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  5. GWO: Hi Ryan, Several years ago I engaged with 5i for a portfolio analysis. [Great-West Lifeco Inc.]
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Investment Q&A

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Q: Hi Ryan,
Several years ago I engaged with 5i for a portfolio analysis. I'm a recently retired investor. 5i strongly encouraged me to include a fixed income component to stabilize portfolio fluctuations and lower volatility.

With that advice and for tax purposes I purchased XBB, CLF, and PMIF into my RRSP. Now that the interest rates are marching steadily upwards I'm in a significant capital loss situation on my portfolio's bond allocation.

At this point do you suggest I just hold through the cycle and absorb the loss or should I sell and reallocate funds? Perhaps into some solid Canadian dividend payers? (eg. GWO?)

As always, much appreciate your advice and guidance in these unprecedented times. Thank-you.

Asked by Maury on June 16, 2022
5i Research Answer:

Bonds have experienced perhaps their worst sell off ever due to inflation fears. But stocks can still decline more, and we would be reluctant to change an asset allocation mix AFTER such a decline. At some point, bond yields will peak, and the sector should perform better. We would estimate three to five months here, depending on how inflation plays out.  Bonds have not been stable recently, but over time provide safe cash flow and 'usually' better stability.   We would ensure that an bond/stock mix remains appropriate for one's goals, and would suggest staying the course if it is.