Interest rate jitters hit fixed income investments

Thanks to hints from the Federal Reserve and Bank of Canada that interest rates might not -in fact- stay this low forever, fixed income investments such as bonds and REIT’s have significantly dropped in value in the last few months. This might initially seem counter-intuitive, due to the fact that investors bought these because of the income stream, which hasn’t changed. However, the reason for the drop in value is that a bond paying, say, 3.5%, becomes less attractive if it seems that interest rates will be higher down the road. The problem for investors is that they may find that the increase in the value of their investment, painstakingly accumulated over years of interest payments, will evaporate when the market drops. In contrast, an investment in the Cannect MIC is protected because the shares can be sold at par (less redemption fees). You don’t have to worry that the value of your investment will be eroded by factors beyond your control, and with the corporation’s managers also being large investors in the MIC, you can be sure that their objectives are the same as yours.