Investment Q&A

Q: Good morning,

I know this might be an odd question, but hear me out.

What are your thoughts on taking a more dynamic approach with one's cash allocation in a portfolio to enhance yield? I know there are tax and trading cost implications with the following, but aside from these, what are your views on moving cash towards the end of each month, prior to the ex-dividend date, to a covered call fun like HHL, and then sell just after the ex-dividend date and keep in cash until the end of the next month. A fund like HHL appears to have "some" price volatility (of course), but also a yield approaching ~ 9%. It seems that by taking a more active approach to one's cash, and moving it in/out of HHL monthly to coincide with monthly cash distributions, might make some sense. So long of course as you are prepared for the fact that there is ample scope for capital gains/losses that you would otherwise not have if you were to hold just a GIC at ~ 5%.

Q: What bond funds are the best to invest in right now for the long term? Currently I hold ZAG.TO and CVD.TO. Should I continue buying them? I would prefer a higher dividend than what the ZAG gives.
Thank you!

Q: Hi- retired investor.
Bought these a while back for fixed income and am down 8% and 10% respectively. Could you explain why these have decreased while bond yields have increased?
Should I dump these and just convert to a 5% GIC or is there a light in view?
Thanks
Jeff

Q: Could you give me some examples of the "Fat Coupon Bonds" that David Roseberg" referred to on BNN yesterday?
Could MTF be included? Thanks, JAMES

Q: I am currently holding over $80K in ZMMK as a holding place. Approx. 4.92% dividend while I wait to see where this market is going (so many mixed signals and differing opinions !). RBC just announced they are supporting the purchase of things like CASH, PSA, etc. How does ZMMK compare compare to the Horizons High Interest Savings ETF (CASH) ? Is ZMMK as "safe" ?

Q: You often reference your preference for aggregate bond funds. What exactly is an aggregate bond fund and how do they differ from a "regular" bond fund (ETF)?

Appreciate your insight.

Paul F.

Q: hello 5i:
regarding the warrants that will eventually trade for the CSU bonds: can you hazard a guess as to what price range they might trade at; possibly looking back and seeing what others have done in this situation?
thanks
Paul L

Q: Upon reading and re-reading the announcement by CSU of the “warrant dividend”, I am still confused and have several questions. I like to understand what I am buying and/or being given, and I don’t fully understand that in this case.

1. Do these warrant dividends cost me anything? I am fairly confident the answer is NO, but please confirm.
2. Is there anything that I need to do, or will the warrant dividends magically show up in my account one day?
3. Once I get the warrants how will they appear in my (RBC) investment account. They won’t be listed on the TSX or any other exchange until the “Company Redemption Right” is exercised so I am not sure what to expect to see.
4. If the warrant dividends are not trading, what value can you ascribe to them? Just use the nominal fair market value of C$0.0001?
5. When the dividend warrants can be traded, will they be traded like a regular stock?
6. When I sell a dividend warrant in a non-registered account, are the proceeds from the sale considered a dividend, interest, or a capital gain? I guess since it is a type of dividend, I speculate it would be treated as dividend income.
7. Is this something that is good, bad, or indifferent for a CSU shareholder?
8. Is it possible to give an example of how this would work from the point of view of a CSU shareholder and the debenture holder. Assume today’s price of CSU and CSU.DB
9. Based on your experience with this type of situation if I could sell my warrants today, what price range would you speculate they are worth?
10. Have you seen this done with other companies? If yes, which ones, and how successful was it for the warrant dividend holder.

A lot of questions, but take as long as you need to answer them.

Thanks,
Paul

Q: Hello 5i,
This message from RBC Direct Investing has just come through. I thought it might be of some interest to the broader 5i community. My guess is that soon the other large banks may follow suit if they have not already done so. Worth keeping an eye on.....

Effective October 31 2023, RBC Direct Investing Inc. is amending the ‘Conflicts of Interest Disclosure’, section 3 to delete the following sentence:

“RBC Direct Investing does not currently offer high interest savings account ETFs.”

Access to high interest savings account Exchange Traded Funds (ETFs) is now available on the platform.

Cheers,
Mike

Q: Re your answer on the warrants. High finance seems as clear as mud. If csu wants a deb until 2040 it just needs to never redeem it.
It seems as I only have 30 shares of csu and $40,000 in debs I have to buy 370 warrants. Thus add to my cost base of 105.
On the surface it seems the best course of action is to sell my debs now for the cap gain ( rrif) as I prefer not to add to the cost basis .
I assume csu plans a redemption, why else go through with this exchange.
Thoughts ?

Q: hello 5i:
more questions/clarification on the CSU warrants:
first, warrants do not HAVE to be exercised, and CSU would wind up with both Series 1 and Series 2 bonds, correct?
second, how do you see trading in the bonds affected? eg. as Series 2 can't be called before 2040, would this make them more valuable than Series 1? Or, if they can be called at any time, would this make them less valuable.
third, the interest rate for the bonds will still follow the same criteria for both Series 1 and Series 2?
fourth, using $10,000 (a round number that makes calculations easier), a holder would then receive 100 warrants? What about numbers that would involve parts of warrants eg. $111,100
thanks for straightening this out
Paul L

Q: I do not fully understand the special dividend announced. One warrent for each share held? Exercisable when the company exercises their redemption right on the series 1 debenture? Please explain.

Q: How will the new deal ECN just negotiated affect their debt specifically ecn.db.b?

Q: I note you last comment on ZRR (BMO Real Return Bond Index ETF) was in 2022. I note it has declined from the $19 range about a year ago down to $14 currently. What are your thoughts on it today as a place to invest for dividend income (RBC shows a dividend of 6.83%). I am interested in it for income as I am retired. How safe is the dividend and what will cause the price to appreciate again?

Q: I am attempting to increase the bond exposure in my portfolio. Would you consider XHY as a good option or a combination of other bond ETF's, if so what others would you recommend?
Thanks
Kim

Q: hi,
can I get your opinion on the Aug. 9th Globe and Mail article by David Rosenberg and Bhawana Chhabra, "...It's time for investors to revisit their asset mix." And are you able to provide a few Canadian dollar ETF's to buy ( US treasury index? other? ), if you would in fact recommend that?
thanks, Chris

Q: I don't quite understand your answer to Rajeev's question on CSU debentures. Does this debenture exist and what is a rights issue ? The only debenture I can find listed on the TSE is CSU.DB which show a yield of 9.5% not 13.3% . So I imagine I'm looking at the wrong one. Could you give the correct symbol for the debenture in question ? And also explain and assess CSU.DB comparing it with the one Rajeev is interested in ? Which one would you prefer as part of the fixed income section of a portfolio ? Thanks .....

Q: this is a more technical question but CSU just announced today that some existing shareholders can elect to buy debentures. Can you help us understand what that means and also how will this be offered to us: through our brokers?

Q: USHY iShares Broad USD High Yield Corporate Bond ETF (not in your data base).

Is this a good time to buy a bond fund like USHY? It seems to do the same thing as HYG , has much lower MER and a higher distribution (above learned after using the comparison tool at ETF.com). Does USHY have a higher risk than HYG? Is this a reasonably good time to buy such a fund?

Q: Hi, What are your thoughts/mechanics on the rights issue of new Constellation debentures ? Do you consider it as a good income investment ? Thanks