Investment Q&A

Q: Thank you for your answer on my inquiry on these new leveraged ETF's HCAL and HDIV ..... Your answer showed HCAL beat both the covered call bank ETF and the bank ETF { albeit under the short one year time frame of the ETF's existence } ...... A while ago I asked 5I to crunch the numbers on all of the big five banks from the turn of the century to the date of the question and give the annual return { dividend plus capital gain } .... The answer I got was an annual return of 11% on the low end to 14% on the high end ..... Your answer to my question on HCAL included the following quote .... " But we would cautious on seeing them as 'safe'. In a bad market, or course, weaker returns will be worsened with leverage. " ...... It is my understanding that these securities are not structured like the 2X and 3X leveraged ones that rebalance daily to achieve the required return ...... My question is regarding your caution on safety ...... Can I not ignore the down turns in favour of the long term return of the banking sector while collecting a superior return ? Those historical 11% to 14% annual bank returns are averaged including the down turns .... It seems to me looking at the sector's long term history the security would offer the same safety as the banking sector with a superior return ..... Please advise if I am looking at this correctly ? I am considering the security to represent my weighting in the banking sector ...... I am delaying my purchase until I fully understand your remarks on " safety " ....... Thank you for your help .....

Q: Could I please get an opinion on this fund; including how you think it might perform in a lengthy, rising interest rate trend and also if you have any similar alternatives of this type of fund worthy of consideration?
Thank you in advance.

Q: My 22 year old daughter has $7G to invest. She has dual citizenship with the US and has been told that she will be taxed on TFSA gains. Do you have any recommendations for her based on this?

Also, could you recommend some ETF’s for her?

Thank you so much.

Q: I am looking for an ETF that has a focus on energy excluding or mimimizing solar and wind.
With appreciation for your great service.
Ed

Q: I asked a question about XSTH a few days ago. Your main concern was the fact that it was new and very small asset wise. What about if I bought STIP on the Us exchange instead? It has been around since 2010 and has more assets. What would your opinion be on this?

Q: Hi,

It seems to me that the good days of the above ETFs are now behind them. They have been loosing speed, as for instance ARKG going from a yield of 33% over 3 years to 18% over 1 year.

What is your assessment of these ETFs at this time. Would you hold or sell to remplace them by ETFs with better growth potential ? If so, which ones would you suggest ?

Thanks a million,

Jacques IDS

Q: My 28yr old son is looking to build a diversified ETF portfolio with 100% equity exposure with a bent towards growth given his long investment horizon.  These will be spread across his TFSA, RRSP and Non-Registered accounts.  Since he will be contributing smaller amounts on a regular basis a zero commission platform such as Wealthsimple is appealing.  However, they charge 1.5% fee for all currency conversions making it only practical to hold Canadian traded ETF's.  As a result he is considering the following:

ZSP 40%
XIC 25%
TEC 20%
VIU 10%
VEE 5%

ZSP + XIC + VIU + VEE together create a mix of ETFs that are globally diversified and very similar to the structure of XEQT/VEQT.  Versus XEQT/VEQT This portfolio has a slightly lower weighted-average MER at 0.16% and also has 20% in TEC (in place of something like QQQ) which is more growth oriented. Here are how the sectors would be weighted with this portfolio:

Info 31%
Financial 15%
Cons Disc 11%
Industrial 9%
Healthcare 8%
Communica 7%
Cons Staples 5%
Energy 5%
Materials 4%
Utilities 2%
Real Estate 2%

These would be the top 10 holdings with this portfolio and these top 10 would account for 24% of holdings in this portfolio:

AAPL5.1% MSFT4.9% AMZN3.2% GOOGL1.8% FB1.7% GOOG1.7% TSLA1.5% SHOP1.4% RY1.2% NVDA1.2%

If this was you at 28, can you please comment on
- are the 5 ETFs he has chosen ones you would go with given his objectives, if not, what changes/substitutes would you make along with recommended % allocations?
- is his % allocation across the 5 appropriate or would you make changes? For example I thought there might be too much overlap between ZSP and TEC as they are both highly invested in AAPL, MSFT, AMZ and FB and he is looking at 60% going into these 2 ETF's. That may well be what you want at his age but  I wonder if he is better served by reducing ZSP to 25% -30% and TEC to 15% and add  the remaining 15-20% to CDZ or VGG (or something else?)
- given he will be making contributions to his TFSA, RRSP and Non-registered, which ETF would be best in which account and why? 

Thanks for all your help, 
Scott

Q: Curious what your thoughts are on this Canadian hedged inflation protected TIP ETF? Would it be good for part of the fixed income part of a portfolio during rising interest rates?

On the shares website the distribution yield is listed as 7% but the real distribution rate is listed as minus 2%. What does this mean?

What are the risks of this type of investment? What is the downside?

Q: Hi 5i - I’m looking for ways to invest in the ever growing focus on ESG and carbon emissions. Are there any ways retail investors can access the space? KRBN is one idea I’ve found. Are there any investable companies who are focusing on creating carbon offsets?

Thank you!

Q: Hello Peter,

The ETF's above are in the income portfolio. All have different yields that are paid out monthly. My question is, do any of these "dividends" increase over time? Not the yield but the actual payout per share?

Thanks,

Kelly

Q: Is it time to get into cyber currencies and how would you suggest investing in it?

Q: Going forward, if you had to choose between IAI and KIE, which would you pick at this point in time, and briefly why?
Thanks

Q: I would like to have your view on renewables mainly BEPC, BLX .
Do they perform better in a low or high interest rate environment?

Also , your outlook on ETF TAN

Thank you

Q: I was wondering if this ETF would be a good way to play the renewable energy space? Good dividend, international and spreads out the risk of just owning individual renewable stocks.

This is the best site and thanks for your continued guidance.

Dave.

Q: Given all the hype around Bitcoin and projected value reaching $100K US by Year-End, is it worth the risk of Buying this ETF now?

Many Thanks!

Q: The yield on CDZ is 3.0%, if I buy equal amounts of the top ten stocks, the average yield is 5.48%. What accounts for the 1.48% difference in yield and is the risk proportionally higher buying the individual stocks than buying the EFT

Q: Hi 5i,
Is there any significant overlap with these 3 ETF's.
Thanks and have a great day. Ivan

Q: I have the time and interest to invest in individual stocks and have benefited greatly from your advice, My 28 year old son is looking to me for investment advice and I was hoping that you could help me. He is young with a long investment horizon so he is not interested in any bond or fixed income components and is comfortable with a portfolio holding a diversified mix of 100% stocks in various geographies. He wants to control his own portfolio but does not have the time to research and stay on top of individual stocks and is leaning towards an ETF portfolio. I am not well versed in this area and was hoping you could provide some guidance.

He is looking at XEQT and VEQT as possible one stop solutions. There are some minor differences between the two, but overall they appear very similar. XEQT has a MER of 0.2% and VEQT has a MER of 0.25%, VEQT holds more stocks than XEQT and XEQT is weighted a bit more towards US stocks and a bit less towards CAD stocks compared to VEQT. Would you recommend one over the other, or hold both?

Instead of buying one of these he is also considering holding a two (or more) ETF portfolio using VCN and XAW ETFs. VCN tracks the Canadian market, XAW tracks the global market excluding Canada. A portfolio of 25% VCN and 75% XAW would replicate XEQT/VEQT very closely, but would have a weighted average MER of about .18%. The trade off is that this one would need to be rebalanced, whereas with XEQT/VEQT all rebalancing is done automatically. Would a 25%VCN/75% XAW be preferable to XEQT/VEQT?

If it was you at 28, would you do either of the above or would you prefer a portfolio of other ETFs and if so, what would those be?

Many thanks

Scott

Q: My grandson has been financially responsible and soon to be mortgage free. He has made some investments with with a financial advisor who has him in high MER mutual funds. He doesn't feel competent to have a self-directed stock account but he would like to invest using ETFs. Can you recommend where I might start in searching for an advisor who would be willing to invest in ETFs for a relatively small ($40,000) account to start. My grandson lives in Greater Vancouver.
With appreciation,
Ed

Q: Hi Peter, Ryan, and Team,

The most recent question about XMD was on Feb. 23.

For a combined portfolio that is skewed somewhat more heavily to larger-cap stocks, could XMD make a good addition? From the iShares website: "Targeted exposure to mid-cap and small-cap Canadian equities". (I can trade this ETF commission-free.) XMD holds 175 stocks, many of which are favoured by 5i, but of course it also holds some that have fallen out of favour. Please suggest alternative Canadian and US ETFs that you may consider "better" but have the same overall goals of XMD.

As always, your advice is important.