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Strategies & Market Trends : Dino's Bar & Grill

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To: Goose94 who wrote (119732)	2/15/2022 9:09:34 AM
From: Goose94	Read Replies (2) of 202372

BCE (BCE-T) the world's central bank are either boosting rates now or plan to, which is bad news for income investors. Rising inflation will erode the purchasing power of the cash flow they receive from their securities. Rising interest rates will tend to drive down the market values of many of their investments, such as bonds, some types of preferred shares and interest-sensitive stocks. Real return bonds are protected against inflation both in terms of principal and interest payments. It sounds like an ideal solution, but it is not. The FTSE Russell Real Return Bond Index was down 8.5 per cent year-to-date as of Feb. 11. The iShares Canadian Real Return Bond Index ETF (XRB) are down 9.5 per cent because real return bonds are long-term issues. Almost 70 per cent of the issues in XRB have maturities of 10 years or more. The effective duration is just less than 15 years, and the portfolio has a real yield of 0.34 per cent. That is not an appealing combination for investors. BCE, offer good inflation-fighting potential. BCE's payout is above the Canadian inflation rate.

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