Investment Q&A

Q: I own these 2 ETF in non-registered accounts. Are their dividends subjected to a withholding tax?

Q: Hi

My question is about structuring and managing a portfolio across multiple registered and unregistered accounts. Please forgive if this question has been asked before.

Between 4 family members (including two young children) we have 11 trading accounts on the go, including 5 unregistered (3 Cdn and 2 US), 2 tfsa’s, 2 rrsp’s, and 2 resp’s. My approach to date has generally been to try to diversify within each account and try not to duplicate between accounts, with an eye to overall diversification.

This results in three problems (at least): sub-optimal diversification within and across accounts, too many holdings (which are difficult to monitor) and a low average $ value per holding. For example, 11 accounts times ten positions per account is 110 holdings. As for low value, a 10% holding on a $50,000 registered account is $5,000, which represents only 0.5% of an aggregate $1,000,000 value (example).

I have been thinking of treating all of the accounts holistically rather than individually while accounting for tax considerations of course. My goal is to try to get the number of holdings down to 20 - 30, with an average value of 3% - 5% of aggregate portfolio value. I find the main difficulty to be in structuring the lower value accounts.

Two approaches I have been mulling over:

1) Scrap the individual account diversification approach and perhaps only hold 1 - 3 positions in lower value accounts. This approach would probably mean that no account on its own will be diversified but the aggregate portfolio will be (hopefully).
2) Try to maintain the account diversification approach by investing in only one etf per account until the account eventually reaches a size sufficient to hold more positions (then I suppose the approach would flip to the first approach). The idea being that each account would hold a different etf (and at least be somewhat diversified) that would contribute to the overall diversification of the aggregate portfolio.

Do you have any comments or guidance on managing multiple accounts? How do investment professionals manage their own family accounts? Any best practices that you are aware of, or good articles that you can direct me to? Any considerations besides tax; for example, how do you apportion risk between family members and accounts?

Thanks
Derek

Q: I am under water on LIT , general play on Electric Vehicles .
What are your thoughts on this strategy and is there a better play .
Telsa news seems positive ....

Many Thanks,
Greg

Q: This is a follow up question regarding where to place XEF for tax efficiency. You Stated "These points could be argued, and could be variable based on one's exact situation and tax rate. But we would generally agree with this assessment."

Just wondering which points in my argument could be questioned. Also, if my corp is taxed just under 15% (small business) and my personal tax is low, does the reasoning fit better?

Thanks again,

Fed

Q: I am wondering if any of the following do not hold all their international stocks directly (ie if they are an ETF of ETFs). I am pretty sure that XEF, IEFA, and IEMG do own all stocks directly, and I think VEE does not, but please correct me if I am wrong. I cannot seem to find information about the rest.

IEMG XEF VEE XEC IEFA VGK SPDW VWO

Thanks again,

Fed

Q: In my registered accounts I have a full position in VGG. Doing very well.
In my US account I hold WMT. Gone from $98 to $112 over a relatively short period of time.Thinking of cashing in and buying VIG.
Ignore sector allocation. Purely for performance ,dividend growth and a little more diversification .WMT seems to have done well in its competition with Amazon. Has it run out of steam.

Q: Thank you for the wonderful service you are providing the DIY investors.
My question: I would like to simplify a mid- 6 figure RRSP portfolio primarily into VT etf + BNDW (70%-30%) for broad diversification, simplicity, ease of rebalancing, and favourable foreign withholding tax treatment in RRSP. Got 16 years before converting to RRIF. I'm comfortable with VT. However, I have read that Canadians should only buy foreign bonds if they are currency hedged to CAN $ otherwise, there'll be too much volatility. Do I need to worry about this? I ask because unless have to, I want to avoid buying a broad Canadian aggregate bond etf (e.g ZAG) instead of BNDW --- because I don't want to lose global bond diversification, and I don't want to have to convert to US $ for rebalancing purposes. Thank you.

Q: Last winter I sold ZPR and replaced it with MFT in my RSP. This seemed like a good move, but recently MFT has slid below my purchase price. It has a great distribution, but with rates more likely to go down than up (?), do you think that MFT will continue to go lower and is there a chance that the distribution will be reduced?
Would you sell or hang on?

Thank-you

Q: On june 27 a question was asked about renewable energy etf's. I have been a bit worried about straight oil and gas stocks, myself, and have been thinking about slowly shifting towards renewable energy. You offered several possibilities at the time. I was wondering which ones you would recommend amongst those:
ETFs (MER): QCLN 0.6% (US), ICLN 0.47% (Global), PBW 0.7% (Global), PBD 0.75% (Global)

I have US dollars so will be buying on the US side.
thanks

Q: Good day,

Any suggestions for an RESP? Child is 14 so not a relatively long time until he may need to access the funds.

Thanks
Robert

Q: Hi, I have 500k in my RRSP with 10% in cash, the rest is in individual gov’nt bonds. I am looking at buying CVD with this cash. Is this a good idea in terms of diversification? What is the difference with straight corporate bonds ETFs? FYI, my total portfolio is balanced, keeping equities in non-registered accounts. Thanks, Martin

Q: I presently have Cdn cash in a savings account @ 1.95. I will not require these funds for at least 5 years. Can you suggest a strategy to increase rate of return, not taxed as interest, low fees and minimal risk. Please rate the above funds. Any other suggestions?

Q: I am looking to buy fixed income funds in my corporate account. What would be your top picks of the ones listed? What are the rate of return - fees? Thank you for your website.

Q: I presently have U.S. cash in a savings account with no returns to speak of. Do not require this cash for at least 5 years. This cash represents the cash/fixed income of my portfolio. Would it be wise to invest in PSU.U or is there another choice available? Have you heard of BIL?
What is the rate of return, fees and risk of these funds?

Q: Thank you for your terrific website. I need to add funds for my U.S. non registered account. I presently have IWD, DVY and SPY.
How would you compare the performance and outlook for the above funds? 5 year minimal hold.

Q: Hello 5i team,
It seems to me that interest rates will remain low in the next year or so; in that context, would it be wise to invest in the above ETFs. I would be happy if I got a return of 2 or 3%.
Thanks,
Antoine

Q: What would be 5I's recommendation for investing in emerging markets? Thanks, Bill

Q: At this point in time with unlikely rising interest rates does it make sense to purchase XHY in preference to HYGH. or would it be safer to purchase TLT, despite a lower yield, as I would expect junk bonds to do poorly with a slowing economy

Q: I tried to buy 100 units of this on my TD Webroker Account for CAD$5,000 and change. Got an error message telling me to call a TD rep at an 800 number. The rep told me that I could not buy this through them. I have never run into this in the past for any stock or ETF that I wanted to buy or sell. What brokers take orders for PSA:CA and which brokers will not take these orders.

Q: I noticed that this ETF is listed as 100 % basic material industry but when looking at the top 10 holding they are mostly bank preferred shares. What would be the better industry classification for this ETF?
Do you like this ETF or would you prefer another one or this one?
Thanks