Investment Q&A

Q: My TD Waterhouse account shows ZWB { yielding 8.2% } and HMAX { yielding 15.1% } . Could you please confirm both yield numbers at today's ETF prices ? And why one might buy the lower yielding ETF considering that HMAX has nearly double the yield and a little more diversified { 75% banks } ? ...... { I'm not concerned about the short history of HMAX } ..... Hypothetically, if it were " you " and you wanted a covered call financial ETF which one would you pick and why ? { Of if there is another one you would prefer over both }

Q: Hi Team

In general it seems like commodity stocks underperform the markets. Let’s look at SU, ABX and TECK which are large cap stocks in the oil, gold and copper categories. It seems commodity stocks had a good run from about 2003 - 2008. Since 2008, each of these three commodity stocks have traded in a range and are currently close to the top of said range. It seems like the commodity stocks have underperformed the overall market for the past 15 years by quite a bit because the commodity stocks are about the same price as they were in 2008. There have been times when buying commodity stocks as a “trade” was great like in 2020 when SU was $15 or in 2015 when TECK was $5 and in 2015 when ABX was $10. But today these stocks are all at the top of the range. They never break out of this range and I don’t see any evidence that they will break out of the range. If they don’t break out of the range the only direction from here is down. For example, gold is a whopping $2000, and ABX is still only $25. Oil was over $100 recently and SU still never broke out of the range. When the markets tank the commodity stocks usually tank as well…. they don’t act as a hedge. There are exceptions like in March 2020 when the market tanked, and ABX did quite well for 4 months. But today, ABX is back to $25 where it was in Feb 2020. I understand diversification is important but why add commodity stocks to a (long term) portfolio if they never perform well. The commodity stocks are finally paying good dividends but so do many other stocks in different sectors.

Question #1 – please let me know if you agree or disagree to the above. If you disagree, what is the compelling argument to buy large cap (safe) commodity stocks unless they are trading at the bottom of the range.

Question #2 – is there an etf that tracks the Canadian stock market that does not include commodity stocks?

Thanks for your great input to your members questions.
Greg

Q: If there was to be a turn around in financials (ie pause or cutting interest rates), how would the covered call bank ETF's perform vs holding bank stocks? Thanks

Q: I currently hold 2 preferreds in my RSP, BEP and CPX, both with a floor yield. While I have no compelling reason to sell either (both are up between 5-10% based on my purchase price and disregarding dividends), I note that ZPR has a slightly higher yield and would be much easier to sell should I want to. What do you see as the pros and cons of selling the 2 individual preferreds and replacing with ZPR? Assuming (?) that rates have somewhat stabilized and are probably more likely to decrease long term rather than go higher, how would this affect the price of ZPR? Does the price of ZPR react more to interest rates or the overall market direction?
My objective here is more income-oriented that capital gains.

Thank-you, Grant

Q: In a balanced RIF account. Looking for consistent yield and some appreciation. What do you think about swapping out BLV for JEPI? Totally different co's I know but..with a possible Fed pause and likely interest rate reversals in the next year or so, will this give BLV a boost, and maybe worth keeping

Q: Hi

BMOInvestorline offers a HISA currently paying 4.35% interest accrued daily and paid monthly. It is not locked in and I can withdraw at anytime without penalty. I haven't found a better rate anywhere. Even EQ Bank only pays 2.5% in its savings account.

I haven't been able to find a "catch" but this seems too good to be true. Am I missing something? Or is this a really prudent way to keep the cash component of my portfolio, assuming I'm going to keep some cash.

Thanks
Robert

Q: Hi Peter,
A lot of high yield ETFs distribution contains a return of capital, which means you get back a portion of your own invested money. It seems to me this is a marketing ploy used by the ETFs to entice investors with a return that is no ‘real’. Which is better for an investor whose primary goal is to increase her wealth and not aiming for a certain amount of monthly/annual income distribution - a plain ETF that has a yield of 4% or a high yield ETF that has a yield of 6% which includes a return of capital of 2.5%? For investors, are there any drawbacks or concerns for ‘return of capital’ feature apart from the necessary book keeping of adjusted cost? Thanks.

Q: If interest rates and inflation are going to peak, do you think these ETFs (XLF, IAK TLT) have opportunity now? If so which one has most potential right now? Thank you.

Q: How are the returns on these money ETFs taxed?

Is it better to hold this type of ETF in a registered acct?

Q: Can you explain the difference between returns of VOO and VFV if one is preferable to the other in a non-registered account, RRSP, and TFSA?

Q: Do you know any etfs that track the S&P Global Luxury Index and that trade in Canada or the US? Looking for something that gives exposure to European luxury brands but does not trade on a European exchange

Q: I have ZUB in my TFSA at a 6% weighting and I am down 13%.Is it a buy/hold or sell for a 1-3 year time frame.
Thank you

Q: I am confused what hedged means with regards to this fund. What makes it different then Jnk

Q: Thoughts on XDG?

Q: Hello, still seeing these bond etfs drifting downwards, these 4 are the fixed income portion of a well balanced portfolio, with investment savings offering just over 4% is it worth considering a move, these are in sheltered accounts. Thanks.

Q: I am looking at reconfiguring my newly established RRIF into the above equities with the 3 etf’s being 25% each with the remaining 5 stocks being the remaining 25%. What is your opinion of these stocks and portfolio composition? Am I being too cute ? Thanks. Derek.

Q: I realize George was asking about HMAX's return of capital, and you are probably pretty close, as HDIV is about 20% in my account, and HYLD is about 50% in my account, just for information's sake.

Q: I hold XYLD and CIC, they are the only covered call ETFs I hold and I am new to them. Is there a way to track or find charts on their total yield? I seem to only find charts of their change in NAV which make them look like dogs, while they return 13% and 8% The other question I have about them is , why are they not drip eligible?
Thanks

Q: From a dividend and capital appreciation perspective, in a RIF account, how would you rank JEPI. Yield is high, net assets are high, and it's issued by stalwart JP Morgan.
What are the risks to owning this in a conservative RIF account seeking consistent yield and long term appreciation

Q: Hello 5i,
Where can I find risk ratios such as the Sharpe ratio?
Thank you,
Stanley