Investment Q&A

Q: Looks like Horizon swap indexes will have a limited life expectancy.
From budget:
"Improve existing rules meant to prevent taxpayers from using derivative transactions to convert fully taxable ordinary income into capital gains taxed at a lower rate."
Comments?

Q: In this month's MoneySaver magazine, there is an article by Rita Silvan titled "Spin-offs, Ticker Symbols and Other Investment Anomalies". In this article, she states that in the last 15 years, from 2002 to 2017, the Bloomberg US Spun-Off Index returned nearly 1,000% compared to the S&P 500 Index which returned 203.9%.

Are you aware of any ETFs which track this index? What is your view about ETFs which track spin-offs? Is this a strategy which you would recommend? I could only find the Invesco S&P Spin-Off ETF (CSD) and its returns appear to be 2.15% annually over the last 5 years, and is a significant underperformer compared to the S&P500.

Thank you again for your invaluable advice. This service is truly excellent!

Q: I am very fortunate to be a member of 5I,Thanks
I wish you were actively advising on US stocks meanwhile however
for me to start please suggest some US stocks or etf for not very aggressive
stocks with high volatility but something like BNS,SLF,td in Canada Income is not my priority but steady growth is in my mind not stocks like canabis?
I appreciate your sugestion and has always benefited from them
Nizar

Q: I have been looking at investing a small amount of US funds in a non-registered account in Japan.
I was all set to invest in EWJ, when I noticed a newer ETF, with a much lower MER of .15%. It is ishares EWJV, a Japan value ETF.
Would you have a preference between these two ETFS?

Thanks for all you do!

Q: Do you know of an ETF that mimics the S&P/TSX Venture (CDNX) Composite Index?

Q: Could I get your thoughts on how HHL might behave in a recession. I understand Healthcare as a sector would be a Defensive sector however I also understand 5i is not to crazy about the cover call aspect, believing it would not protect again the down side. So how would HHL behave? Would the price fall greater than the average defensive share price, or would investors still consider it a defensive play and hold steady the price. Or would the cover call aspect cease to work and the dividends reduce? If it's more an impact on the dividends, is there a way of telling how much the
cover calling is adding to the dividends and therefore what dividends could be expected in times of a recession. Thanks

Q: I would like to set up a passive portfolio for my mother. Could you please recommend indexes in Canada and the United states that would reflect the market while giving diversification.

Q: I am currently considering the purchase of the ZDH ETF for a non-registered account. I would appreciate your advice about the tax implications, especially given that this ETF has a high yield and is invested primarily in European and Asian equities.

Where can I find out how different ETFs compare for tax in Canada? The Morningstar site offers a "tax analysis" section, but it does not make sense to me. For example, using the site's "since inception" returns, the ratio of "tax-adjusted return" to "pre-tax" return for XIC (Canada) is 86%, and for DGRO (US) is 94%. This would seem to imply that a Canadian investor would pay less in taxes buying a US ETF than a Canadian ETF. The same ratio for ZDH is 76%.

I would like to understand (1) is there a better site other than Morningstar, where I can find out the tax implications of buying ETFs which hold foreign equities; and (2) how much of an impact do the taxes have on the investment returns when one buys ETFs with foreign equities (i.e. if the pretax return for a foreign ETF is 8%, what return would I need from a Canadian ETF to keep the same after-tax amount?).

Thank you.

Q: Hey there guys. Wondering about appropriate allocation for my rrsp for longterm holdings (using etfs). Focused on low cost, and good diversification, geographically especially. Keeping in mind my tfsa will be almost exclusively Canadian stocks and ETFs. So for the rrsp 50% VTI, 40% SPDW, 10% HXT. I know spdw holds a bit of Canada too. Thanks for your amazing work, it is very much appreciated,
Jer in Ottawa

Q: Good day team ,looking for advice on dividend fund or etf for rsp.i have agf series q interpipeline and sentry energy funds for longer timeframe i have 10 g to ad not sure on what ,thanks for all the great help my investments choices are better since joining your team

Q: Other than VFV , can you please recommend a US etf that you like ,that sells in Canada
What are your thoughts on XUS.
Thank you

Q: I currently have money invested in CBO and XBB and I am considering investing an additional $400,000 in fixed income. Would you add to these two securities or do you have any other suggestions? I am getting old and have to be more conservative.
Thanks, Bill

Q: I have read your recent ETF and Mutual Fund Update with great interest. The forecast growth numbers for the ETF industry are truly impressive. On the surface, ETFs would appear to be a magic bullet for individual investors who wish diversification at low cost.

Over my lifetime, I have seen a number of financial trends/theses, which start with very strong growth. However, after a period of time, these trends invariably collapse and end badly for the "buy and hold" investors. Do you see any possibility of this occurring for ETF investors? What risks do you see for (conservative, retired) investors who have a portfolio of ETFs as opposed to a basket of diversified, dividend aristocrats? Have you seen any analyses which look at the long-term impact of this trend (i.e. what will happen in the markets if most people buy ETFs and not individual stocks? What risks does this trend pose to individual investors?). Thank-you for your insightful advice.

Q: What are your thoughts on the discretionary sector at this point of the cycle, specifically XCD?
I considering a sell on a smallish XCD position to top up XAW.
Thank you.
Mike

Q: A lot of research and writing has addressed the reality that it is *very* hard for an active fund manager/stock picker to beat the indices on an after-fee basis.

But what about the bond market? Does 5i know of a body of research/evidence that explores whether or not over time, an active bond trader/manager could beat a passive bond index fund such as XBB/VAB/ZAG? Should I go passive or active with my fixed income allocation? Which actively managed fixed income ETFs do you like, if any?

Thank you.

Q: Hello 5i:
What do you think of ZDI vs XEF? Are they both expose to the same regions internationally? Which one is better for international exposure? Thank you.

Q: Hi 5i, As a mid 70's couple our portfolio must be changed to be more div. focused to match our monthly RRIF's. The noted positions and portfolio weight are all under 2% yld. Please suggest some or all to be sold or reduced, in what order, while still having some growth intact.
Thanks.
ATD.B 6.5,IYT 3.7,DIS 2,INCO 1.4,L .8,GUD .8,PHO .6,COV.5,TSGI.3,ZUH5.4,VUN 4.7,VXC 4.6,VGG 1.1,XHC .9

Q: I have very little in the health care industry, I only own GUD at 1.5% of my portfolio. I am thinking of selling GUD and buying ZUH at say 2.5% of my portfolio. Your thoughts please. Or would you suggest some other health ETF?

Q: Hi, 60 year old investor. Wanted to get your thoughts on a portfolio consisting of about 11% each of zlb, xiu, wxm, zqq, zsp, zlu and ~ 33% zag. Won’t need the money for about 5 years. Thanks, Mike

Q: Are you aware of a mutual fund or ETF that's main focus is to screen for high roe stocks?
Thanks