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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I am looking to put a large amount of cash in TD Webroker registered and non registered accounts, safely on the sidelines. Could you please tell me what your preference would be and why, including any other recommendation. Many thanks as always.

TDB8150 (savings account) Currently offering 1.6% yield. CIDC guaranteed.
TDB165 (premium money market funds, with initial minimum investment of $100,000 required) Currently offering 1.54% yield. CDIC guaranteed ?
PSA (high interest savings ETF). Currently offering 2.125 yield. Not CIDC guaranteed.
Read Answer Asked by Alexandra on August 12, 2019
Q: I am being pitched on a number of RBC MF for a portfolio makeup. Can I have your analysis on the following and perhaps equivalent etfs. thank you.

RBC Canadian bond index A
RBC Canadian index fund A
RBC global bond fund A
RBC global corporate bond fund A
RBC international index curr neutral A
RBC us index fund A

Read Answer Asked by Craig on August 12, 2019
Q: Would you have a preference between IWM and IJR for small cap exposure? I know IWO has been a favorite but was hoping to capture some growth and value names. Are there any significant fundamental differences between these 2 ETFs. Also, could IJR be added to data analytics pls. I tried adding it but the system did not recognize the ETF. Thanks as always.
Read Answer Asked by Aaron on August 12, 2019
Q: There are plenty of forecasts telling us that bond yields are declining and may go to zero.
If they continue to decline , what does this mean and how can an investor take advantage of this. Your Asset Allocator tells me I need to move $500,000 into fixed income to balance my portfolio, which is predominantly equities.
Do I go to a bond fund , or actual bonds? If so what would you recommend? If bonds what type and term? I will hold for min 5 - 10 years.

Thanks and take as many credits as you wish.
Read Answer Asked by William on August 12, 2019
Q: I am thinking of putting some money in gold and would like to get your thoughts on if I should put the money in gold etfs or stocks in gold producers. Your thoughts on this would be appreciated. Also would you please recommend some names in both gold etfs and gold producers.
Cheers,
Read Answer Asked by Harry on August 12, 2019
Q: David Rosenberg is once again talking of a doomsday secenario. Whether he is right or wrong, I have a feeling a recession is due and it is all about timing. I know you have previously fielded questions regarding taking a defensive stance for protection against a recession but I am wondering where long trem bonds fit into this story. Is an investment in Long Term Bonds a good strategy in this case and if so, how does one make such an investment and what percentage of a balanced portfolio would you dedicate to long term bonds?
Read Answer Asked by Michael on August 12, 2019
Q: Is the only difference between VGG (Cdn) and VIG (US) the currency denomination and fees? Is VGH the same as VGG, but VGH is hedged to the Canadian dollar?

VGG has higher fees than VIG, so I would assume that over several years, its returns would be less than VIG. However, I have looked on a number of sites and VGG seems to have higher returns. For example, over the last 5 years, VGG has had an annual return of 13.58% and VIG of 11.63%. What is causing this apparent difference in performance?

VGH has 9.11% 5-year performance. The lower performance I assume is due to it being hedged to the Canadian dollar. Can you please confirm my assumption is correct.

Thank you very much for all of your excellent advice.

Read Answer Asked by Dale on August 09, 2019
Q: Hi Team,
Would you please recommend 3 to 4 C$ denominated etfs that are focused on us equities (I already own XQQ and ZUB).
Cheers,
Read Answer Asked by Harry on August 09, 2019
Q: This is a follow up to my question about EM ETFs.

The way I see it, XEC holds only IEMG, but in Canadian funds. With XEC, there are 2 layers of foreign withholding taxes, one from the EM countries, and one from the US, neither of which are recoverable. This amounts to up to 27.75% (15% + 15% of the remaining 85%) withholding taxes on dividends, none of which are not recoverable.

With IEMG, the US withholding taxes are recoverable, so the total withholding taxes are up to 15%. That is a significant difference.

The same holds for VEE (holds only VWO).

ZEM looks like it holds about 15% US based ETFs, and the rest are direct holdings. That means that the withholding taxes are mostly recoverable (4.16% are non recoverable (from 15% of the holding times 27.75% from the above calculation), but the rest may be, depending on the treaties Canada has with each EM country).

Is this correct reasoning?

If it is correct, are there any other EM ETFs that have mostly direct holdings in addition to ZEM? Also, why would you recommend XEC over IEMG and VEE over VWO, especially considering the lower MER for IEMG and VWO?

If my reasoning is not correct, why, and which ETFs would be best from a taxation perspective?

Thanks, and I hope my question is clear,

Fed
Read Answer Asked by Federico on August 09, 2019
Q: I have most sectors covered thanks to your Portfolio Analytics. Thanks so much. However I have a very large and growing allocation in Vanguard Dividend Appreciate (VIG:US). My international investments (non-US) are small and need a boost. What would you suggest I do to diversify internationally using ETFs?
Read Answer Asked by John on August 09, 2019
Q: Hello Peter and team,

I am considering how to allocate the US and International equity component of my portfolio. I will be using ETF's solely held in my RRSP account which will comprise roughly 40% of my total portfolio, growing to about 45% with new deposits over time. Currently I am using Canadian-based ETF's (XUU, VGG, XMC for US and XEF and VEE for International) but I am looking at using US-based ETF's, with the idea of both reducing costs (lower MER and avoiding withholding taxes on dividends) as well as introducing some currency exposure.

In a response to an earlier question today, you indicated: "Our one comment is that the suggested ETFs might result in US dollar exposure somewhere close to 50% of the portfolio. This might make sense depending on individual needs, but 50% exposure to the US dollar might be a bit high for a lot of investors. " which has led to some follow-up questions:
In general, what would you consider to be an appropriate range for non-CDN exposure? More specifically, what factors might an investor consider in one's own situation to hep decide where in this range is personally-appropriate or whether it makes sense to exceed the suggested range?
I hadn't considered currency risk very closely, so the other member's question was quite timely and I look forward to your response. I have found 5i to be such an invaluable resource, providing so much opportunity for learning about the world of investing.

Thanks in advance,
Rory
Read Answer Asked by Rory on August 09, 2019
Q: MCHI Vs FXI
What's your opinion regarding potential return in 3-5 years.
Read Answer Asked by Rajendra on August 09, 2019
Q: I am continuing to try and "perfect" my portfolio allocations. Your Portfolio Analytics program has been a huge asset, and has caused me to really re-think things. I am close to retirement, and can accept some risk but not looking to create an above-average risk portfolio.

For equity investments, I am aiming for about 35% US, and 35% international. I would like safety and growth, and am willing to have some risk. Once I am happy with the final portfolio, I hope to be able to "walk away" for the next few years and let it grow. I have a preference for the "dividend growers" strategy.

Does this allocation make sense to you, for both international and US equities? Are there any changes you would recommend?:

US Dividend growers (e.g. DGRO, VIG): 20% of equity portfolio
US Quality: 10% (e.g. VOO)
US SME: 5% (e.g. IWO)

International dividend growers (e.g. VIGI, iGRO, ZDI): 20% of equity portfolio
International Quality: 10% (e.g. XEF)
Emerging markets: 5% (e.g. VEE, ZEM)

Thank you so much for this amazing service!
Read Answer Asked by Dale on August 07, 2019
Q: What are some high yield ETFs that sell in US dollars?
Read Answer Asked by Robert on August 07, 2019
Q: I'm considering one of these ETFs to hold in my RRSP for the Canadian portion. They only have about $4M assets under management and I'm curious what the downside to this is. This would be a long 20+ year hold so should I be worried about the low trading volume or anything else that comes with small ETF's? Do you see an advantage to one of these ETFs over the other?

Also this DRMC claims to have a 4.07% weighting in the energy sector but Enbridge has a 6.4% weighting. Do you know why this would be?

Thanks and deduct credits as you see fit.

Read Answer Asked by Dennis on August 07, 2019
Q: The last question I asked (below) was about a name in CAD.
The answers were about ETFs in USD.
Thank you for providing names in CAD.
Question:
Could you please suggest a Gold bullion ETF in CAD - Not a "paper ETF" but an actual physical like PHYS? Thank you.

Answer:

We would be fine with PHYS here. SGOL is another option, holding physical gold bars in Swiss vaults
Read Answer Asked by Genevieve on August 06, 2019