Investments that have some safety of principal and a potential for capital gains that typically account for 15% to 70% of a balanced portfolio. Examples include bonds and GICs with maturities greater than one-year, strip bonds, mortgage-backed securities, private placements and other debt instruments, preferred shares (not including convertible securities) and income mutual funds.
Term of the Minute
- Liquidity Risk
Liquidity is a measure of how quickly an investment can be sold for cash at a fair market price. If a fund can’t sell an investment quickly, it may lose money or make a lower profit, especially if it has to meet a large number of redemption requests. In general, investments in smaller companies, smaller markets or certain sectors of the economy tend to be less liquid than other types of investments. The less liquid an investment, the more its value tends to fluctuate.