Comments on: PH&N Inflation-Linked Bond Fund: Active management at a low-fee

By: Canadian Capitalist

Canadian Capitalist — Wed, 29 Jul 2009 20:15:49 +0000

Thanks for your research Doug. MER of 0.50% isn’t bad for a mutual fund with no commissions to buy and sell compared to 0.35% MER for XRB. It would be nice if the minimum investment were lower though

By: Doug

Doug — Wed, 29 Jul 2009 20:04:10 +0000

After talking to PH&N this fund (actually Series D but called Series A on RBC Direct Investing website) has the symbol PHN650. The expenses are management fee 0.45% + operating expenses 0.05% for a total of 0.50%. There is no commission for purchase.

By: Canadian Capitalist

Canadian Capitalist — Fri, 24 Jul 2009 01:55:30 +0000

@Doug: Now that you’ve mentioned it, I looked up the fund on RBC Direct. You are right. They don’t list this fund. A quick call to RBC Direct should clarify matters. Can you let us know what you find out?

By: Stephanie

Stephanie — Thu, 23 Jul 2009 17:34:56 +0000

Well I don’t have much to add to this convo after reading all the responses. I do enjoy reading your blogs though, thanks again and take care!

By: Doug

Doug — Thu, 23 Jul 2009 15:44:11 +0000

I was looking for this fund at RBC Direct Investing. It is hard to find as it is not listed in the PH&N listings. The only fund I could find was the Series A (PHN650). I found this by first going to the PH&N website. RBC does not give an MER for this fund so I didn’t buy any. Can anyone help me here?

By: Four Pillars

Four Pillars — Thu, 16 Jul 2009 16:40:25 +0000

Thanks for the mention – it was fun to be included in the G&M poll once again.

By: Dave

Dave — Wed, 15 Jul 2009 13:39:12 +0000

With a minimum purchase of $25k for individual investors, I don’t really see the benefits of this fund vs the iShares ETF. Am I missing something?

By: Canadian Capitalist

Canadian Capitalist — Fri, 10 Jul 2009 17:15:59 +0000

@Phil: I believe we have 4 RRB bonds today maturing in 2021, 2026, 2031 and 2036. There are two advantages that a low-cost fund would offer: (1) Ability to buy in small amounts. Buying bonds directly would mean an outlay closer to $5,000 for one bond. However, this may not be an issue if the allocation to RRBs is small to begin with. (2) Presumably, institutional investors can obtain much better pricing on bonds compared to individuals. Again, this may not be an issue for an investor hoping to hold the bonds to maturity and not intending to sell to rebalance the portfolio.

@Rob: Investors like myself hold bonds for lowering portfolio volatility. As such, the expectation is bonds would be bought / sold when rebalancing the portfolio. Since bonds are not held for generating income, the volatility in prices is a desirable attribute; not something that should be avoided.

@rajeev: Thanks for your kind words. I feel honoured that the Globe asked for my picks.

@Cam: Actually, Phil and Rob’s point is valid for investors drawing down income from a portfolio and have shorter-term investment horizons. They can avoid the volatility that comes with bond funds by investing in the bonds directly.

By: Cam Birch

Cam Birch — Fri, 10 Jul 2009 06:00:56 +0000

@Phil S, @Rob: I don’t think you have quite grasped the concept. This is a mutual fund, they purchase RRB as their investment tool (rather than regular bonds or stocks). A fund like this will properly ladder the bonds to ensure a regular cashflow and avoid undue risk. Also they are not required to purchase Canadian Government Bonds, they can purchase provincial bonds, or even bonds issued by companies if they meet the qualifications. They are also intending to have a 30% foreign content in this fund, though they are not restricted to such.

An investment like this is to have some liquidity in RRB purchases. The fund manages that for you, you just get to sit back and enjoy the ride.

All fund purchases Mutual or ETF have a cost for convenience. Ideally everyone would have properly laddered bonds and an excellent portfolio, because we cannot quite so easily there are some simpler ways out. This is not for everyone but it is a viable product, properly researched.

By: A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com

A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com — Fri, 10 Jul 2009 01:58:16 +0000

[...] Capitalist is a fan of active management afterall… well, you’ll see what I [...]