Fixed income: Your portfolio’s anchor

In the pursuit of long-term goals, it’s easy to focus on the "engine" of a diversified portfolio of assets—the equity component designed to drive capital appreciation. However, at ATB Investment Management (ATBIM), we know that even the most powerful engine requires a resilient frame to support it. Without a sturdy framework, the stress of high-speed growth can become a liability when the landscape shifts.

In a purposeful, strategically-built portfolio, that essential support comes from fixed income.

Fixed income acts as that structural foundation that complements your growth assets. It isn't just about collecting regular interest income; it’s about managing the forces of the market so that your total portfolio remains stable, balanced, and—most importantly—on track. In our recent strategic discussions with our sub-advisor, Canso Investment Counsel Ltd., we explored how these core benefits provide the discipline and durability required to navigate even the most complex financial environments. 

The three pillars of your financial foundation

Fixed income provides three structural benefits:

1. Capital preservation: When you buy a bond, you become a lender with a legal contract. In a downside scenario, bondholders have seniority and must be paid back before equity holders. This legal priority provides a vital safety net for your principal.

2. Predictable income: Bonds typically provide a reliable, predetermined flow of cash structured to help outpace inflation. Whether you are using that income to fund your retirement or reinvesting it to buy more assets when prices are low, this predictability brings clarity to your financial plan.

3. Peace of mind: Long-term success isn’t about timing the market; it’s about staying in it. While bonds and stocks can occasionally move in the same direction during unique economic shifts, fixed income historically acts as a vital diversifier. By dampening broader market turbulence, it serves as an anchor that helps you stay the course during uncertain times.

The Canso perspective: Discipline over hype

At ATBIM, our independent sub-advisory model gives us the freedom to partner with leading, independent investment managers who bring a unique, disciplined lens to the market. Canso has been a trusted sub-advisor for several ATB Funds since 2007. Their approach to fixed income aligns with our focus on clarity and long-term value. Rather than simply following the broader market index—which can often move in lockstep with equity markets—they use a “credit shift” philosophy centred on valuation and patience.

Expertise in action: The Canso track record

A key reason we have partnered with Canso for nearly two decades is their consistent approach to navigating diverse market cycles. Their bottom-up philosophy is structured to prioritize capital preservation during market stress while remaining positioned to capture value when conditions improve. This disciplined focus provides the clarity and confidence our clients expect from an institutional-grade sub-advisor.

This “credit shift” is fundamentally about managing risk through patience. It means maintaining a high-quality bias when markets are expensive and waiting for the right conditions to emerge. Canso only increases credit exposure when their fundamental research shows that potential rewards properly compensate you for the risk taken. This valuation-driven focus is designed to provide protection even when traditional market correlations shift so your fixed income can remain a true shield for your capital.

Resilience vs. market complexity

In today’s evolving financial landscape, credit opportunities have expanded into many specialized and private markets. While these areas can offer attractive yields and the appearance of lower volatility, Canso emphasizes that true resilience is not defined by the absence of price swings—it is defined by the presence of fundamental value.

True resilience is built on rigorous, bottom-up research that remains consistent across all market types. It means “looking under the hood” of every loan to ensure structural protections and covenants are robust. In any market where price discovery is less frequent, the discipline of a manager becomes even more critical. 

Our job, alongside sub-advisors like Canso, is to protect your capital through a commitment to deep fundamental research for which they are known. We focus on ensuring you are being properly compensated for the risks taken, with a constant eye on preserving your principal and maintaining long-term portfolio health.