Multi-Sector Fixed Income

Funds in the Multi-Sector Fixed Income category have an investment mandate stating that they strategically or tactically diversify their assets across several fixed income sectors including, but not limited to, government, municipal/provincial, corporate (including preferred shares), securitized (including asset-backed securities, collateralized loans, mortgage-backed securities, etc.), and high yield debt. Geographic exposure can span both developed and emerging markets. Canadian Fixed Income should be less than 90% to qualify (up to 30% foreign, if hedged to CAD). Inclusion in this category may be based on i) a written fixed income allocation policy meeting the above definition (i.e. in a fund’s prospectus or written investment policy) that is explicit in defining a multi-sector mandate; ii) a portfolio manager’s or sub-adviser’s stated or known approach to managing portfolios; or iii) the fund’s historical fixed income allocation tendencies. Namely, funds in this category should have no more than 65% of their holdings in a single fixed income sector and should demonstrate that they span at least three fixed income sectors over time, defined as a weighted average exposure of at least 10%.

The CIFSC notes that funds in this category have, or are permitted to have, an average credit quality below investment grade (Lower than BBB or equivalent) and can hold in excess of 40% of the portfolio in high yield fixed income securities for prolonged periods of time, which would otherwise qualify the fund for the High Yield Fixed Income category.