Investment Q&A

Q: Retired income oriented long term (10 year focus) investor.
Already own CPD, CVD and XPF.

In the process of rebalancing asset allocations with the objective of increasing fixed income, and given the current interest rate environment can a case be made for buying one or all of these stocks? Why or why not?

Any other thoughts also appreciated.

Thanks.

Q: I have a philosophical question on bond allocations in a portfolio. Simply put, why would anyone put money in bonds or bond funds in the current interest rate environment. A high bond allocation made sense in the 70's and 80's but for the last many years the returns have been very small. I realize that the bonds won't fall in a recession, but is that worth the high lost opportunity cost compared to say, holding banks or utilities. What bothers me is the almost universal acceptance by advisors that a bond allocation is mandatory. As a nerdy engineer I get suspicious when ideas are presented as fact with minimal apparent logic. I can see why bonds are somewhat attractive to advisors as the low volatility keeps clients less "edgy" but is it really the best long term strategy under the current conditions. I am in the fortunate position that I do not need to make large withdrawals and I can usually plan ahead. Why would I need bonds?

Q: Hello, my question is about CVD, CBO, CPD and XHY. I know you like these ETFs for income, and most of them are in the Income Portfolio. When one looks at their 5-year chart, one can see a downward trend for all of them. What will it take to change that to an upward trend? Would you invest in these ETFs today? Regarding XHY, the Fact Sheet says “Exposure to a broad range of U.S. high yield, non-investment grade corporate bonds, based on market-value weighting”, does the low quality of these bonds bother you? Thanks, Gervais

Q: Hello,
I own both of these ETF's in my RRSP. The position in VAB is higher by 3 fold as compared to XLB.
I will be adding to one of these with my 2019 contribution. Given the outlook for rates (I lean towards the notion that they have most likely peaked), I was going to increase my position in XLB. Would you agree with this decision or would you favor VAB? As background, I am retiring in 13 years if that helps.
Secondly, do you view preferred shares and corporate bonds issued by public companies comparable in terms of asset categories? Both respond for the most part to movements in interest rates as best I can tell but would like to get your opinion please.

Thanks,

Dan

Q: Hello 5i Team
I own Government of Canada Real Return Bonds as follows:
All dollar figures are shown as per $100 face value
Dec 01, 2021
Cost basis - $178.9998
Market Value - $179.0590
Dec 01, 2026
Cost basis - $179.4574
Market Value - $200.2690
Dec 01, 2031
Cost basis - $185.6486
Market Value - $213.501
Dec 01, 2036
Cost basis - $145.3914
Market Value - $185.9052

My first question is the series 2021 market value has been declining the last couple of months. As the maturity date approaches does the market value go to $100.000 from the current $179.059 or is the decline in market price the result of the flattening yield curve (i.e. short term rates approaching current long term rate for the bond).

My second question, should I continue to hold these Real Return Bonds as part of my fixed income portfolio. They represent about 8 % of my fixed income portfolio. I have been quite happy with them since I purchased them.

Thanks for the excellent service.

Q: Gentlemen Good Morning,
My new Councillor at FNB propose me BNS S&P / TSX 60 Callable Contingent $8.05 coupons Notes Series 81F
Suppose to be no risk, with Annualized return 5.04%
There is no information on fees on the paper.
Your thought please ?
Thanks
Regards.

Q: Have some cash account money to invest right now, could you recommend some suitable options ? Need to be able to liquidate in event of house purchase/investment.

Q: Good Morning, I have been watching ZAG and XBB in order to deploy cash. Not sure when is a good entry point? I know we cannot time the market but what would you suggest I should look for (e.g.. off it's 52 wk high, net asset value etc). Which one would you prefer ZAG or XBB. Thank you. Heather

Q: I hold the enbridge note.us in my RRIF and enjoy the dividend. Please advise if this is a safe, long term hold.
Thanks

Q: Hello how is this etf from Blackrock as a bond holding for US funds?
Thanks
Deborah

Q: Thank you for your article on Canadian stocks that pay US dividends. A substantial portion of my investments are in US dollar stocks and a US money market fund. Would ZUS.u provide a good alternative to a portion of the money market fund. It pays over 3% but it does seem very large and is relatively new. Can you suggest any other US$ fixed income alternatives?

Q: I was reading an article in the Globe about green bonds. What is your opinion of the above named and would you suggest any others. The yield is important but the safety is primary.
Thank you for insight.

Q: Hi,

My wife's group RRSP has Manulife AllianceBernstein Canadian Core Plus Bond as one of the options. How does it compare with CLF. Should I instead invest in MAW102 in the group RRSP and buy CLF in her regular RRSP account as part of bond portfolio allocation.

Thanks
Ninad

Q: Goodmorning All at 5i! What are your thoughts on split preferred shares as a conservative investment?Any caveats? Cheers, Tamara

Q: I would very much like your thoughts on "NBC Auto Callable Contingent Income Note Securities (Maturity-Monitored Barrier)" linked to the American market.
https://nbcstructuredsolutions.ca/detailProduit.aspx?lequel=04361&langue=en.
i see the principal is not protected if XSP-t drops 40%.

Thanks.

Q: Do you think MOGO will be able to make its interest payments on this Convertible Debenture? Do you thing they will be able to make required payment at maturity in 2020? Would you recommend buying this convertible debenture?

Q: HI Guys:
I bought this fund two years ago as part of fixed income side of our portfolio.The distributions have been reinvested in the fund since I bought, the fund currently trades 1% under book value, the fund is 75% bonds and 25% equities, MER 1.04%. Distributions this year look to be around 1.5% if the recent distribution is consistent for the rest of the year. I'm looking at an investment in QLTA which would give me US diversification and is a pure corporate bond fund with a monthly yield 3.1%. I've never been a bond investor usually equities and cash I'm thinking to sell SIF120 and put the money into QLTA for the distribution and a lower MER 0.15%. I realize this may not be apples to apples and higher risk with currency and corporate bonds, would you have a concern with this approach, or any other bond ETF's that are worth consideration the money is in a RRIF account.

Q: Hi Peter and Ryan,
We received the last portion of our funds in cash from Sun Life today. We are a little hesitant to open new equity positions or foray into bonds. The stock analysis highlights that we need to add REITS but that sector seems to be under pressure this week. The risk and payback seems unbalanced everywhere we look today.
As we are into our early 60's we have given thought to placing 40% of our portfolio that arrived as cash into a temporary safe place. If you were to choose today which ETF's are recommended out of CMR, XFR, HFR to place funds for deployment at a later date.
Cheers
Jerry and Debbie

Q: Have found the recommendations about investing outside of Canada to be very helpful.
I do cringe when looking at possibilities for adding bonds or fixed income as all of the etf's I have seen suggested have very poor performance, why not just stay in cash? I realize the desire to minimize loss in equities, but have a hard time committing money when the products perform poorly. Any other suggestions?

Q: As suggested in Portfolio Analytics I need to add Fixed Income to family portfolio. It suggested ZAG or XBB; Defensive CBO or FLOT, Aggressive CPD or ZPR. Which of the three would you suggest to invest in? Also researching them they refer to Dividend Yield. Is it actually dividend yield or interest income? The reason I am asking should the fixed income be in RRSP (I know it is preferable for US$) or would a non-registered corporation account be fine also?
Heather