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Sentry Alternative Asset Income Fund

In today’s low-interest-rate environment, the search for yield is difficult. Traditional asset classes such as dividend-paying equities, and government and investment-grade corporate bonds don’t always provide sufficient income. However, alternative assets, such as high-yield bonds, REITs, infrastructure and options typically provide a higher yield as well as the potential to improve diversification and lower volatility in a portfolio. Sentry Alternative Asset Income Fund combines all four investments in a single solution.

Enhanced income

Alternative assets, such as high-yield bonds, REITs and infrastructure, typically deliver higher yield than traditional income-producing assets. The fund invests in these asset classes and employs conservative options strategies to provide investors with increased income potential.

AAIF chart yield

Source: Bloomberg L.P., data as at December 31, 2016

Reduced volatility

Including asset classes with lower or negative correlation can help diversify a portfolio and reduce volatility. The asset classes in the fund tend to perform differently than traditional equities and fixed income, providing a cushion against equity price fluctuations.

10-year correlation of asset classes*

  Canadian bonds Canadian equities U.S. equities Global equities U.S. bonds
High-yield bonds 0.35        
Global REITs 0.32 0.41 0.70 0.73  
Global Infrastructure 0.35 0.53 0.71 0.83 0.00
Options 0.20 0.18 0.77 0.68 0.34

Correlation is a measure of how asset classes move in relation to one another. The correlation will range between 1 and -1 with 1 representing asset classes moving in the same direction at the same time and -1 representing asset classes moving in opposite directions.

Source: Morningstar Direct. Data as at December 31, 2016.

* Canadian equities (S&P/TSX Composite Index), U.S. equities (S&P 500 Index), Global equities (MSCI World Index), Canadian bonds (FTSE TMX Canada Universe Bond Index), Global high-yield bonds (BofAML Global High Yield Index), Global REITs (S&P Global REIT Index), Global infrastructure (S&P Global Infrastructure Index), Options (50% CBOE S&P 500 BuyWrite Index 50% CBOE S&P 500 PutWrite Index), Corporate bonds (FTSE TMX All Corporate Bond Index)

Increased return diversification

Asset classes perform differently each year. Including a combination of real estate, infrastructure, high-yield bonds and options in a single fund offers a simple way to diversify the return potential of a portfolio.

AAIF table returns
AAIF table returns

Source: Morningstar. Priced in Canadian dollars as at December 31, 2016. Assumes reinvestment of all income and no transaction costs or taxes.

Sentry: a strong history in alternative assets

Sentry has considerable expertise in alternative asset investing, including over 95 years of combined investment experience.

AAIF history diagram