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Toronto-Dominion Bank (The) (TD)
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Sun Life Financial Inc. (SLF)
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National Bank of Canada (NA)
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goeasy Ltd. (GSY)
Q: Portfolio Analytics indicates that across our accounts, we are overweight in the Financial Services sector. In order to free up some cash for under=represented sectors, my thinking is to reduce TD enough to achieve the target amount. I'm a bit uneasy with some of the recent negative issues with TD, but still would like to keep some due to its wide moat and 5i's opinion that perhaps its "problems" have been overplayed. Would you concur with my strategy? Thanks.
5i Research Answer:
At current valuations and prospects, we would probably prefer to sell more of NA vs TD. Reasons are because TD has already taken its 'hit', and the fact that its US exposure should serve it well this year (we expect the US economy to be better). But we consider sector allocation more important than specific stock selection, and if an investor is reducing exposure we would still be OK reducing TD or trimming across the board of the group. We do like GSY, but would note it is likely much riskier than the others overall (much smaller) so that may be a consideration here as well.