Bond and mortgage funds - Fixed Income Investing

Money Digest, Jan, 2003

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 over 420 bond and mortgage funds in Canada. As shown in the accompanying table, 10 of these funds have yielded 11.1% or more for the 12-months ending November 30, 2002.

Bond and mortgage funds that yield more than 11.1% as at Nov. 30, 2002

                                                Returns (%)
Fund name                        Load      1 yr.     3 yr.     5 yr.

Friedberg Foreign Bond             NL       14.7       9.9       5.2
Investors Global Bond               B       12.6       5.6       4.3
AGF Global Gov't Bond             F/B       12.0       5.1       5.3
AGF RSP Global Bond               F/B       11.8       7.5       5.2
BMO Global Bond                    NL       11.8         -         -
AIC Global Bond Fund              F/B       11.5       6.5         -
Templeton Global Bond             F/B       11.4       6.2       2.7
IG AGF Int'l Bond Fund              B       11.3       6.6       4.4
MLI AGF Global Gov't Bond GIF     F/B       11.1       7.7       5.4
MLI AGF Global Gov't GIF Encore   F/B       11.1       7.7         -