Bond and mortgage funds

Money Digest, Jan, 1998

Since most bonds cost around $1,000, a small investor may not be able to diversify properly by investing in bonds directly. Many investors may not want to be bothered with selecting suitable bonds for their portfolios.

Bond funds overcome these potential problems by pooling the money received from many investors and investing in a portfolio of bonds, mortgages, or both. Interest rates influence bond funds in the same way that interest rates influence bonds.

There are more than 225 bond funds and mortgage funds in Canada. As shown in the table below, seven of these funds have yielded over 11% for the year ending November 30, 1997.

                          Bond and Mortgage Funds
                        that yield more than 11% as
                           at November 30, 1997

Altamira                   16.8%
Fidelity Emerg Mkt. Bond   16.4
GT Global Growth & Inc.    14.2
Altamira High Yield Bond   13.7
Guardian Foreign Income    12.0
Maxxum Income              11.2
Guardian For. Income CI B  11.1