Our Fixed Income portfolios continued performing very well. Additionally, our fixed income portfolio holdings in our taxable accounts have had the added benefit of providing a higher after-tax return than interest only portfolios of bonds (or GICs) only.

In our fixed income portfolio, we have been making profits on our preferred share indexes (HPR from Global X and DXP from Dynamic) after a 17% - 20% increase. We also lowered our percentage weight of preferred shares in the fixed income portfolio recently and may decrease exposure even after the preferred shares performance performed well beyond our expectations. As rates in Canada decrease, we have expanded our global exposure as US and global interest rates remain higher compared to Canadian rates.

Over the past year we have expanded our fixed income positions to more alternative fixed income investments which are not readily available to retail investors. Specifically, we added East Coast Strategic Credit Trust and CANSO Corporate Value. East Coast and RPIA Investment Advisors Alternative Global were both up in 2022, when Canadian Fixed Income markets were down over 11%. We added those two new alternative investments as they can make money during times of decreasing or increasing interest rates.

 

Equities:

Since our last update in January 2025. We continued taking profits.For example, we have been selectively taking profits and reducing our equity exposure. One example is we took profits in banking (RY) in November/December through mid-February. More recently we also made profits in our healthcare sector positions as they were performing extremely well year to date and wanted to sell down the target weights.

I have said many times before when the markets, be they fixed income or equities, are performing well beyond expectations, we tend to take profits by selling part or all of the position into the rising market. With the cash we raise, we sometimes buy more equities we own that are down, but still really like. For the past, several months we have mostly allocated those profits into some government bonds and other types of fixed income. We did so anticipating a market pullback so we could buy back investments “on sale.”  

Finally, as mentioned in our last update, we increased Canadian downside protection, (hedging/insurance) into mid-April 2025. The Canadian equity portion of the portfolio is approximately 40% hedged against a 7% decline. This partial protection aims to reduce volatility and partially limit the portfolio drops.

 

Conclusion

We continue closely watching any tariff news and are actively assessing ways to take advantage of opportunities. We appreciate your trust and confidence. Please reach out if you need anything—we are available via phone, WebEx, or in person.

 

** Here’s the fine print and there’s a lot of it…

Currency can add return when the Canadian dollar goes down but reduce returns when the Canadian dollar goes up for non-currency hedged US and international investments. Also, please remember that your US accounts report values in US dollars.

Securities or investment strategies mentioned in this newsletter may not be suitable for all investors or portfolios. The information contained in this strategy update is not intended as a recommendation directed to a particular investor or class of investors and is not intended as a recommendation in view of the particular circumstances of a specific investor, class of investors or a specific portfolio. Options, and other strategies mentioned, may not be suitable for all investors. You should not take any action with respect to any securities or investment strategy mentioned in this newsletter without first consulting your own Portfolio Manager or in order to ascertain whether the securities or investment strategy mentioned are suitable in your particular circumstances. This information is not a substitute for obtaining professional advice from your Portfolio Manager. The commentary, opinions and conclusions, if any, included in this newsletter represent the personal and subjective view of Daniel Kelly who is not employed as an analyst and do not purport to represent the views of RBC Dominion Securities Inc. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. Investment Trust Units are sold by RBC Dominion Securities Inc. There may be commissions, trailing commissions, management fees and expenses associated with Investment Trust investments. Please read the prospectus before investing. Investment Trusts are not guaranteed, their values change frequently, and past performance may not be repeated. (Keep reading, there’s only 7 more sentences to go.) This commentary is based on information that is believed to be accurate at the time of writing and is subject to change. All opinions and estimates contained in this report constitute RBC Dominion Securities Inc.’s judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates, market conditions and other investment factors are subject to change. Past performance may not be repeated. The information provided is intended only to illustrate certain historical returns and is not intended to reflect future values or returns.   RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ®Registered trademarks of Royal Bank of Canada. Used under license. ©2025 Royal Bank of Canada. All rights reserved.

 

Investment portfolios are not guaranteed, and past performance is no indication of future returns. In addition to these portfolios not being a guaranteed investment, there can also be significant fluctuations in the value of the portfolio. Has anyone read this far?