Investment Q&A

Q: With all the market turmoil I would like to park some funds. I am considering money market or GICs. I invest through TD Waterhouse. What would your recommendation be?

Q: I am 80 and I have 85 k in my TFSA . Iam looking to invest in Fix income . What would you suggest ?

Q: Hi 5i,

Looking for your top 2 or 3 fixed income recommendations for the market we're in, and where you feel we may be headed in the next 12-24 months. Looking for some bond ETFs, preferably Canadian listed.

Criteria is primarily capital preservation with some return to blunt the impact of inflation, and of course liquidity. I want to hold dry powder for buying opportunities I believe will come with recession, but I hate the idea of sitting in cash.

Thanks!

Q: What are your updated thoughts on OBE? I have a partial position and planned to increase to a full position until their news release today. In such a strong oil and gas environment, why does a company need to commit to an 11.95% interest rate on 5 year notes. Am I missing something, OBE scores well on a number of metrics that I monitor so I thought they would be able to negotiate a better interest rate.

Q: Rather than buy TIP directly, I am leaning towards buying XSTP and/or XSTH. Given that they are only 15% correlated (no doubt due to the CAD-hedged aspect of XSTH) I am leaning towards buying both. What is your perspective on this scenario for an income portfolio given the current state of U.S./CAD dollar exchange rates?

Q: Now that i can get a GIC of over 4% what would be the advantage of owning HFR over a GIC ladder.

Q: I like TIP for its dividend and excellent lack of correlation to the rest of my portfolio. However, will its dividend and covered call income potential make up for its immediate seemingly dubious short and intermediate-term growth prospects? Thanks!

Q: Hi 5i, What is your current read on the attractiveness of investing in TLT? I assume it would be best to hold in a registered account but you could please confirm. If acquiring just one bond fund today, would this be your preferred choice, and/or is there a comparable CDN bond fund worth considering? Thanks.

Q: The Globe just had an interesting piece by a RY high yield bond fund manager and I'm curious about your thoughts on the gain potential which assumes inflation is defeated in a year or two. I am reluctant to pay fund fees again so if there is an ETF you can suggest which deals with corporate bonds it would be appreciated. thanks Al

Q: Could you kindly give me your view on the above two funds with respect to their yields and capital preservation going forward 1-2 years.
Thank you

Q: I would like to add my two cents to your comments to Cal about TD semi-annual pay step up extendible notes, having bought into one of these many years ago. First, these are not too far removed from a GIC, as they are next to impossible to cash/sell until maturity. Second, the moment rates move against TD (ie down in this case), they will call the note as quickly as permitted. Your 3-year note might become a 1-year note if it is to TD's advantage. Lastly, these are not covered by CDIC and are subject to bail-in, unlike a GIC. Doubtful that would happen, but be aware. . . In my view, if you are willing to lock-in for 3 years, go with a GIC, which actually has better 3-year rates and you know exactly where you stand.

Q: I have been holding a legacy position in preferred shares, both corporate and CPD ETF, as the bulwark of our fixed income allocation. I have never been a fan of. pref shares and wonder if this is a good time to sell and replace with a laddered GIC strategy. Is there an ETF that does this well, in your opinion. I have also been reading about GIC's offered by SLF and others. Would they be better and if so, how does one purchase them? Thank you for the calm you project to your subscribers.

al

Q: Is it too early to move some cash to a bond etf.
Which would you suggest in Canada and US.

Q: Hi,
I find it useful for me to monitor certain ETF ratios as a way of seeing whether or not rotation is taking place - such as: IWF:IWD - to see if growth is being favoured over value, as an example.
I have a harder time understanding the concept of 'credit spread' with regards to the bond market and am wondering if there might be a pair of ETF's that could be used in a similar way to show a ratio that indicates whether or not corporate or junk bonds are being favoured - possibly LQD:JNK?
Is looking at a ratio such as this a good way to track it? Would it be better to just monitor the difference, as a percentage, between the two ETF's over time?
I'm open to your wise counsel, as this isn't an area I have any expertise in - and I am finding it hard to educate myself on it with any confidence in some of what I am reading on the wilds of the internet.
If you feel this is something to benefit others, feel free to make it public.
Thank you,
Dawn

Q: Hello 5i,

If someone was seeking safety and wants to either ladder or 1 term some GIC's, would it be a good time to start seeking the best rate be after the July 13-22 BOC rate announcement? It looks like Sept 7-22 is the next rate announcement so I was thinking even if another 0.50% was to occur not all would be passed onto GIC's.

Would you recommend a GIC strategy / company in Canada. The money I want to buy GIC's is from a personal house so principle safety is key. Since costs are rising so much I won't be using the money for 2-3 years even if the housing market cools it will take many quarters to normalize costs.

Q: Does it make sense to park some money from fixed income CVD to TD, which is close to 52 week low, and move it back to CVD, if and when TD shares have moved up.

Q: With the increase of rates, five years are becoming more interesting. I'm thinking of creating a ladder of bonds to hold to maturity, but when I look at my broker I have difficulty in discerning the type of bond it is as described in the title of the bond. Do you know of an website that describes what these codes mean? For example what does the bond TRP TR HYB C-2027 4.65%18MAY77 mean? Specifically TR and HYB? Where do you find such bond codes?

Q: Jennifer Gauthier in the Globe presented an article indicating that some of the key drivers of consumer price growth are declining. ie. oil (WTI) drops below $100, wholesale gas price drops 7%, lumber prices are a fraction of their pandemic peak, freight rates on major shipping routes have fallen 40% since September 2021 but remain a lot higher than pre-pandemic rates.

By contrast, Eric Lascelles Chief Econ. At RBC Global Asset Mgmnt. is quoted as saying that inflation has spread to a wide range of products rather than just a few key drivers and he believes that inflation has not yet peaked.

I have a few questions after reading it.

Do you agree with these assessments?

I suppose the way to know that inflation has peaked is to see it drop. Would it be unlikely to rise soon after once the market signals it’s peaked?

At the peak, do you see any sectors rising quicker than others?

Do GIC rates quickly start coming down once the peak is signaled?

Q: Do you see any upside for this ETF in the year or two.

Q: What would be safe bond ETFs with decent dividends for the next 2 or 3 years.