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Market Insights

The Opportunity for a Core Bond Position

Following the softening in policy stance from the Bank of Canada, domestic bond yields have moved lower in recent weeks, and we see signs of potential stabilization at home. South of the border, the US market raised its overnight rate by 75pbs on November 2nd and has now priced in another 125bps of rate hikes by early 2023, increasing the expected terminal rate to over 5.25%. We believe interest rates are now sufficiently restrictive to slow the economy and the income opportunity is very compelling while providing significant safety for investors today.
Q3 2022 Newsletter

Market volatility, inflation, and geopolitical developments have all made for a cloudy bond market. However, we are seeing the silver lining from an attractive running yield, dislocation across sectors and geographies, and improved opportunities in security selection.
Considering the different roles bonds and GICs play in a portfolio

Given the recent market volatility, YTD 2022 has been an extremely challenging period for fixed income as central banks began tighter monetary regimes. As a result, bond yields spiked, sending bond prices plummeting. This created an opportunity for fixed income investors to purchase bonds and GICs at the most attractive yield levels, and many are now wondering if they should use GICs instead of bonds as a source of safe income.
4 Key Themes Investors Should Consider When Getting Back into Bonds

Although the independence of DIY investing can seem appealing, we believe that investors should reflect on these key themes and potential challenges that exist with achieving diversification, managing, and maintaining bond portfolios cost, and the potential impact of taxes. A qualified investment manager that specializes in bond portfolios can help investors navigate this established asset class in a way that can help achieve investor objectives across market environments.
July 2022 Newsletter

July saw central banks continue their fastest and most aggressive monetary tightening in recent history. However, we believe some of the volatility that we saw during the first half of the year may be beginning to dissipate and signs of improvement may be on the horizon for fixed income investors. Against this improving backdrop, we have seen credit spread volatility fall and believe there are interesting opportunities that didn't exist at the beginning of 2022 that can deliver strong returns for our portfolios.
Q2 2022 Newsletter

Living in unprecedented times has become the norm since the pandemic took hold in early 2020, and just when the light at the end of the tunnel begins to shine through, another set of obstructions materialize. We are familiar with the current impediments – inflation running at four-decade highs, escalating geopolitical risks, and a harsh monetary policy regime purposely restricting economic growth. Altogether, we believe this may be a recipe for a recession – but what kind of recession?
Introducing RP Broad Corporate Bond (Fossil Fuel Exclusion)

We are pleased to announce the launch of our new strategy, RP Broad Corporate Bond (Fossil Fuel Exclusion), designed in partnership with our client, University of Toronto Asset Management (UTAM), and in collaboration with FTSE Russell. Learn more about the strategy and how the first-of-its-kind screening approach was developed!
The Maturing of ESG Debt Markets

In the past few years, we've seen ESG-labeled bonds benefiting from a cost advantage that became known as the "greenium." As the ESG bond market has grown, we've noticed this "greenium" fade as the market matures and the advantages ESG bond issuers once had becomes tied to the ambition of their projects, not just the label of their bond.
April 2022 Newsletter

Since the beginning of 2021, bond holdings have posted double-digit losses and weighed down portfolio performance. However, as is often the case in markets, with pain comes opportunity. Despite the potential for continued short-term volatility, we believe the time to increase bond allocations for intermediate and long-term investors is now.
Q1 2022 Market Commentary

During Q1 2022, bond markets suffered across the board as the ongoing conflict in Ukraine, rising inflation expectations, and rising bond yields impacted prices negatively. We discuss the anticipated rate hikes by the US Federal Reserve, corporate fundamentals, and an example of how we generated gains through a relative value lens.
Codifying Climate Disclosures

The SEC recently unveiled its landmark proposal requiring companies to disclose a variety of climate-related data as part of their annual reports and audited financial statements, covering both quantitative and qualitative information. We see this as an important step in the codifying of climate-related risks in line with what we already see in the Eurozone.
January 2022 Market Commentary

2022 began with plenty of market activity as monetary policy took center stage and Covid-19 continued to evolve. We believe the driver of recent volatility stems from changing expectations about monetary policy, including the pace and number of interest rate hikes and a greater chance of quantitative tightening in 2022/2023. Find out more about our views on recent market events in the market commentary linked below.
The Inclusion of “Transition” Technology

The EU Taxonomy is a classification system that defines environmentally sustainable economic activity under EU law. in this article, we take a look at where we stand and our views on the taxonomy, especially for natural gas and nuclear energy.
Q4 2021 Newsletter

2021 was an unpredictable but also transformative year in financial markets. We saw concerns around inflation, the emergence of new variants of the virus, and policies from governments and central banks that changed as often as the wind. Understanding 2021 helps us understand what to expect in 2022.
Q3 2021 Newsletter

Inflation can have a broad impact on an economy, whether it is driving consumer decisions or cutting corporate profit margins. Market participants are interested in how policy decisions can strike the right balance to address elevated inflation and the impact these decisions will have on bonds.
The Future of Investing

Our proprietary software (SANTA) helps identify attractive securities and assist with optimal trade execution. Read more about an example of how this enables us to act quickly and effectively.
Q2 2021 Newsletter

In an environment of low yields and compressed credit spreads, there is considerable value in dynamically allocating capital across different geographical markets. Each of our portfolios has a significant component of corporate bonds issued outside of Canada, which gives us a wider menu of investments. In this article, we discuss some of the opportunities we are taking advantage of in our strategies.
Q1 2021 Newsletter

During the first quarter of this year, the “main event” was an increase in long-term interest rates and a steepening of yield curves. We are cautious with A-rated corporate bonds given the incentives for management to sacrifice this rating. We continue to balance defensive investments with exposure to areas of the market where credit spreads have not fully re-traced to pre-COVID levels.
February 2021 Newsletter

Warren Buffett commented "Bonds are Dead" in his annual Berkshire Hathaway newsletter. We do not believe "Bonds are Dead" but the traditional approach to bonds must adapt to new investor needs.
Opportunity in the travel sector during COVID-19

The travel sector was arguably the hardest hit sector by COVID-19, and as an online travel agency (OTA), Expedia’s business was severely impacted. Here is an update on one of our high conviction positions – Expedia – as the company returns to the debt markets, this time to repurchase debt and issue it.