A friend of mine asked me one day… I’ve got $X to invest, over the next two years, and I was wondering what is out there where I can get a better than 3% return with liquidity and relatively little risk.
I asked them if they were interested in investing in 30-year government bonds, which yield a tad over 3%, and certainly fits the liquidity criterion. They were strict on the 2 year limit.
So I pulled up a list of Canadian debentures that were maturing over the next couple years. I couldn’t find anything acceptable. I did do some research on Ag Growth International (TSX: AFN.DB) which would give roughly 5.6% or so, but was strongly conditional upon them obtaining refinancing. With their equity prices as high as they were, this should not pose much challenge at present, but who knows what it will be like in half a year?
Every institutional manager on this planet is trying to squeeze a few more basis points out of their short term portfolios and this competition is quite evident in the public marketplaces.
I also looked at split share preferred shares, but those equally have risks that I won’t bother getting to in this post.
I face the same dilemma myself – there is relatively little that is striking my attention in the marketplace at present. The only purchases I have made are really special situations that would otherwise be very difficult to pick up on a typical screen.