Investment Q&A

Q: Hi 5iTeam,
I noticed that when the markets pulled back in early to mid March this year, both bond ETFs: XLB (approx. -28%) and XSB (approx -9%), pulled back as well although there were no movements in interest rates. I would think that these bond ETFs are a good proxy for cash, then what would investors' reason be for selling? Your comments on this would be much appreciated.
Cheers,

Q: I am planning to increase my bond exposure in my RIF and have looked at VBU. I already have Canadian bond exposure. This is a hedged fund. Is this, as a hedged fund, appropriate for my RIF? Is there an unhedged equivalent? Do you have other funds I should review?

Thanks

Q: Hi,
This is about parking one's cash.

I know I have "slightly" less cash than Mr. Warren Buffet :))

But whenever I read that people like him have 134 BILLION dollars in cash or other Mega rich people sitting on the sidelines with literally hundreds of Millions of dollars, I have always wondered where these ultra rich people park their money?!
We the ordinary folks are struggling to get 0.65%. The same for them too?

Your answers have always suggested GICs, High Interest Savings Account and ETFs like PSA and very rarely Income ETFS/Mutual funds.

Any new suggestions?

Q: One of my bonds recently matured. I am looking to use the funds to purchase che.db.b. I know you do not like che.un as an investment, but this convertible debenture matures June 30, 2021 with a yield of 5.6%. What is the likelihood that CHE.UN will pay out at maturity?

Q: Dear 5i,

Can you suggest some non-Bond type Canadian traded ETF's that might have similar performance characteristics to a short term Canadian bond ETF. I am hoping you may be able to suggest some relatively low risk Canadian ETFs that have a little income with minimal chance of capital loss.

thanks

Q: Looking for a safe place to park my Moms Money. I was thinking about XLB , but the risk reward there is crazy in my view.
The draw down the way i see it was around 26.5% back in March, this to me looks like the Bond Market isn't functioning properly. She currently owns Scotia Innova Income portfolio which pays a distribution of 3% . The draw down in that fund last March was around 8% i believe, this to me not making much sense either when comparing it to XLB
Considering the issues mentioned above, Does purchasing GICs seem rationale to you considering these crazy times.
Thanks !

Q: What do you think of this and Pimco Inv Grd Credit as "safe haven" investments?

Q: I am currently reviewing my mother's non-equity portion of her retirement portfolio. She currently owns CLF, ZAG and short-term GICs. The interest from these investments are not needed for immediate living expenses. The non-equity investments in her portfolio serve to reduce volatility, and provide peace of mind.

Everything I have read recently indicates that interest rates have likely made a long-term bottom. As such, I am wondering whether my mother should sell ZAG and keep her interest-bearing investments in short-term, secure instruments only (i.e. CLF and GICs). In short, should she be staying away from mid-long term bonds?

Jeremy Siegel recently recommended that retirees should modify the traditional 60/40 stock/bond portfolio to 75/25 going forward because he does not anticipate good returns from longer-term bonds. Do you agree?

Many thanks for your thoughtful and valued insights.

Q: Hi, can you give me your thoughts on these High Bonds that mature in
3 years. GIC's don't pay much so looking elsewhere.
Air Canada,Ford Canada,SNC,Parkland,COMINAR REIT

As always thanks for the great service
Anthony

Q: I have been keeping a lot of money out of the market for most of this year waiting for stability to return. Bonds seemed to be pretty much a pointless investment to me for the last few years but I've reconsidered. Putting a chunk of cash into a bond etf seems better than just leaving it in my account where it earns next to nothing. On the other hand, it's safe where it is. How safe are bond ETFs? I'm particularly thinking of bond ETFs which don't seem to bounce around much like BLV, VLB, and XLB, but which seem to have done well YTD.

Q: XTR and MFT offer attractive yields and seem relatively stable...are you comfortable with how they generate distributions and would you recommend them today? Thanks, great service.

Q: Peter,
I am considering purchasing the Fairfax Financial Holdings Ltd Bond March 3,2025 for my RRSP. Any concerns?

Thank you

Paul

Q: I like the Vanguard family of ETFs and am looking for safe income in these uncertain times. I am aware of VBAL and VGRO, but could you suggest other Vanguard offerings that focus on earning investors relatively safe distributions. If there are other companies that offer superior ETFs for income I would appreciate your suggestions.

Q: Please recommend Canadian and US ETFs that invest in inflation linked bonds.
Thanks as usual.
LSM

Q: Dear 5i,

Can I please get your opinion regarding these 3 Canadian Aggregate Bond ETF's.
MKB and HAD have MER's approx. 4 times higher than the passive XBB ETF. It looks like the overall Total Return performance is better with MKB and HAD but, only by about 0.5 to 1%.
1. Do you think it is worth paying the extra fees for MKB and HAD?
2. If yes, which one would you choose between MKB and HAD?
3. With interest rates already very low does it make any sense to purchase any Canadian aggregate bonds?

thanks

Q: Hi, I owned the 5.25% Debentures (and stock) ahead of the COVID-crash, but bought more of both in the pit of the crash. I get that they are servicing a lot of debt, but I also felt that they were perhaps being punished for being an airline, without consideration of their essential service in most of their flying markets, and their largest input cost is fuel, which mitigates some lost revenue.
The Debentures have not recovered nearly as well as the stock. I'm OK holding on to the debentures, as they are less than 2% of my RSP, but would appreciate your perspective.

Q: This fund is recommended by my broker for my RIF/TFSA. Would appreciate your opinion on the pros and cons of investing in this fund. it looks like that this fund provides trailer fee to the broker, would that be an incentive for his recommendation?
The fund may have performed well due to the drastic fall in interest rate. What effect of higher interest rate on the performance of this fund? Do you forecast that interest rate may go higher when the situation of the virus subsides?

Thanks

Q: Hello, can you make a comparison between these 2 etfs? I already have XBB, so my goal is to maintain a minimum 2% revenue stream in my RRSP and shorten the duration as well. Maybe you have another suggestion? Thanks.

Q: HI TEAM
XHY IS APPROX 10% AND THE OTHER 3 ARE 30% EACH OF THE BOND PORTION OF MY PORTFOLIO, WHER WOULD YOU ADD FUNDS AS I NEED TO TOP UP MY BONDS

Q: Morning, 5iTeam,

I am thinking taking a position in XLB and XSB. Would this move make a good pair trade in your opinion?
Cheers,