Issued with terms to maturity between 2 and 30 years, government bonds are considered very low-risk fixed income investments as they are backed by governments. The value of government bonds fluctuates based on supply and demand in the market – a government will increase the supply of bonds to raise money, which will be used to stimulate the economy.
Demand for government bonds tends to increase during periods of low confidence in equity markets as investors seek safety. Demand also tends to increase in periods of weak economic activity when the threat of inflation is minimized.
To learn about the funds we offer that invest primarily in government bonds, see:
RBC Canadian Short-Term Income Fund
PH&N Short Term Bond & Mortgage Fund