Thursday, October 15, 2009
Fixed Income & Preferred Shares
Fixed-Income investing is a widely misunderstood topic and many investors take excessive risks with their fixed income portfolio while blithely assuming that they are taking no risks at all.
In my paper Preferred Shares and GICs I introduced the concept that any fixed-income investment portfolio is a compromise between:
- Security of Principal, and
- Security of Income
Many investors emphasize the first attribute while ignoring the second to their ultimate discomfort.
Other commonly made errors are:
- Paying too much for liquidity
- Insufficient diversification
- Overemphasis on current income
- Insufficient attention to issuer options
- Attempting to address all risks with one particular investment
- Underemphasis on tax effects
In this seminar, I explain that "risk" cannot be thought of as a position on a number line: there are many different kinds of risk and portfolios must be constructed to account for all of them - no single investment can do it. I also explain how preferred shares can fit into a fixed income portfolio, bringing their own strengths to offset the weaknesses of other fixed-income investments.
There is no charge for attendance at this seminar; there will be opportunity after the session to discuss the material informally.
Location: Days Hotel & Conference Center, (at Carlton & College, downtown Toronto) Rosedale Room (see map).
Time: October 15, 2009, 6pm-9pm.