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Bonds vs GICs

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August 23, 2023

As interest rates have risen sharply over the past 18+ months, we’ve seen a significant uptick in client interest for GICs and cash equivalents. Though GICs do have a place in investor portfolios (especially now given their attractive rates), there is also an opportunity cost to utilizing them long-term as a replacement for bond funds.

Our partners at Manulife Invetsments recently released a very client-friendly piece that outlines the key differences between investing in a GIC and a bond fund (such as Manulife Strategic Income or Manulife Yield Opportunities). Click on pdf link below.

As the piece outlines – bond funds have/will outperform GICs the vast majority of the time over the long term. The portfolio managers at these two bond funds continue to believe strongly in the current and go-forward opportunity for bonds. Coming off a disastrous 2022 , I believe the opportunity set for our bond funds is high, with limited downside.

I hope that this piece might help in those of you who are leaning towards the safety of a GIC, and potentially missing the opportunity in bonds.

As always, please let us know if you have any questions or would like any additional info.

-Aaron Pedlar

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