CORRECT: CANADA TIP SHEET: Maple Bonds Key To Pembroke Corporate Bond Fund
First Published Thursday, 26th April 2012 07:26 pm - © 2012 Dow Jones
("CANADA TIP SHEET: Maple Bonds Key To Pembroke Corporate Bond Fund," at noon EDT, misstated the average credit quality of the fund in the 3rd paragraph. The correct version follows:)
--One of Globe Fund's top performing fixed-income funds in 2012
--40% of fund is comprised of "Maple Bond" issuances
--Focuses positions in below-investment grade bonds
By David George-Cosh
Of Dow Jones NEWSWIRES
TORONTO -(Dow Jones)- Appetite for so-called maple bonds plummeted after the 2008 credit crisis shook global markets, but they're back in vogue, according to Richard Usher-Jones, vice president of Canso Investment Counsel Ltd.
The firm's Pembroke Corporate Bond Fund is one of the top performing fixed-income funds over the past six months, with a lofty six-month return of 8.39% and a three-month return of 6.76%. It has generated returns of 13.78% since its inception in January 2009.
About 40% of the fund's assets are in maple bonds - Canadian-denominated corporate bonds issued by non-Canadian companies - helping the fund to generate an average yield of about 6.2% with an average credit quality of "BBB".
"Many of our competitors don't have the research capabilities or were negatively impacted by the credit crisis by holding maple bonds in their portfolio," Usher-Jones said in an interview.
About 48% of the fund's holdings are in foreign corporate debt more generally. Taking positions in foreign financial firms, such as Royal Bank of Scotland Group PLC (RBS.LN), Lloyds Banking Group PLC (LLOY.LN) and Bank of America Corp. (BAC) have brought "tremendous value, despite it being an area of the market that is, in general, disliked," Usher-Jones said.
Closer to home, Pembroke recently decided to invest in longer-term bonds of Canadian telecommunications operators Shaw Communications Inc. (SJR) and Rogers Communications Inc. (RCI)
"We think there's good value in long cable telcos," he said. "You're picking up a good yield spread with those over the long-term."
-By David George-Cosh, Dow Jones Newswires; 416-306-2017, email@example.com