Investment Q&A

Q: I have a mutual fund question, about a specific fund but more from an investment understanding perspective than picking on that fund. I know you're not fans of them, and the more I learn, the more I understand why (which is why I'm in the process of weaning myself away from our "advisor").

Our advisor has about 75% of my wife's $90k RRSP in a specific mutual fund, let's just call it Fund A from Company XYZ. This fund's investment objective & strategy is to "generate income and long-term capital growth by investing primarily in a diversified portfolio of Canadian dollar denominated fixed income securities". The funds top 30 holdings -- in fact, its top TWO holdings!, are 62% Company XYZ's (i.e. the fund company's) Bond Fund, and 37% Company XYZ's Cdn Dividend Fund, leaving 1% for everything else (unspecified).

Does this mean I'm paying the MER twice, once at the level of the fund itself, and again at the level of the constituent funds?

Would this situation, in isolation, be enough to get me out of this fund?

The funds MER is 2.3%, and its total return since the advisor bought it in July 2012 is 1.1%.

That certainly sounds like a good reason to get out of this fund especially and in particular.

Thanks again for all your investment advice, we beginning investors really appreciate it!

Q: Peter;
It was a pleasure meeting with you at the Money Show in Toronto.
As discussed, I was looking for a useful Software Trading platform to be used in conjunction with the on-line Gold Circle program provided by RBC. The two I found interesting & am now trying out are Worden Brothers, Durham NC USA "TC2000" & Inovestor Inc "EVA" from Montreal. Will give you my assessment of both next month.

Q: My father has a GIC coming due and is thinking of principal protected notes to add more equity without the risk. Whould you recommend this over an Etf?

Q: Hi Team, I've noticed some people ask you "If you were to cover this company then what back of the napkin rating would you give it", I like it when you give us a rating, it makes it easier to understand where that company stand on your point of view, I find it easier that way, compared to trying to understand some of your answers and reading between the lines. Now this is only a suggestion, because I know you already give a great service, but if you could put that rating when possible, it would help me out a lot in understanding you answer. If this isn't possible, I'm also ok with it...keep up your great work, and thanks for being there for us novice investors.

Post this if you wish (up to you).

Q: ETF Short list: - - I have been wandering through considerable posts on ETF's here and in other areas online for some weeks now, and trying to formulate a clear short list of best in class ETF's, but more specifically, the BEST TIME/SCENARIO to move INTO and OUT of each one of them for income, growth and security of capital. There are so many market areas they cover and such diverse offerings that a concise summary would be very helpful. Does anyone have anything like this already that they would be willing to share? Thanks in advance.

Q: Hi Peter, I have set aside a downpayment for a future home purchase in the next 6-12 months, and rather than earning 1% in a 'high interest' savings account, what would you recommend I do with the cash? Obviously I would want this cash to be safe, but at the same time earn a higher return than simply parking it in a savings account. Thanks

Q: Peter,

I love your service! The one area that disappoints me is your unwillingness to indicate if the current stock price is good or bad. A great company may not currently make a great stock pick.

Could you not apply ypur "grading" method to the stock price?

As an example, CNR could be rated as an "A" company but have a "D" rated stock price. This would indicate that the stock price is ahead of the value in a very good company.

Thanks for listening.

Regards
John

Q: hi folks, thank again for your insite. my question is do u think the money market is a good investment with countries like china, indonesia, bangladesh.

Q: Happy Halloween!!
Further to Robbie's question about ETF's in place of mutual funds: you offered some suggestions but I am unclear as to whether they are meant to be either/or choices or "all of the above" in order to achieve balance/diversification. Could you elaborate?
Thanks!!
Mike

Q: I didn't follow model portfolio and now it is quite high.Would you still recommend getting in and set up as model portfolio?.Or i missed the boat?.

Q: For US tax withholding purposes, should I hold VFV in a TFSA or RRSP, or does it matter?

Thank you.

Q: I am trying to avoid the usurous mutual fund fees --Can you recommend a couple of good options for me ? Thanx

Q: Thanks for the great service you provide!

I am impressed with the simplicity of your rating system -- the A, B, Cs of investing, as it were, is a pleasure to adopt in choosing companies for investing.

I am interested in what criteria you use in order to give your ratings -- what distinguishes an A stock, for instance from a B+ or B-? I'm assuming it's a combination of P/E and debt loads and all sorts of wonderful fundamental things, but do you have a set criteria that breaks the companies into different categories?

(If that information is posted elsewhere on the site, I haven't found it, and would appreciate being pointed in that direction.)

I am very pleased I joined 5I research as it provides me with a wonderful opportunity to consider companies I never would have given a second look at, thanks to your system ratings.

Q: Even if we should not attempt to time the market, it is useful to know about a reasonable price entry point.
Will it be possible to add this information in your reports?

Q: Hey team, can you tell me what kind of indicators you look for in a market top? This market for me has become pretty scary so I decided to cash out on some companies such as AYA that could be caught big time in a downward movement.

Q: with regards to div paying stocks in a RRSP is it advisable to DRIP if available...what about non-RRSP?Thanks

Q: Good morning..currently rebalancing RRSP portfolio...currently own ARX,BTE,WCP and E representing 18%...was thinking of reducing ARX and adding TOU...is 18% to high in current market conditons?
Utility pipeline...BEP.UN,IPL,NPI..representing 15%...thinking of selling NPI to reduce allocation to 11.5%..is this allocation okay whith the current market...

sorry one more question...I have no exposure to healh..if wanted a 5% holding what would you recommend?

Thanks again!!

Q: I was wondering what your opinion is on using short term real return bond etfs as an inflation hedge? I was considering purchasing VTIPX on the US markets since there are no short term real return bonds in Canada.

Q: Re: XCS; a small cap index ETF, the performance has been less than stellar if one compared it to Mawer small cap fund (closed to new investors); is there another small cap index other than
IWO (US) that you could recommend to look at ?
Secondly, is there a seasonal time to be best at small to mid caps ? Thanks!

Q: I would like to purchase half positions in Stantec, Home Capital and Cineplex but I can't bring myself to pull the trigger because of recent positive share price appreciation. How can I justify entering the market at this particular point in time? I was clobbered in 09 ie sold out near the bottom and clobbered again recently with a position in VIX. Thank you.