Asset class performance

Glossary

Fixed income

An investment that pays regular interest, such as a loan or a bond.

When an investor buys a bond, they loan money to a government or company for a set period. In exchange, they get interest payments at regular intervals. When the term ends, the investor receives the principal they loaned to the government or company. 

Bonds can also be traded before the term ends. While the principal returned at the end of the term is fixed, a bond’s value can fluctuate as interest rates change during the term.

These investments tend to have less risk over longer periods of time and more stable returns than stocks. However, they have limited growth potential.

Public equities (Canadian, US, and International equities)

To invest in public equities, investors buy and sell shares on a stock exchange.

When an investor buys shares of a company, they become a partial owner of the company. The investor receives part of the company’s profits through price appreciation and dividends.

Public equities are divided by region. Investors can buy Canadian equities, US equities, and International equities.

Public equities offer long-term price appreciation. However, prices can be volatile over shorter periods based on company results and changing economic conditions.

Private equities

An investment in a private company. These investments are not traded on the stock market and are more specialized.

Investors typically work with private equity managers. These managers buy companies and work to make them more valuable by improving operations and profitability. Their goal is to increase the company’s value and eventually sell it. 

Private equities have the potential for higher returns than public equities. However, not all investors can buy them. These investments have high upfront costs and carry more risk.

Unlike public equities, private equities are harder to liquidate over shorter time frames. Overall, they’re better suited for experienced investors.

Real estate

An investment made by buying a building or property. This includes office buildings, homes, warehouses, or land. The goal is to earn rental income and see the property value increase.

Real estate helps make an investment portfolio more stable and protects it from rising inflation. Real estate is usually a long-term investment.

Infrastructure

A long-term investment in companies that build, operate, and maintain essential physical systems and assets. These companies provide public services that people rely on every day, including roads, power, water, and public buildings, such as schools and hospitals.

Infrastructure investments often have high upfront costs but can provide consistent returns.

Private credit

A type of investment that involves loans (or other types of credit) between a company and a non-bank lender. The terms of the loan are negotiated based on the borrower’s needs.

Private credit investments have variable interest rates and strong protections for the lender, such as collateral. Collateral is something valuable—such as a building—that the lender can seize if the company can’t repay the loan.