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Allocation Question

3756 Views 1 Reply 2 Participants Last post by  leslie
I have decided to allocate 40% of my portfolio to equities and 60% to fixed income. My first question is: In typical allocation categorizations do preferred shares fall under equity or fixed income?
I decided with regard to bonds to build a short term ladder with corp bonds over a 5 year period. I do not want the volatility associated with bonds funds or ETF's. However as I look at current yields in that maturity window in my ITrade inventory I don't see much that is exciting.
Besides the preferred's and corp bonds are there other fixed income investments that I should be looking at?
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The pref shares are now becoming much more of a risky bet as they approach Face value. They have been vary useful in the past year, but the two-yr chart comparing the prefs to the TSX show that there is now a trade-off.


You might consider corporate debentures that are traded on the exchange. These are most convertible (into common stock) but most are so far out of the money now that you are paying no premium for the benefit (or at least last I looked which was a while ago). For the listing of Cdn issues see this site with is updated weekly I think.

Some sites for learning about these:
http://members.shaw.ca/PublicAccess/IntroConvertDben.pdf
http://members.shaw.ca/PublicAccess/guide_to_convertible_debentures.pdf
http://inyourbestinterest.ca/viewdoc.php?id=276
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