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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi Peter
I have been overweight stocks for some time, and while it may still a bit premature, for piece of mind I would like to increase my fixed income weighting to approx. 30%. My feeling is that over the next 2-3 years interest rates in the US will slowly trend higher, and likely even more slowly in Canada. With this in mind, my bias is to allocate towards shorter term corp bonds, REITS, and Preferred issues (recognizing that the latter two are more fixed income proxies more than true plays). For each of these sectors do you think I am best allocating exposure via ETF's (for example, VSC, ZRE and XPF), or do you think that there is a case to be made for buying best of breed individual issues in each class. Specifically in concerns with the ETF approach is that slightly higher rates over time may see a fall in the price of VSC negate all of the dividend benefit (whereas holding an individual bond to maturity will ensure I earn a return), while I understand that there may be inefficiencies within the Canadian Preferred market (pricing/liquidity) which mean that an ETF may not be the best approach here either. Your thoughts would be most welcome. Thanks.
Read Answer Asked by Shane on February 26, 2014
Q: Would you agree that all things being equal lack of diversification and realtors commissions means owning a REIT is a better way to play real estate than investing directly in rental properties? Bearing in mind the long term advantage of 5:1 mortgage leverage it seems that things are not equal and the advantage is currently with rental properties over a time horizon of twenty years or more .

Do you know any REITs in Canada or the US that employ the same kind of leverage? This would be especially useful when investing in the US market, as maintaning a property far away is highly stressful.
Read Answer Asked by Andrew on February 25, 2014
Q: It's almost two months since you gave an opinion on Twin Butte Energy TBE. What is your current take? It has a good dividend yielding 8.38%, which seems to be steady, and although I am down 18% on the share price, I am happy with the income. (Unless of course, you can recommend something else with an equally good dividend and a better chance of growth to recoup my losses!)
Read Answer Asked by John on February 20, 2014
Q: RON.PR.A got a bump today presumably because of Benj Gallander's recommendation last evening. It has a nice dividend but starts to float in March, 2016. Do you know the formula for setting the rate at that time and would you recommend this particular preferred share?
Read Answer Asked by richard on February 19, 2014
Q: I would appreciate your views on preferred
ETFs in general and US PFF and Canadian ZPR in particular
Read Answer Asked by Behrouz on February 19, 2014
Q: Hello Peter and 5i staff,
My wife and I are retired with sufficient pension income to live on with no debt. Our portfolio ( 5 accounts total ) leans toward dividends and I'm not really sure we need (fixed) income in our portfolio.
Our financial advisor has convinced me to buy several issues of convertible debentures in our RSP accounts which I am not totally comfortable with. The issue that really stands out is Atlantic Power 6% due Dec 2019 currently trading?? at $58. Will we ever see the return of our investment or should we attempt to extricate ourselves from this, take the loss, and move on?
Thanks for any suggestions,
Larry
Read Answer Asked by Larry on February 12, 2014
Q: Hi, given the choice between retractable preferred shares and perpetual preferred shares, what would be the better option, in like of today's potentially higher interest rate environment going forward? Thanks, your Q & A section is my must read daily!
Read Answer Asked by ANDY on February 09, 2014
Q: Good Morning! Given the recent issues EIF is facing, would you consider the new EIF convertible debenture with a 6% coupon a safe investement if held to maturity and if so would such investment be best in a TFSA, RRSP or outside. Do you see the debenture possibly sinking bellow par in the near future and would it be better to wait and possibly buy it later at a more favorable valuation.

Thanks for your advice.
Joseph
Read Answer Asked by Joseph on February 04, 2014
Q: You mentioned previously Exchange Income (EIF) convertible debentures as a good buy for in a fixed income portfolio. Did you have any one of the outstanding (or new issue) in mind or one that would fit into my ladder of maturities?
Read Answer Asked by Greg on January 31, 2014
Q: Hi Peter and team, thanks for all your great advise in 2013. I'm looking at several converts to spruce up my fixed income side. I would appreciate your thoughts or ranking of the following debentures: afn.db.a, are.db.b, ahf.db, eif.db.e, fr.db.h, mrt.db.a, weq.db.c, di.db.c and nwh.db.
I'm 70 and plan to hold to maturity and would represent about 10% of my fixed income.

thanks in advance
Read Answer Asked by Cyril on January 22, 2014
Q: At age 72 the most recent recommendation for income (bonds) in a portfolio is age 72x72= 52%. Would you agree that convertible bonds (less than a 5 year term) should be a significant portion of the total. What % amount would you recommend and could you please provide a few names to include.
Thanks for providing such a necessary service to the small retail investor.
Read Answer Asked by Warren on January 10, 2014
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