Investment Q&A

Q: With the proliferation of ETFs using covered calls there have been numerous questions about the return of capital classification of the distributions. Many of the questioners seem to think that Return of Capital means that they are simply getting their own money back. And while this may be true in some cases in many ETFs this is a tax classification of certain types of distributions and not the erosion of capital. Many of your answers do not fully explain this and often leaves the impression that the questioners belief that they are simply getting their money back and their capital is being eroded is correct when in many cases it is not. I think an article from yourselves more fully explaining this popular group of ETFs is in order.
After much research I have recently embraced ETFs using covered calls as a means of funding my retirement. For someone younger, focusing on growth, this may not be the right choice but as a retiree I’m looking for income without having to sell investments during market downturns to fund my retirement

Q: As a follow up to previous question about currency diversification. What would be your preferred vehicles for both the Swiss franc and the Japanese yen. Thanks

Q: Hi guys,
Great service...can you give me some thoughts on this RBC product...Target Date discount bond ETF's...seem to be a good option for safe money looking for cap. gains vs. interest....do you think timing would be right to add to these.? Any preference of government vs. Corporate? Thanks.

Q: Regarding both BMO { ZWB, ZWU,ZWT, etc. } and Hamilton { HMAX, UMAX, FMAX, etc. } covered call ETFs, do either use a return "of" capital as part of their distributed yield ? ..... If so how much and would it be a deterrent from buying them ? I have put the word "of" in quotation marks as I think it means I am getting my own money back ? ..... Thanks for your always sound advice .....

Q: Good Morning,

Would HXQ be your pick today for a NASDAQ etf, non-reg account ? Thanks again

Q: I would appreciate your general comments regarding these two ETFs, in particular with regard to these as a long term hold for my nephew at age 30. That person also intends to have other funds invested in more speculative, higher risk equities (play money!)
1) Are these a safe hold that should increase in value with general market appreciation over the years?
2) Would you believe the current dividend is sustainable?
3) Are there other options in the ETF world that you might recommend for a long term hold?
4) Again for a long term hold would you prefer something along the lines of buying equities directly, with something like holding one of your portfolios, knowing that he will not be paying much attention to these investments.
Thanks! Paul

Q: Further to my prior question, in looking at ETFs, I often thought why not just buy their top holdings, and that is quite often what I do. However, in trying to find out that info for these two I noticed something I thought was unusual.

For example, the XEQT ETF lists holdings as follows ...
iShares Core S&P Total US Stock Market ... 44.8%
iShares Core MSCI EAFE IMI ETF ... 24.96%
iShares Core S&P/TSX Capped Compost ETF ... 24.86%
iShares Core MSCI Emer Mkts IMI ETF ... 4.97%

This seems to be the total of their holdings (99.59%). I assume these also generate management fees, which seems like an approach to increase fees paid by "layering" their offerings!
Would a person not be generally better off just buying the 4 separately in the percentages to match the XEQT ETF?
... or possibly digging deepr in the layer and finding out what equities they really are holding?
Thanks! Paul

Q: I have held Freehold for a little over 2 years, and am no more than even on the stock price (but at least have the dividends). Similar to James' question today, I am thinking about selling FRU and moving to an energy income ETF. I have been looking at EMAX, but was not aware of ENCC that was mentioned by James. EMAX is new, but I like the North American approach vs ENCC which appears to be only Canadian companies. Could you compare the pros and cons of each ETF, including taxation of distributions, call strategy and any trading premium to NAV. Do you have a preference of one over the other? My objective is some sector exposure and income, more than capital gains.
Thank-you

Q: There has been an upward trend in silver the last bit. Would you know the reason for this? Do you believe this trend will continue for the remainder of 2024?

Q: XEQT. Can you give me comparable ETF’s that are as good,or better that charge a lower expense ratio
Thank you

Q: if wanted a dividend and growth what u.s. etf do you think is best for large caps

Q: I want more US exposure, but would be moving Ca $ to US $. Is it best to exchange ones cash to buy US ETFs such as VIG.US, or to buy a Ca ETF with US exposure? What would be equivalent to VIG be? Thank you.

Q: I have the fixed portion of my portfolio equally distributed across these two ETF's. The yield from CVD is much better currently at 5.33%, and ZMP is currently 3.05%. Any risk I'm not seeing if I only own CVD and get the higher yield?

Q: Dear 5i team.

Are the holdings in these two different enough to hold both? Is the lower mer of life good enough reason to only own it?
Understanding that they are covered call etfs, which non covered call etf would compliment them best to gain upside to sector rallies?

Thanks for your insights.

Q: With the goal of adding good quality growth stocks and using your suggestions ( thank you ), some time back I added BN and GSY to my cash account which is full of telecom, pipes, banks and utilities. I am now looking at these four with my thoughts on them : EQB, Stephen Smith is the main reason I am liking this company . I am overweight banks already- should this factor into the equation ?
CALF, the small cap sector should be getting interesting if rates decline and I could use more US exposure. TFII, management can’t be beat but the industry is suffering ( good or bad for TFII? ),
best to wait and see how industry shakes out?
XIT, ( have 10% portfolio exposure with a US tech ETF ) has significant CSU exposure.

Is my thinking clear? Any single addition would be approximately 3% portfolio weighting. In what order would you buy ? Am looking at buying 2 immediately. Any you wouldn’t buy ?
Thanks. Derek.

Q: Hi guys,

I have BRK.B, SPY & I2I as my only etfs in my U.S. portfolio, all around 2%. I know you can't provide personal advice, however, inside a normal balance portfolio what would be the range for each (bottom 2% to high10%)?
Thanks,

Jim

Q: Hi, In my prior question, the breakdown for ZRE is far from 100%. Is "residential" missing? Could be a private question. Thanks.

Q: Morning
Which etf would you recommend for US exposure and why. Please rate them from 1-4
ZSP
VFV
VGG
XUS
Also thoughts on XEQT for all round exposure
Thank you

Q: I hold both ZRE and XRE. I selected two ETF because their Top10 holdings looked different enough. ZRE has also a better yield. Do you see a better growth from one of them?
Would you have on-hand a breakdown of their holdings (industrials, residential, retail, office). Could these ETF have private holdings? Thanks a million.

Q: This question or type of question was asked in the last week, but I can't find it. Sorry. My 2 kids each have about $100,000. I manage their money, but would prefer to just manage it through ETF's. Can you please suggest a portfolio of ETF's for reasonable growth (60-70% equities), but balanced with some bonds as well. If you want to cut and paste your answer to the question from a week ago, that would be great. Thanks a lot.