Do O'Leary's "Low Risk" retail investors know they're long junk bonds?

It’s that time of year again. The Easter Bunny brings us the annual financial statements for Kevin O’Leary’s shrinking fund management business.

I’ve had a look at a few funds so far, and what has struck me is the high proportion of sub-investment grade bonds that KO is holding in mutual funds that otherwise sound pretty generic.

Floating Rate Income Fund
BBB – 9.1%
BB – 31.2%
B – 54.6%
CCC – 3.0%
Not rated – 2.1%

According to O’Leary’s website, this fund is for investors with “low” risk tolerance — the most conservative designation available according to Regulators. Remarkable: 91% of your bond assets are below investment grade, and there’s not a more conservative category for you to invest in — at least according to Mr. O’Leary.

Compare this risk designation to the O’Leary Canadian High Income Fund’s assets.

It is a “Low-Medium” fund on the risk tolerance scale, I assume due to the fact that it holds some equities as well as bonds. Here are the bond assets:

O’Leary Canadian High Income Fund
BBB – 12.0%
BB – 36.2%
B – 42.2%
CCC – 0.0%
Not rated – 9.6%

But not the O’Leary Global Bond Yield Fund. It is a “Low” risk designated fund, despite 97.4% of the bonds being of the “junk” kind:

BBB – 2.6%
BB – 36.5%
B – 53.3%
CCC – 6.6%
Not rated – 1.0%

Over at RBC, that firm’s High Yield bond fund is designated to be “Low-Medium” risk, which gives you a sense of how they position the world of junk bond investing for their retail clients.

Not KO, though. “Come on in, the water’s low risk,” said the Shark to the minnow.

MRM
(disclosure: this post, like all blogs, is an Opinion Piece)