U.S. Investors Love Canadian Bonds
Canadian bonds are attracting record foreign investment as U.S. buyers seek to tap into the sounder finances and healthier economy of their northern neighbor. In the year ended Jan. 31, net foreign inflows into Canadian bonds were Canadian $86.3 billion (U.S. $85.9 billion), the most for a 12-month period since at least 1988, according to Statistics Canada, the country's statistical agency. Some 75% of inflows came from U.S. investors. "Canada is increasingly viewed as a store of value in its own right, with deeper, more liquid markets than before," says Michael Woolfolk, senior currency strategist at Bank of New York Mellon (BK). Of mutual funds with 10% or more in Canadian fixed-income securities, Morningstar's (MORN) top-ranked funds (four of five stars) are from Loomis Sayles. The Loomis Sayles Fixed Income (LSFIX) fund has almost 21% in Canada and an average credit quality of BBB; Loomis Sayles Investment Grade Fixed Income (LSIGX) has about 18% and an average credit quality of A.