Matco Fixed Income Fund (Series F)
Fund Documents [LINK]    Fund Codes [LINK]    As at June 30 2022  

Investment Profile
The Fund invests in Canadian investment grade government and corporate bonds to generate interest income and modest capital appreciation.

Fund Inception Date

2017

Fund Net Asset Value

$81.5 Million

Portfolio Manager

Trevor Galon, CFA

Yield

Current Yield 3.1%
Yield to Maturity 3.9%

Is this fund for you?

You are seeking income, stability and capital preservation

You have a low tolerance for risk on your investment

You are looking to hold the investment for the short, medium or long term

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Geographic Profile

Canadian-focused
The fund invests primarily in Canadian dollar-denominated bonds issued by governments and corporations. The Fund may invest in up to 20% in U.S. corporate bonds.Fixed Income Geographic Profile 22Q2

Strategy

To preserve capital and generate income, the Fund uses a multi strategy approach to optimize the portfolio.

Investor Education

  • Learn about Matco and our investment philosophy
  • Understand this Fund is not intended to be a complete investment program for all investors

 

Performance (Series F)

As at June 30, 2022    
Annualized
Net of Fees 3M YTD 1Y 3Y 5Y 7Y 10Y Inception
Series F -5.3% -11.2% -10.6% -2.5% - - - -0.2%

 

Growth of $10,000 since inception

Fixed Income Growth of $10,000 21Q3

Cumulative Returns

  3M YTD 1Y 3Y 5Y 7Y 10Y Inception
Series F -5.3% -11.2% -10.6% -7.2% - - - -1.2%

 

  • Calendar Year Returns

      2021 2020 2019 2018 2017
    Series F -3.1% 8.0% 4.2% 0.7% 1.3%
  • Annual Distribution per Unit ($/unit)

      2021 2020 2019 2018 2017 2016 2015
    Income 0.16 0.19 0.18 0.16 0.06 - -
    Capital Gains 0.08 0.15 - - - - -
    Total Distributions: 0.24 0.34 0.18 0.16 0.06 - -

Sector AllocationFixed Income Sector Allocation 22Q2

Asset MixFixed Income Asset Mix 21Q3

Top Holdings

Canada Housing Trust  1.75% 15JUN30 7.1%
Canada Government 3.50% 01DEC45 7.0%
Hydro One Inc. 5.36% 20MAY36  5.3%
Toronto-Dominion Bank 1.888% 08MAR28 5.2% 
Canada Housing Trust No 1  FRN 15MAR24 4.7%

 

Province of Alberta 3.45% 01DEC43 4.7%
Canada Housing Trust No. 1 FRN 15SEP24 4.7%
Canadian Government Bond 2.75% 01DEC48 4.6%
Canadian Dollar   4.5%
Canada Housing Trust No. 1 FRN 15SEP23 4.1%

Outlook

The second quarter of 2022 observed a few developments that will impact the outlook for interest rates. First and foremost, inflation has continued to be stubbornly high. In 2021, global supply chain disruptions, vehicle price increases and rising oil prices were the primary sources of inflation.

The Russian invasion of Ukraine has put additional upward price pressure on the price of oil and other agricultural commodities. This further intensified inflation concerns in the year’s first six months. As a result, North American central banks have accelerated overnight interest rate increases.

In the second quarter, the Bank of Canada and the U.S. Federal Reserve increased interest rates by 1.00% and 1.25%, respectively. It is anticipated that both central banks will continue to increase interest rates throughout the remainder of 2022. Current expectations are for overnight interest rates to end the year at approximately 3.00%. These rate increases are used as a blunt tool to begin curbing inflation. At the start of the year, Matco’s expectation was for inflation to begin moving lower in the third quarter of 2022. The Russian-Ukraine conflict has extended this expectation to the end of 2022 or the first quarter of 2023.

While rising interest rates negatively impact the performance of bonds, preferred shares can be positively impacted. The Fund’s 14.2% allocation to preferred shares may allow the Fund to achieve capital appreciation in a rising interest rate environment.

The outlook for economic growth is also important for the Matco Fixed Income Fund. If growth remains healthy, corporate bonds will continue to perform well. The growth outlook for 2022 is for continued growth, albeit at a slower pace than 2021.

Due to the slower economic growth profile, we have reduced our corporate bond weighting from 45.5% at the beginning of 2021 to 35.4% currently. The Fund also has a strong income profile of 3.1%. As the outlook for fixed income performance remains modest, maintaining a healthy level of income will remain a key focus throughout the remainder of 2022.

Performance returns for the Matco Mutual Funds are calculated by Matco Financial Inc. These returns are calculated and reported in Canadian dollars and are historical simple returns for the 3 month, YTD and 1 year periods and annualized compounded total returns for periods after 1 year. They include changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. A cumulative return on an investment is the aggregate amount that the investment has gained or lost over time, independent of the amount of time involved, expressed as a percentage. Calendar year return reflects the compound rate of return over the specified calendar year (January 1st to December 31st). Matco Fund returns are calculated after management fees and operating expenses have been deducted.