Investment Q&A

Q: A question related to portfolio weightings. I used to only have individual stock names and a fairly equal balance across various sectors. I just purchased an market ETF the other day (VUN) to get additional exposure and classified it as "other", but it didn't feel right when I noticed that the weighting of my other sectors went down.

As an example, if I had x% in a particular sector, but made a large contribution due to new cash into a market ETF, the original x% in that sector would now show up lower in my own calculations. How do you account for this? I don't want to be overleveraged in a particular sector by mistake.

Q: I am currently moving some of my portfolio from stocks to ETF's. I want only a plain vanilla flavoured portfolio. I have been going through your questions and answers regarding ETF's, and given the diversity of situations and dates, I am getting a little confused. i wonder if you could suggest the best for broad canada, broad U.S., and international?
thanks

Q: Hi Peter,
DBA is actual agricultural commodities while COW is companies involved in agriculture. Any Canadian listed company closer to DBA than COW ? Thanks.

Q: Hi Peter,
Is there a reasonable Canadian listed equivalent to the NYSE listed PowerShares Agriculture Fund ? Thanks.

Q: Hi,
Would like to start an RESP for my grandson. I am looking at the new TD series of EFTs which started in March 2016. Specifically THU and TPU (TD S&P 500 CAD Hedged Index ETF and TD S&P 500 Index EFT). The cost of these EFTs are only $15. Similar hedged and unhedged ETFs at Vanguard,BMO and I-Shares are trading at about $30-$40. Please advise if these TD ETFs will be just as good or should I stick with the tried and true ones mentioned above.
Thanks

Q: Peter and team:
In my kid's RESP, I am trying to transition away from individual equities into ETF's as we approach the time that it will be required.They currently hold ZWB, ZRE, ZLB & ZLU. I was thinking of adding ZDV to this. Would this be redundant, or help in diversity along with increased yield.

Thank you as always.

Phil

Q: My son is in his mid-thirties and has very limited time available to actively follow/trade the markets. He is looking for a simple, passive investment portfolio with very broad exposure, a modest dividend focus, and that is rebalanced, ideally, once a year. Can you comment on the following proposed portfolio and allocations, assuming about $100k? Are there any alternatives he should consider? Should he modify his approach in a TSFA/RRSP? Thanks.

VAB - 20% (Canadian bonds)
VCN - 15% (Canadian equity)
VDY - 15% (Canadian dividend)
VXC - 50% (Global equity excluding Canada)

Q: Bought a small portion of ZWU(covered call utilities with 0.72% mer) @ $15.04 in mid 2013(now$13.33) & loss is covered by the 0.08pm distribution.Please advise if I should switch to T,BCE.FTS, CDZ(0.67% mer) or Zlb(.39% mer)In 2013,I did not know what stock in the sector to buy.Since I joined 5I,I learn a lot & now tend to prefer a stock that is suggested by You.Thanks for your usual great advices & services.

Q: Hi 5i:

I have a set percentage of my portfolio dedicated to fixed income, with a primary focus on safety, but also with the hope of some return. I have focused on short term bond ladder ETFs, corporate and gov't. Over the last few years I have seen the reported distributions drop, slowly but steadily, and also the price of the ETFs drop steadily. For example, CBO now shows a dividend of about 3.6% wile I'm down about 3.3% on the market value of the ETF. I would have been much better off over the last few years in a GIC. I have some of the latter and like the ETFs because I can redeem them at will. Is there any other alternative to these bond ETFs (most that I have looked behave similarly)? What about RBC's Target Bond ETFs? These are held to maturity, though it seems to me that this might not help if the main problem is that the bonds included in the ETFs are bought at a premium. Your advice would be much appreciated.

Q: With the upcoming new classification of Real Estate being formed out of the Financials under the GICS is there a best way to play this? A single REIT or just pick up an ETF? I've read numbers as high as 100 billion could pour into REITs as a result - what kind of spike in valuations will this cause or is some of this already priced in?

Q: I have a few hundred shares of cyh and zwe which makes up about 8% of my portfolio. Would you recommend reducing this exposure until the Brexit issue is resolved in June? If so,what percentage might you recommend,if at all? Thank you.

Q: I hold ETFs that track the S&P500, TSX and the All Cap Ex NA index, both hedged and non-hedged. I'm considering adding an emerging market ETF but I'm concerned about the heavy China weighted that most such ETFs have. Your advice would be appreciated. In particular, can you suggest one that has a lower China weighting?

Q: Given today's market and the expectation of a US rate hike, could you identify 5 ETF's that you would be comfortable with to provide safety of principal and income. Thanks.

Q: Can you recommend this ETF as a fixed income equivalent, with better tax efficiency ?

Q: I am thinking about parking some cash in one or both of these ETF's (perhaps a 50/50 split) for the next 12 months. I understand that rate increases could adversely impact the unit price but given that rates are not expected to increase in Canada anytime soon and these are Canadian corporate bond funds not American would there be any impact from a US rate hike? If so, why? Secondly, what do you think of the downside risk and is there a better option you would suggest.
Thank you

Q: Hello 5i Do you think that ZPW could act as a hedge against choppy markets while collecting a nice dividend. Thanks. Gary

Q: Ours is a very conservative portfolio, with one third in dividend-paying equities, half of that individual stocks and half no-load funds. The latter's performance doesn't seem to justify the MER's so I would like to reduce, maybe eliminate, that cost, roughly $5,000 per year. Any thoughts you might have on how best to effect that change and what form that should take, eg less funds, more stocks and/or ETF's, will be much appreciated.

Q: I have some cash in my account and am thinking of adding to MAL and to XHY. Recent news and performance of MAL has been good, but I am concerned about the effect of US rate increases on XHY. My account is well diversified. I would appreciate your comments on both.

Q: Alerion appears to have begun recovery from an extended down trend with what looks like significant accumulation. However, doubts have been raised with respect to volumes for transport in part related product price and demand issues. Do you have an opinion on this issue and AMLP prospects please.

Q: Good Morning: My question is about the Horizons ETF listed as TXF. (It did not show up in the drop down menu.) The full name is First Asset Tech Giants Covered Call or something like that. I know it is Cdn. hedged which I am fine with and it uses a covered call strategy to optimize returns. Do you have an opinion on this ETF in regard to management fees (they do not seem excessive to me for an actively managed fund), performance, sector and weighting within a portfolio. I don't own a lot of big tech names directly (small holdings in Alphabet, Corning, Intel, Qualcomm and Apple,all of which are in this fund) and wanted some additional exposure in this sector. I already have a small position in this ETF (less than 1%) and would like to double it. Thanks for your input. don