Investment Q&A

Q: I'm a bit underweight in the consumer cyclical sector and a bit underweight in my international allocation (the latter being somewhat of a chronic condition). I'm trying to make a buy decision between MG, ZDI and XEF. I already own the two ETFs and MG would be a new position. I understand that a direct comparison of a single company with an ETF is not possible and that you can't personalize sector weightings, but all else being equal, which one of these would you be most interested in today? Many thanks!

Q: In question you responded to today, the information in the questions was not correct. According to NRGI website, this in the correct information
Geographic Allocation as of 08/31/2022
Sector Weight
Canada 83.04
United States 9.32

Q: Hi...further to my recent questions regarding Eric's NRGI ETF, I just want to make sure I understand the tax treatment of this ETF before I purchase it.

According to his website, NRGI is 82% USA and 18% Cdn as of Aug 31/22.

Please correct me if I am wrong:
1. Any share price appreciation will obviously be taxed as Canadian capital gains.
2. Any dividends from a Canadian company will be taxed as Canadian dividends and received the dividend tax credit.
3. Any dividends from a USA company will be taxed as interest income.
4. Any "covered call" dividends from either a USA or Canadian company will be treated as Canadian capital gains (not 100% sure on this one).

So, ignore the share price appreciation aspect for now. Eric has stated the target distribution is 7%.

My conclusion is that the distribution could then be split into roughly 5% dividend (82% of which would be taxed as interest income) and 2% covered call (taxed as capital gain).

Q#1 = So, is it safe to say that the ETF would be taxed with roughly 4% being interest income tax, a negligible amount of Canadian dividends, and the vast majority being taxed as capital gains (share price change plus CC-dividend impact)?

Q#2 = So, I believe it still makes sense to buy this in a Cash Account...do you agree?

Thanks for helping me understand this one....Steve

Q: Hello
There are Youtube Investment Advisors pushing the theme of income investing. Nothing else matters, just the income. Not taxation nor ETF price action (Capital Value).

Given this ETF Theme of Covered Call Strategy (some leveraged 25%) are paying such a high distribution, in the right set of market events (down excessive period) can this strategy trade itself to zero?

They are certainly not making 15% income from dividends and call writing. So capital erosion must be the outcome in today's market.

I was holding covered call etfs from BMO during Covid crash. The strategy performed worse, even after distributions, than straight equity holdings. It was a terrible experience as there was zero downside protection and the strategy seemed to accentuate the drawdown.

Given the current environment (more downside in my opinion) are these ETFs setting investors up for an ugly awakening? ( distribution cuts, return of capital (One's own money), price decline and slowness to recover when markets come back)

Thoughts

Q: I noted that Warren Buffett recently bought more oxy on the dip. I also noted that some time ago he sold his stake in Suncor. I need to raise my energy sector holdings and was planning on buying Suncor. Because it is a good company and because of the tax credit, versus a US counterpart. But I hesitate when I see Buffet continuing to buy. Does he know something that we don’t know? Or, does he have a special deal that we don’t have access to? I am thinking that if they are more or less equal that I would be better to get the one with the tax credit? But the question is whether they are equal? Or does oxy have an advantage that outstrips the tax credit?
Thanks for the great service

Q: I own this ETF. Down 24%. Not particularly concerned given the overall market. But I do not understand how the industrial real estate sector is expected to perform in the current environment. What is your outlook for this sector? Thanks for your help.
David

Q: Retired, dividend-income investor. I own a full position in NNRG in my TFSA account.

I am looking to add an energy income ETF in my wife's Cash account. Because I am a huge Eric fan, I had naturally gravitated to NRGI, not even thinking there might be other alternatives to his income ETF. The question earlier today related to ENCC woke me up.

Could you please list some Energy Income ETFs that you think I should consider. I will then do some of my own research on each of your candidates. Is there one that stands out as head-and-shoulders above the rest?

NRGI is roughly 85% USA stocks. whereas ENCC appears to be very heavy (90%) to Canadian. Does this factor into the equation, related to income taxes and which type of account it should be placed in?

When overlaying ENCC and NRGI on your 6 month charts, they look virtually identical. ENCC has a 10% yield vs NRGI at 7%, although I suspect there will be special dividends in addition.

Your thoughts...thanks...Steve

Q: Can you recommend some fixed income products? Either directly purchasable bonds, GICs, or funds that look set to benefit from current rates and expected future hikes.

Q: How safe are these savings ETFs? If the company behind them, say Horizon, which I believe is owned by a Korean company Mirae Asset goes under what happens to your money?

Q: I want to crystalize tax losses in my non-reg account. Can you please suggest good proxies for IYT, VTV, VEA, and IWO? Thanks.

Q: If the strategy to be pursued is to invest Canadian cash for 3 years believing in a stronger Cdn dollar against the US dollar and that let's say Cdn equities and US equities will strengthen equally, is it better to buy a Cdn dollar ETF that holds US equities or one that holds Canadian equities?

Q: I am looking for a CAD hedged version of vanguard's mega cap etf MGC-A. Is there one?
which CAD hedged ETFs would you recommend for the russell 2000 and nasdaq- XSU nad ZQQ?

Q: Hi 5i team,

I am feeling BOC will stop raising the interest rate at one point. Is this a good time to start accumulating this name?

thanks,

Q: What is your opinion of ENCC? Apart from the dividend is it a worthwhile investment at today’s price?

Q: Hello Team ..I have US and CA$ in my income oriented RIF. I would like to buy either PID:CA ( using CA$) or VYMI ..given their depreciated value (and high US$ ).Both have great dividends but the macro is awful and holding me back which makes me think it is exactly the right time to start easing in. I would appreciate your thoughts...best regards. gary

Q: What's your thoughts on starting to buy into VOO at this point for a 20 year time horizon and any any guesses on market bottom?

Q: How do you see ZEB and XFN performing going forward in this environment?

Thanks for your service!

Q: Is this ETF unhedged? Since USD is very high and the world currency has been crushed is this a good time to buy this etf for diversification. Rest of my portfolio is in the US stocks.

Q: Hi
I am holding about 50 % cash

Does it make sense to just hold it for a while or put it into USA treasuries. And if so what would be the best choice? Stocks like ztl zvi or zmu or something else

Currently I hold no bonds … mostly dividend stocks like bce- enb- dvn - financials - reits.


Thanks

Q: I believe you have suggested PSA as a means of accessing higher interest on cash and maintaining liquidity and avoiding risk. Is there an ETF that fits this bill for US dollars that you would recommend that trades on NYSE or the TSX? Appreciated as always.