Know the risk level of your funds

When you’re assessing mutual funds, remember that even within the same category some are much riskier than others.

For example, the Altamira Bond Fund invests primarily in long-term bonds. When interest rates are falling, it outperforms everything in sight, as it did in the late ‘90s. But when rates are rising, the loss potential is much higher than with an ordinary bond fund.

On the other hand, the Scotia Defensive Income Fund invests in short-term bonds. It will never be a huge winner, but when bond market conditions are rough it will protect your assets much more effectively.