Falling rates have historically boosted long-duration bonds.
However, in 2024, short-term and ultra-short-term bonds like the Franklin Canadian Ultra Short Term Bond Fund (FHIS) and the Franklin Canadian Short Term Bond Fund (FLSD) are proving more effective.
FHIS, launched in September 2022, offers a yield of 3.9 percent (as of November 30, 2024) with low volatility and a short duration of less than one year. It consistently outperforms its benchmark, the FTSE Canada 0-1 Year Universe Overall Bond Index.
“FHIS is a great option for investors who want to put their cash to work without exposing themselves to significant interest rate risk,” says Lee.
FLSD caters to investors seeking higher yields. With a yield of 4.2 percent and an effective duration of three years, FLSD balances reinvestment risk and return potential in today’s declining rate environment.
