Investment Q&A

Q: Hi team:
I owned XTR for a few years in my RRSP, it generates about 5% yield per month but compared to FIE, another ETF, it has underperformed, the later has alot of Cdn Banks in it, probably accounting for the better performances; as the interest rate might edged up slowly, it could put a negative return on XTR as it has more bonds and preferred shares in its holdings, as an investor in his early 60s, I wonder if I should switch XTR (about 50%) to FIE due to the impending interest rate increase which they have been talking for the last 3 years ? Thanks! have a good day and looking forward to hear from you

Q: Hello Peter and team,

I am looking to get some exposure to the US market via an ETF in a non-registered account. My criteria is that the ETF must pay a dividend and have some growth potential; this is for a 3+ year hold, medium risk investor. Searching through the Q&As it looks like your favourite US ETFs would be SPY, IWO and VIG. Based on the current market environment which is your favourite ETF that will meet my criteria today?

Can you remind me about the withholding tax issue? Is it worth the hassle of the withholding tax, or is it better to get a Canadian $ hedged ETF instead (and which one)?

If I buy before the end of the year, will I get a large taxable distribution (e.g. IWO in Dec 2012)? Is it better to wait until January to buy? Many years ago I bought a mutual fund in a non-registered account in November, and got stung by a large tax bill when they paid out the distribution in December even though I was not in the mutual fund for most of the year. I don’t want to repeat that, and I am not sure if ETFs work that way as well.


Paul J.

Q: Peter and team:
What do you think of xlk as a broad brush play on the technology sector? Is there a Canadian equivalent? (either Canadian companies or American companies in can. funds). Could you briefly touch on how etf's are handled vs. pure stocks @ tax time?

Thanks for such a great service!

Phil

Q: Hi, I noticed that you recommended a Vanguard Canadian index ETF called VCE in your answer to another questions. Vanguard also has one called VCN which seems to cover Canadian large, medium and small cap. Which one do you think is better and why? I already own many of the stocks in your portfolio and am just looking to add diversification.

Q: Good morning 5i, in April you liked the high yield sector; has your opinion changed or is this still a hold. Thank you

Q: Hello
I recently sold ZWB at $17.85 and now planning to buy CEW (equal weight banks and insurance companies ETF) Is this ok or would you suggest a better alternative.

Thanks

Q: Hello
I recently read the following,
Warren Buffet flatly endorsed a simple portfolio of inexpensive index funds for his own survivors. My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.

If a Canadian was to follow this advice, and allocate some to a Canadian index fund, a U.S index fund and short term government bonds. What would your allocations be and what Canadian Index fund would you recommend? If you where to periodically rebalance the portfolio how often would you do that. Would you use this strategy in RRSPs, TFSAs and RESPs?
Also should the investor protect him/herself from U.S dollar currency risk?
Use the assumption that this is for long term investing.

thanks, looking forward to your comments.
Bryon

Q: Hi folks: Would buying HIX (TSX 60 inverse ETF) be a good hedge against a market sell off at this time?

Q: Further to the general talk of a market correction, would it be prudent to sell the ETF positions in the Income Portfolio and hold cash for a few months, to see if a correction takes hold?

Q: If/when interest rates rise, should one be getting out of this ETF?

Please forgive the naivety of this question, but I hear analysts blathering on at great length about the need to "get out" of bonds as the economy improves and it leaves me at a loss on how to deal with this in my portfolio.

I realize this is in your Income portfolio for its attractive yield, but was wondering if the forecasted interest rate rise does indeed begin soon, does the thesis of holding this for its yield still remain valid? Would not the falling market price then negate its dividend yield?

Q: Hi Peter, I have some US funds I would like to use in the healthcare sector (no exposure at this time). Could you give me your take on Walgreens WAG, IBB and IYH. Which one would give me the best long term hold?
Thanks
Gary

Q: I would like to add some healthcare exposure to my portfolio -- which at present holds only Leisureworld at about 1.5%. I was wondering about ZUH. Is it liquid enough? Is it large enough? There doesn't seem to be a Canadian equivalent, unless you are aware of one. I'm looking for growth in a sector to which I feel I am under-exposed in a not very "creative" way. The ETF has performed very well (in my opinion) since its inception and the sector bodes well for the future. What would you recommend. Thanks, as always, for your insightful views.

Q: I would like your thoughts on the Vanguard vfv, vsp-hedged or the Ishares xus, xsp-hedged? Is this a good investment view the US markets getting stronger? Do you favor one over the other? And could you explain what it means to be hedged to the cdn dollar?

Q: Do you see hzu as a good straight forward proxy for silver prices. And if so, how does the internals work to follow accurately those prices. Any lag? Any derivatives that could cause wild changes?.
And if I may, could you rank Silver Gold and Platinum in order of preference.
Thank you
CDJ

Q: Hi Peter

Is it finally time to buy CGL and SVR or is there still more downside coming? Or,is it better to buy the larger US versions GLD and SLV because of the rising US dollar? Do you see the dollar hitting 85 cents or lower?

Q: can you suggest a good way to invest in US dollar strength for Canadians as in uup or a convienent alternative.Thank You.

Q: Hi,

I've been looking to take a position in VIG in US dollars in my RSP account. I see that you recently recommended CUD, another US dividend ETF. Would you recommend one over the other?

Thank you,

Q: Hi,
I am looking at setting up RESPs for both my children (both under 3 years old) and would like to set up the following asset allocation:
Cdn Equity 30% US Equity 30% Int'l Equity 30% and Fixed Income 10%
At 9 years old I would start converting more into fixed income.
No commissions are paid on ETF purchases.
I am comfortable with an aggressive approach.

I have two questions, if I may:
(1) Do you agree with this asset allocation strategy?
(2) Which ETFs (TSX only) would you recommend for each of these categories if you were buying in the next 3 months.
Thank you

Q: I need to add US and International Exposure to my locked in account. It is currently 60% cdn equity and 40% bonds and gics. I want to have fixed income remain at 40%. I want to reduce Canadian equity to 40% and add 12% US Equity and 8% other international equity.
1 Would ishares Core S&P Index (XSP) and ishares MCSI EAFE (XIN) index be appropriate?

2 Both are hedged to the Canadian $. Is that the best way to go? If the Canadian $ strengthens by 10% what effect can I expect to see?

3 Should I make this change in equal purchases of 1/3 of each index over 12 months?

Thanks for your help and great service

Q: Following on with Alan's question of 09/22 would you please make recommendations for specific "exposure to fixed income" investments.
thank you
Deborah