GuardBonds™ target maturity date funds
Key points
- Canadian bond yields have moved markedly higher across the yield curve in April, influenced by the recent sell-off in the U.S. Treasury market.
- Short-term corporate bond yields are now even more attractive relative to other cash alternatives, such as high-interest savings (HISA) ETFs, Guaranteed Investment Certificates
(GICs), and Treasury-Bills (T-Bills). - The appeal of GuardBonds™ target maturity date strategies – which buy and hold short-term corporate bonds to maturity, reducing market volatility – is further enhanced when returns are
examined on after-tax basis.
The rise in bond yields since the end of March 2025, may be explained by the recent sell-off in U.S. Treasuries, which was likely caused by a confluence of factors including concerns regarding expected economic growth, rising inflation, uncertainty regarding government economic and trade policy, and hedge funds unwinding leveraged positions.
Canada Government Yield Curve:
Higher Yields Across All Tenors Along the Curve
Source: Guardian Capital using Bloomberg data for the month-to-date change in Canada Sovereign Curve rates (ID: YCGT0007); as at April 30, 2025
In the context of GuardBonds™ Funds, which aim to hold bonds in their portfolios until their maturity date, the current rise in yields is less relevant for investors than the end result, which is that higher yields today on short-term investment-grade corporate bonds increases the total return potential of these bonds when held to maturity. Current yields on these are significantly higher than other cash alternative products, such as HISA ETFs, GICs, and T-Bills.
Comparing Yields:
Investment-grade Corporate Bonds Relative To Held-to-maturity Products
Source: Guardian Capital LP using Bloomberg data from April 30, 2024 to April 30, 2025.
- Investment Grade Corporate Bond Yields for 1, 2 and 3 year are based on the following Bloomberg indices:
- 1yr A+, A, A-: ticker: BVCSCD01 BVLI Index,
- 2yr A+, A, A-: ticker: BVCSCD02 BVLI Index,
- 3yr A+, A, A-: ticker: BVCSCD03 BVLI Index.
- HISA ETFs are represented by the annualized net distribution yield for Global X High Interest Savings ETF (TSX: CASH) as published on the ETF’s website.
- 30day T-Bill based on the yield-to-maturity of the FTSE Canada 30 Day Treasury Bill Total Return Index.
- The 1-year GIC is based on published rates from the Bank of Canada: https://www.bankofcanada.ca/rates/banking-andfinancial-statistics/posted-interest-rates-offered-by-chartered-banks/
The attractiveness of higher yields on short-term investment-grade corporate bonds when held to maturity – like those in the GuardBonds™ Funds – is further enhanced by the potential tax efficiency offered by capital gains*. GuardBonds™ Funds seek to maximize total return potential and tax efficiency by prioritizing bond issuances trading at a discount. Returns from other cash alternative products, such as HISA ETFs, GICs, and T-Bills, are taxed as ordinary income at an investors’ highest marginal tax rate.
1-year comparative returns (as of April 30, 2025)
Fund | Total returns | Price return | Price return as % of total return |
---|---|---|---|
GuardBonds™ 2025 Investment Grade Bond Fund | 5.34% | 3.51% | 66% |
GuardBonds™ 2026 Investment Grade Bond Fund | 7.00% | 5.20% | 74% |
GuardBonds™ 2027 Investment Grade Bond Fund | 8.20% | 6.11% | 75% |
GuardBonds™ 1-3 Year Laddered Investment Grade Bond Fund | 5.80% | 3.91% | 67% |
HISA ETF | 3.72% | -0.02% | -1% |
T-Bill ETF | 3.91% | -0.07% | -2% |
1-year GIC | 4.40% | 0.00% | 0% |
Source: Guardian Capital LP using Bloomberg data from April 30, 2024 to April 30, 2025.
Total Return: The change in adjusted share price (stocks), NAV (mutual funds), or market prices (ETFs and closed-end funds) over the selected time period. For stocks, includes dividends earned but does not reinvest dividends. For mutual funds, ETFs and closed-end funds, assumes a reinvestment of all income and capital gains distributions. Returns greater than one year are annualized.
Price Return: The change in adjusted share price (stocks), NAV (mutual funds), or market prices (ETFs and closed-end funds) over the selected time period.
- Total returns for the GuardBonds™ are based on the ETF series.
- The HISA ETF is represented using the Global X High Interest Savings ETF (ticker: CASH CN Equity).
- The T-Bill ETF is represented by the Guardian Ultra-Short Canada T-Bill ETF (ticker: GCTB CN Equity). The return for the 1-year GIC is based on the yield as of 03/28/2025 and is held for 1-year.
- The 1-year GIC rate is based on data from the Bank of Canada: https://www.bankofcanada.ca/rates/banking-and-financialstatistics/posted-interest-rates-offered-by-chartered-banks/
*Tax efficiency is dependent upon the proportion of discount bonds held by a GuardBonds™ fund, which cannot be predicted and is expected to fluctuate over time, depending on prevailing market conditions as well as the impact and timing of subscriptions and redemptions in the GuardBonds Funds. A bond that trades below its par value is referred to as a “discount bond”. As the bond gets closer to maturity, its price increases to eventually converge to par value. When a discount bond matures at par value the price appreciation is treated as a capital gain, which is taxed more favorably than interest income.
Visit GuardBonds.com or speak to your investment advisor to learn more about how GuardBonds™ Funds aim to help you lock in yield and lock out volatility.
Performance
Fund | 1M | 2M | 6M | YTD | 1YR | SI* |
---|---|---|---|---|---|---|
GuardBonds™ 2025 Investment Grade Bond Fund | 0.21 | 0.49 | 0.72 | 1.84 | 1.09 | 5.34 |
GuardBonds™ 2026 Investment Grade Bond Fund | 0.14 | 0.46 | 0.66 | 2.27 | 1.28 | 7.00 |
GuardBonds™ 2027 Investment Grade Bond Fund | 0.14 | 0.52 | 0.86 | 2.69 | 1.71 | 8.20 |
GuardBonds™ 1-3 Year Laddered Investment Grade Bond Fund | 0.22 | 0.54 | 0.81 | 2.31 | 1.31 | 5.80 |
Source: Guardian Capital LP as of April 30, 2025.
*Since inception date = January 9, 2024
Except as otherwise noted, the indicated rates of return are the historical annual compounded total returns including 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 unitholder that would have reduced returns. The rates of return for periods of less than one year are simple rates of return. Performance is calculated net of fees. Mutual funds and ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.
How GuardBonds™ compare
Characteristic | GuardBonds™ | Individual Bonds | Guaranteed Investment Certificates (GICs) | Bond Funds / ETFs |
---|---|---|---|---|
Diversified holdings | ✓ | ✓ | ||
Monthly distributions | ✓ | ✓ | ||
Actively managed | ✓ | Not always | ||
Potential tax-efficiency | ✓ | Not always | Not always | |
Defined maturity | ✓ | ✓ | ✓ | Not always |
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Date published: May 15, 2025