AN INTERVIEW WITH CHRIS BOLTON, CFA
Cumberland Investment Counsel Inc.
We sat down with Chris Bolton, portfolio manager of the Kipling Strategic Income Fund, to get his outlook for 2025 and insights into how the fund is strategically positioned to navigate what’s ahead.
Q: What makes the Kipling Strategic Income Fund unique?
The Kipling Strategic Income Fund is a 130/30 alternative strategy. When you invest $100 in the fund, the first thing we do is buy $100 worth of corporate bonds. But we don’t stop there. We also short $30 of Government of Canada bonds and use those proceeds to buy an additional $30 of corporate bonds—allowing us to collect the spread between the two yields. We like to think of this extra income as accruing rent, much like a landlord.
This is very different than most fixed income funds that essentially mirror the broader market. We do take on some additional credit risk to access higher-yielding corporate bonds, but once those distributions are paid to you, that’s money in your jeans—and it can’t be taken back. Our alternative approach amplifies income potential while still maintaining a “low risk” rating.
Q: How do you select corporate bonds?
CB: Credit analysis is what truly sets us apart. We don’t make big macroeconomic calls—because frankly, one wrong call can be disastrous. Instead, we go deep into the fundamentals of the companies we lend to. Are they paying their bills on time? Do they have strong free cash flow? Are their balance sheets healthy?
“We’ve had zero defaults in the fund’s history and
every interest payment has been made on time and in cash.”
We’re selective. While we’ll hold B-rated bonds at the lower end, they’re far from high-risk. We’ve had zero defaults in the fund’s history and every interest payment has been made on time and in cash.
This consistency has driven the fund’s steady returns. And because we typically hold bonds to maturity, we have a clear view of expected returns over the holding period. It’s not about predicting the market—it’s about locking in more predictable outcomes.
Q: What’s your outlook for 2025?
CB: I’m optimistic. I like to say, “The river is still flowing towards the ocean.”
What I mean is, there will always be debates about politics, inflation, and interest rates—but we’ll stay focused on what we do best: grinding out steady yields month after month.
Yes, today’s yields are lower than they were in 2023 and 2024 because interest rates have declined. And no, the returns won’t arrive at a perfectly steady clip—there will be volatility. But by sticking to our disciplined process, we believe we can continue to generate a reliable income stream.
In terms of the market, the yield curve is still inverted, but I expect further rate cuts in Canada, gradually moving the curve back toward an upward slope. On the political front, any change in Canada is likely to be more business-friendly—which could benefit the fund at the margin.
“We don’t need a raging economy for
the fund to perform well.”
Regardless of market movements, our strategy is to keep duration short and stay laser-focused on credit selection. We don’t need a raging economy for the fund to perform well. We’ve delivered a positive absolute return every month for the past 22 months.
Q: What risks are you keeping an eye on for 2025?
CB: The obvious one is tariffs. They could be inflationary and negative for growth. The bigger challenge is that tariffs also trigger knee-jerk market reactions. But if we panic every time there’s a headline or a tweet, I believe we’ll do our investors a disservice.
We may reduce exposure to export-heavy sectors like auto manufacturing. We might lean more into domestic sectors like banks or utilities that are less affected by tariffs. But at the end of the day, it’s about sticking to credit analysis. We focus on companies with strong fundamentals that can weather market volatility—because that’s how we protect capital and keep collecting interest.
Q: What would you say to investors who own bond funds, GICs or HISAs?
CB: With bond funds, you have to be cautious about managers who make big bets. They could extend the duration to 30 years and look like a hero, but if the market swings, they’re in big trouble.
Investors have done well with GICs and HISAs over the past couple of years because rates were high, but that has changed. HISAs will take a hit as rates come down and I’d be concerned about locking my money into a GIC at today’s rates.
Our strategy offers a middle ground. You have higher income potential than GICs or HISAs without the risks you’d have with long-duration bond funds or equity-based strategies. Plus you’ve got active management that can adapt to market shifts, and you maintain access to daily liquidity.
Q. Any final thoughts?
CB: I think Kipling Strategic Income Fund represents a very attractive balance of stability and opportunity, and that it will continue to work well in 2025 and beyond.
Speak to your Cumberland Portfolio Manager or Wealth Advisor to learn more.
*Cumberland and Cumberland Private Wealth refer to Cumberland Private Wealth Management Inc. (CPWM) and Cumberland Investment Counsel Inc. (CIC). NCM Asset Management Ltd. (NCM) is the Investment Fund Manager and CIC is the Portfolio Manager to the Kipling Funds and sub-advisor to certain NCM Funds. CIC is also the sub-advisor to certain CPWM investment mandates. This communication is for informational purposes only and is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. The communication may contain forward-looking statements which are not guarantees of future performance. Forward-looking statements involve inherent risk and uncertainties, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. All opinions in forward-looking statements are subject to change without notice. Past performance does not guarantee future results. CPWM and CIC may engage in trading strategies or hold long or short positions in any of the securities discussed in this communication and may alter such trading strategies or unwind such positions at any time without notice or liability. CPWM, CIC and NCM are under the common ownership of Cumberland Partners Ltd. Please contact your Portfolio Manager and refer to the offering documents for additional information.
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