James Hymas Opines on RRBs

John Heinzl has an article in the Globe & Mail of 2011-4-27 titled The case for, and against, real return bonds in which I am quoted:

James Hymas, president of Hymas Investment Management, said the low yields on RRBs suggest that some investors are worried about hyper-inflation. They would rather accept a tiny real yield than suffer a loss in purchasing power if inflation really heats up.

But he’s no fan of RRBs, either, partly because they’re less liquid than regular bonds but mainly because “they’re trying to do too many things at once. They’re trying to give you a fixed income and inflation protection, but they don’t perform either function particularly well.”

If investors want inflation protection, fixed-income portfolios are the wrong place to achieve it, he said. They should instead look to other asset classes, such as resource stocks, to counter the impact of inflation on their bonds, he said.

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