Investment Q&A

Q: Greetings 5i,
I am retired and typically don't have much in the way of fixed income since we have decent pension income, dividend income from a non-Reg account and some income from our RRIFs (started early to postpone CPP).

However, there is likely opportunity now for short-term bonds (higher yields as bond prices have fallen) and long-term bonds (capital gains when interest rates start to fall). Could you please identify two Cdn bond ETFs that would satisfy this rate dumbbell scheme?

Thanks as always for your excellent service.
SP

Q: Hello 5i Team
Last year stocks and bonds both had a down year, I would like to add to a fixed income ETF that you think would have upside the next few years as interest rate starts to pause and decline in the future. I currently own a position in Vbal etf which has bonds component in it.
Thanks

Q: What are your favourite Canadian bond ETFs given the current circumstances and looking ahead a couple of years.
Thank you!

Q: Hi Peter & team:
IF I buy CSU.DB today at 138 $ and tonight CSU makes their recall announcement , the baystreet computers will grind away for about TWO milliseconds and tomorrows opening price may very well be about 115$ to 118$, and THEN a gradual decline to 100$ over 5 years.
My question is do you agree that this debenture is riskier than it appears since new buyers after the announcement will also expect to make money during the 5 year roll-off. Please poke holes in my theory if you wish...

(Of course the 5 years could also start in 2035 ...)

Q: Where to hold Bonds? As I am winding down my income producing years and shifting to drawing down my savings I am wondering where I should hold bonds. We currently hold no fixed income as we will get a pension from my wife's work when she retires( so historically considered that out fixed income). Bonds haven't really been on my radar with rates so low the past 10+ years but things are changing both in terms or yield and my investment needs. I have 4 options to stash some bonds TFSA, RSP, unregistered and within my Inc. I more or less have things in the right place currently with growth in TFSA, US in RRSP and CAD in unregistered accounts. My plan was to sell some USD large caps once the steam runs out of the current rally and buys some high grade corporate bonds, in or around 10-15% of my portfolio. A bit of the old traders strategy of sell in may and walk away...

So to circle back, the easiest place to do it would be in my RRSP, but some of the reading I have done has suggested I do it in my TFSA as I can get the yield out of the TFSA tax free account at any time instead of locking it in the more restricted RRSP accounts. Shifting the TFSA from growth to income also seems like an appropriate move at this stage nearing retirement ( me semi-retired, my wife in 4 years or less). The 3rd option I am considering is doing it in my INC and using the yield to " pay the bills" so to speak of keeping the Inc cash flow positive as my earning drop with me working less.

Q: I hold convertible debentures from Invesque IVQ.DB.V, maturing 30 Sept of this year, but which are only trading at 80 cents on the dollar. This seems to indicate that there is a substantial risk of default. In your opinion will I get my principal back or will I be given newly-issued and hence highly diluted IVQ shares? Thanks!

Q: I have already asked a question about this security. Thanks very much for your answer regarding the payments being interest and not dividends.
I just can't understand this security. It is an inflation linked bond with a maturity date in 2040. The new year's interest rate has been announced as 13.3% based on the 100 bond price. The current face value has declined over the last week even though the interest rate has gone up by just over 2% per year. The current rate on face value of 137 is 9.7%.
I know about the thin trading volume and the potential for Constellation to redeem the bond with 5 years notice.
What am I missing?? Is there a good reason not to put a fair chunk of fixed income destined money into this debenture?
Thanks as always for your insight!!

Q: R.E. Royalties has 9% secured green bond coming available. How secure would this company be?

Thanks
Dick

Q: With interest rates rising and bond yields now almost at levels worth looking at I want to start adding a few bonds to my portfolio. Obviously the easy thing to do would be to buy a few of your recommended bond ETFs but I would rather buy and hold individual bonds over bat for the average with an ETF. Can you recommend some good reading material on the subject of building a self managed bond portfolio. I understand the basics, looking for a slightly more advanced guide for a DIY investor.

Q: To full fill RIF withdrawal obligations, I am seeking high yield vehicles and found HYI, ZHY and ZJK, they all have above 6% yield. HYI is called active high yield bond ETF even has 7.33% yield. Does active high yield more risky than other two? What do you take on these ETFs if you are a yield seeking investor? Thanks. Lin

Q: Hello,

What is the difference between PSA and CASH?

Also, I own ZCS and CBO and was wondering if I should increase my allocation to CASH and PSA while reducing my allocation to ZCS and CBO considering the higher rate (better yield) on the short end of the curve. It seems to be higher income / lower risk strategy. Can you please provide your comments. Thank you.

Q: Bond market drives the stock market.

I keep hearing this message. Would you please provide a explanation of why this is the case ( if you agree) and how this works. And WHO are the drivers of the bond market.

Thanks as always.

Q: I have some cash that I was thinking of putting into PSA or CASH for the shorter term. But I am wondering if the unit price of those may drop suddenly when the market turns bullish, and investors move back into stocks. So, well I may earn a nice yield, I could lose some capital. Is that something I should worry about? Thanks.

Q: Last week Horizons issued press release indicating they were suspending new subscriptions after reaching approx. $US 775 million in assets.
The release says that “ during a period of suspended subscriptions , the Manager expects the shares of HSUV.U to trade at a premium to its NAV per share . While new subscriptions are suspended , Horizons ETFs is strongly discouraging investors from purchasing shares of HSUV. U “ .
As of today , the price and NAV are within a few cents of each other.
How should this press release be interpreted ?
Is it just a formality ?
Or should you be listening when Company issues a caution on its own product ?
Thanks.

Q: Hi
What is the advantage of holding an ETF like CASH or PSA Instead of a money market fund such as TDB8150?
The latter appears to pay a much higher interest rate (3.8%).
Thank you.

Q: Where would you suggest to store cash in a US$ account for daily or 30,60 or 90 days?
Thanks again

Q: I noted and likely your strategy to add to XHY for income and possible capital gains. However, when I looked at high yield corp. bond ETFs, ZJK looked better overall. There is also the matter of CAD hedging. I'm looking to park cash for my 2023 RIF withdrawal this December and I've been using the BMO HISA for this. Can I have your opinion on using ZJK or XHY instead for about 2% higher income?

Q: I'm looking at my legacy pile of preferred shares of which I have never been fond and wondering if this isn't a good time to sell and invest in a bond ETF such as XHY. I know you have expressed ambivalence about prefs but have also said in better times the class can do better. However, yields are roughly comparable, I can use the loses and invest the proceeds in XHY or a different bond fund which you might suggest, keeping the investment on the fixed income side of the page, Many thanks. al

Q: Can you recommend a high interest savings account that trades on the US exchange that is to equivalent PSA-T. I tried using the PSA.U-T in my US account but my trading account wants to convert the US dollars to CDN. Thanks.

Q: I’m looking to put a fairly large cash position to work (my portfolio is 30% cash) over the short term and would like to atleast gain some income (while I wait for a short-term recession scenario to play out) but limit large equity exposure. Can you give some short term bond etfs or some liquid traded products that would serve that purpose. I own a large position in zwb already but realize I’ll still get dinged in a pull back (at which point I’d shift that position back into underlying bank equities for a recovery). And also what kind of yields would I be looking at? I also would like to be paid out atleast monthly. Thanks