Sr Portfolio Manager
Bank of Canada’s bond-buying program will now further support the fixed-income market by directly including hedge funds. Portfolio manager Andrew James Labbad explains how this can benefit Amplus Fund.
On Tuesday, the Bank of Canada (BoC) announced an expansion of it’s Corporate Bond Purchase Program (CBPP) to allow buy-side participants, such as Wealhouse Capital Management, to sell bond holdings directly to the BoC via a primary dealer .
Since the program was first launched in May, as a result of the economic fallout due to COVID-19, the CBPP has successfully served as a backstop to support the Canadian corporate bond market, which is currently very robust and healthy. This change will create additional peace of mind for investors. The bonds eligible for this program are mostly 1- to 5-year investment-grade bonds from corporate (i.e. non-bank) issuers. The capacity of this program was originally set for $10 billion and as of today, BoC has only deployed ~$151 million so far. In other words, the gates are still wide open, with plenty of additional capacity to support the fixed-income corporate market.
Starting October 20th, Wealhouse can go directly to the Bank of Canada via a primary dealer for increased liquidity, avoiding the dealers’ limitations of selling their own risk. Our portfolio is properly setup to take advantage of this program, both directly and indirectly, with ~65% of our portfolio eligible for this new program.
Historic low rates and unprecedented quantitative easing from central banks have created ample opportunities of market spreads divergence globally. Amplus Credit Income Fund aims to maximize positive risk-adjusted returns in a rising market, while protecting investors from market risk in a downturn. By employing a diverse arsenal of investment strategies, Amplus is designed to capitalize on market inefficiencies and mispricing while minimizing interest rate exposures.
Amplus Fund subscribes to a flexible investment style with primarily debt securities such as bonds, preferred shares, and convertible shares. We have the global relationships to invest in different currencies, taking advantage of the best value.View Fund