Investment Q&A

Q: February 26th, you noted that FIE was a decent ETF for Canadian Financials. This ETF posts a trailing 12-month yield of 7.34% which it pays out monthly ($0.04) as a mix of eligible dividends and return of capital. In 2012, it paid $0.414 as eligible dividends. Based on the average NAV for 2012 of $6.50, this would be a 6.4% return. How is such a high return possible when 90% of FIE is in Canadian banks plus CBO and CPD which pay around 4-4.5%? Is this return sustainable? I have posed this question to iShare and, as yet, received no satisfactory answer. Am I missing something?

Q: For a retired person looking for a solid income stream would a laddered bond fund like CLF or CBO be a sound investment as part, say 5%, of an overall portfolio? Thanks and keep up the great work.
Ronald

Q: Hi, I have a question regarding investment strategy. I heard that you shouldn't invest more than 5% in any stock and I also herd that you should only hold about 5 to 7 quality stocks. That accounts for 35% or my portfolio. My question is...what do I do with the other 65% of my portfolio? Should I be investing that portion or is it better to leave it. This way I won't lose any money on this amount.
Thanks

Q: Following up on Chucks question about the leveraged etf's. Given their structure and the decay that comes out of it, can't a prudent investor short both the hbd and hbu and come out ahead over time? For example, the hbd is off 25% in the past two years while the hbu is flat. I must be missing something or else someone else would have already thought of this.
Thanks,
Bill

Q: Hi Peter
New member first question
Wondering if you can give your opinion on natural gas where do you see it 6 month from now.
as well if possible your opinion on HND and HNU on how they work.
thank you

Q: Impeccable timing on the Goldcorp recommendation. I think the contrarians are right in calling for gold to continue its run. That being said, I would like your opinion on some of the "double" ETF's such as HGU, HNU etc that outperform in a bull market for gold (HGU) and natural gas(HNU), and take big hits in a bear market. Thanks

Q: To aquire a small stake in the US market, I am looking at these etf's. CUD, XSP, and ZUB. Do you think this is a good idea? what would a good entry point be? thank you.... Linda

Q: Hello Peter and team. Do have any recommendations on how to best play commodities with out actually purchasing individual futures contracts. I'm particularly interested in grains, oj, coffee, sugar etc. Are there etf's that would be suitable? Thanks

Q: Is there a Canadian tech ETF containing such companies as BB,DSG,
ESL,IM,MDA,MDF,SYZ, etc.? The tech sector seems to have some legs in the US, just wondering if Canada's tech sector may follow suit.

Q: Hi. I have a few questions concerning buying a convertible bond ETF. There appears to be only one choice, iShare’s CVD, which is an advantaged fund. An apparent alternative, PCD.UN which is also advantaged, will probably be wound up either in September 2014 or earlier. I have several questions.
(1) Is there an alternative way to hold a fund of convertibles while staying away from Canada’s rapacious mutual fund industry.
(2) Both CVD and PCD.UN are trending downwards fairly steeply (for fixed income funds) over the last few months. Is this a good time to be buying convertibles?
(3) CVD will have to at least restructure when the government legislates against such tax avoidance funds. Does this increase the short to medium term risk?
(4) Presumably CVD will have a higher (but fully taxable) yield by about 0.5-0.75% once they restructure since the forward structure costs will disappear. Is this a valid presumption?

Q: Hi,
I have held the major canadian banks over the past 20 years and as a result pleased to do so. I have always wanted to diversify into U.S. banks but just never invested my time to do the proper due diligence. Would the U.S. regional banks be a good area to begin my search? Or would you recommend staying out of U.S. financials totally?
Thank you,
Mike G.

Q: What do you think will happen to the "advantaged" series of ETFs (e.g. CHB, CVD, etc) given the recent budget announcement regarding "character conversion" structures.

http://www.theglobeandmail.com/globe-investor/ottawa-targets-mutual-funds-using-low-tax-strategy/article10237720/

Q: Hi All, Please provide your opinion of CAB for use in a non sheltered portion of a portfolio, I have to get my bond portion balanced and it has to be non sheltered, is there another product you would recommend that would serve the same purpose as bonds for non tax sheltered.

Q: What do you think of buying high yield bonds such as TSX: CHB, iShares Advantaged U.S. High Yield Bond Index Fund (CAD-Hedged)? Thanks.

Q: Peter; Not a question but have you seen today''s NP article , pge. FP 11, by Michael Nairne? It gives further
data on why to buy ETF's VS Mutual Funds. Those fees just keep rising !
Rod

Q: Hello - I have been comparing two global iShares ETFs, CGR and its identical US listed counterpart, ICF, and notice that CGR tends to outperform ICF more than simply tracking ICF.Is this simply a currency phenomenon and is CGR the better buy?

Q: I'm looking to add a few fixed income holdings; preferred shares and bonds. I see some of the larger cap names in your Model Portfolio have preferred shares and/or bonds. Would you recommend I add them as well as the commons (as opposed to just the commons) or do you have any others you could recommend for the fixed side?
Thanks,
Heather

Q: Hi All, I have very little exposure to the precious metals sector. I see that the sector is very beat up. I have two questions: 1. Do you think this sector may turn around this year? 2. Would BMO Junior Gold Index ETF (ZJG.TO) be a decent way to get exposure?

Q: Peter; With the CAD down would you purchase a hedged or non hedged ETF at this time? Thanks.
Rod

Q: Thanks for posting ur Model Portfolio. To round out the portfolio with US, International, Emerging Markets and a bond component would you just use an ETF for each - and if so what ones do you like.
What % of cash do u recommend to hold for a retired person.
Many thanks Peter.
Jorge