let’s have a look at how this strategy has worked.

At the end of March, the fund was nearly fully invested, with 95% allocated to bonds, 3% to floating rate notes, and just over 1% to cash.

Of this, 88% was in Canadian bonds, while 12% was invested in U.S. bonds. About two thirds of the fund was investment-grade corporate bonds, with around 11% in high-yield and non-investment grade issues. As a result, the fund offers a yield to maturity that is higher than the benchmark, and a duration that was modestly lower.

I continue to view this as one of the best Canadian bond funds around. It has a solid management team, led by Rob Pemberton and Christopher Case. They follow a disciplined, repeatable process, at a reasonable cost. The fund tends to deliver most of the upside of the market, while participating in less of the downside. Looking at the current environment, it is unlikely we will see any meaningful upward pressure on interest rates in Canada, making this a strong pick for now.

TD Canadian Core Plus Bond Fund
Fund company: TD Asset Management
Fund type:
Canadian Fixed Income
FundGrade™ rating: C (March)
Style: Credit Analysis
Risk level: Low
Load status: Optional
RRSP/RRIF suitability: Excellent
Manager: Rob Pemberton since Nov. 2013; Christopher Case since Sept. 2011
MER: 1.50%
Fund code: TDB695 (front end units)
Minimum investment: $500


Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due diligence on a variety of investment products. He is also the publisher of Dave Paterson’s Top Funds Report, offering regular commentary and in-depth analysis of Canada’s top investment funds. He uses a unique analytical approach to identify funds with strong, risk-adjusted returns, and regularly publishes his insights and analyses in Fund Library.

Notes and Disclaimer

© 2017 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice.

 

 
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