{"id":751133,"date":"2026-06-21T07:45:39","date_gmt":"2026-06-21T07:45:39","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/751133\/"},"modified":"2026-06-21T07:45:39","modified_gmt":"2026-06-21T07:45:39","slug":"fixed-income-has-become-a-catch-all-term-it-shouldnt-be","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/751133\/","title":{"rendered":"\u2018Fixed income\u2019 has become a catch-all term. It shouldn\u2019t be"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Nuthawut Somsuk\/iStockPhoto \/ Getty Images<\/p>\n

If a fund has fixed income in its title, or a synonym such as debt or yield, does that alone make it suitable for you? <\/p>\n

Nope.<\/p>\n

You\u2019ll pass on a salad because it has walnuts or cilantro. Or perhaps because of the dressing. You may even demand to know what\u2019s in it. Yet, many investors will buy something labelled \u201cfixed income\u201d without asking a single question.<\/p>\n

Even if you\u2019re not an expert investor, you can easily check. Look at the menu or ask the waiter; check the prospectus or the fund manager\u2019s website. Ask your adviser. It\u2019s not hidden any more. It stopped being somebody else\u2019s fault a while ago.<\/p>\n

Still, a surprising number of fixed-income investors unknowingly own equities, preferred shares and convertible bonds; bank loans, foreign currencies and emerging market debt; private credit, factored receivables, high yield and highly structured or securitized assets \u2013 sometimes even real estate investment trusts.<\/p>\n

None of those are inherently bad investments. Some are very good ones. But if you didn\u2019t mean to buy them, and they don\u2019t solve your fixed income needs, then that\u2019s a problem. <\/p>\n

It suggests the decision wasn\u2019t all that thoughtful \u2013 perhaps less thoughtful than your lunch order.<\/p>\n

Opinion: How much downside protection do you really have in your portfolio? Here\u2019s how to find out<\/a><\/p>\n

Part of the issue is labelling. \u201cFixed income\u201d has become a catch-all. Some platforms group it that way. Databases reinforce it. Advisers often don\u2019t push back on it. The result is a category that often tells you very little about what you actually own.<\/p>\n

Interest-rate risk within fixed income portfolios is another exposure that tends to get a free pass. For decades, the performance of rates carried fixed income portfolios. High and falling rates delivered consistent returns, and the default to rates as fixed income worked.<\/p>\n

That hasn\u2019t been the case for a while.<\/p>\n

Despite that, a large share of fixed income portfolios are still dominated by interest rate exposure \u2013 by default rather than design. The Canadian bond index and the funds that track it have demonstrated how unfortunate that has been over more than the last decade. <\/p>\n

Rates still have a role. They just shouldn\u2019t be the only, or even the dominant, driver. Institutional portfolios figured that out years ago. Most individual portfolios haven\u2019t.<\/p>\n

Which brings us back to what you\u2019re actually trying to accomplish. <\/p>\n

Fixed income doesn\u2019t exist in isolation. It sits inside a total portfolio.<\/p>\n

If your equity portfolio is aggressive, your fixed income should probably be protective. If your equities are stable and liquid, you may have some room to take risk elsewhere.<\/p>\n

Many portfolios don\u2019t reflect that. They end up layering risk on top of risk, often unintentionally, simply because fixed income was in the name. <\/p>\n

High yield, private debt, emerging market bonds \u2013 they all carry real risk. Maybe less than equities, but certainly more than core fixed income solutions, and they draw from the same total risk budget. <\/p>\n

A well-constructed fixed income allocation can actually enable more risk-taking in equities. That\u2019s the point. Diversification, income, lower correlation and downside protection are supposed to support the portfolio, not add to the same drivers and increase total portfolio risk. <\/p>\n

If you choose to include higher-risk exposures within the fixed income bucket, fine. Just know that they\u2019re there, and how they\u2019re likely to behave. Choose them on purpose.<\/p>\n

Where do you go from here?<\/p>\n

Fixed income is making a comeback \u2013 has your portfolio adjusted?<\/a><\/p>\n

Most fixed-income investors start by choosing the amount and duration of their interest rate exposure and add investment grade corporate credit. That\u2019s familiar, and it\u2019s easy to access.<\/p>\n

Some will choose funds that remove the interest rate exposure to isolate the credit spread premium in corporate bonds, and include high-quality asset-backed securities. They\u2019ll often select a mortgage strategy from a manager with a strong track record and suitable liquidity parameters. <\/p>\n

From there, some stop. Others layer in high yield, private debt, bank loans or more specialized strategies. Institutions often include real estate and infrastructure equity within their fixed income allocation as well.<\/p>\n

There isn\u2019t a single right answer.<\/p>\n

But better portfolios tend to reflect a set of deliberate choices about what risks are being taken and why. Not just what happened to be included under a broad label, and not just interest rate risk by default. <\/p>\n

You\u2019ll notice that equities, preferred shares, convertible bonds and warrants didn\u2019t make the allocation process above. That\u2019s not because they\u2019re bad investments. It\u2019s because they aren\u2019t fixed income.<\/p>\n

If you want them, include them \u2013 maybe in a different part of the portfolio. Either way, account for them properly within your total portfolio risk.<\/p>\n

The right combination of rates, credit, mortgages and select other exposures has worked well for many investors. That\u2019s not the issue.<\/p>\n

The issue is assuming that anything that mentions fixed income will behave the way you need that part of the portfolio to.<\/p>\n

Caveat emptor.<\/p>\n

Because in an environment such as this one, it\u2019s easy for the fixed income portion of a portfolio to lapse or drift \u2013 to become something you wouldn\u2019t have chosen if you\u2019d checked the ingredients.<\/p>\n

And when the market tone changes, that\u2019s when you\u2019ll know what was actually in your salad. <\/p>\n

Kevin Foley is Managing Director, Institutional Accounts, at YTM Capital, a Canadian asset manager specializing in credit and mortgage funds. He spent two decades trading and managing fixed income at a major Canadian bank and serves on several Canadian foundation boards and investment committees. Kevin.Foley@YTMCapital.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Nuthawut Somsuk\/iStockPhoto \/ Getty Images If a fund has fixed income in its…\n","protected":false},"author":2,"featured_media":751134,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-751133","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/751133","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=751133"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/751133\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/751134"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=751133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=751133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=751133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}