Articles & Insights
Investment Executive: Focus on Products  |  15 February 2016

Risk and reward

The current yield to maturity (YTM) of a default-free government bond is a reasonable estimate of its future expected return. Studies have found that the correlation between the beginning YTM and the subsequent realized return on 10-year US treasuries is in the 0.9 range. As interest rates change, the gain or loss on reinvestment income is offset by roughly the loss or gain on the principal value. Unfortunately, Canadian federal government bonds hit record lows in mid-January.  Read more >