Investment Q&A

Q: In my RRSP accounts I have built up a laddered GIC portfolio in addition to a variety of stocks and equity etfs, taking the income generated by the portfolio and adding to the ladder. Given the low rates for 5 yr GIC, under 2%, I’m thinking of taking this years income and purchasing CVD, which has a lower payout but more stability than the above mentioned Preferred share ETFs.
I may split my purchase between CVD and one of the above Preferred Share ETFs and am leaning towards ZPR as performance and MER of the 3 is similar but ZPR has a higher dividend payout.
In addition to better income, interest rates should be close to bottoming and if I stage my purchases over the next 3 months I will benefit from unit price appreciation when rates start going up and will have locked in a 5-6% return.
Your thoughts please.

Q: You are right when you say preferred shares are not bonds, they fall fast in a bad market.

Would it be wise to add a modest amount of ZPR or CPD during this period and take the dividend for a while? This would be in an RRSP

Q: Hello 5i
3 analysis requests per above : can you comment on these ETFs in regards to North American holdings overlap and geography overlap for the international exposure etfs (all are 1/2 to full positions). If you have replacement etf options please feel free to comment. Finally in regards to respective sector identification / allocation what would 5i recommend for the north american focused etfs (source the fund fact disclosure or simply enter as an index?) Thanks for the innovative hi level investment platform & your service.

Q: Would appreciate your opinion on ZPR vs HPR Preferred share ETFs.

Q: Hi 5i

I bought ZPR (9.60) a few years ago below $10, sold a year or so later for 11.70. With it sub 10 again I am looking to repeat. Do you think div will stay close to current amount? And am I correct that it has moved down in step with interest rates due to the rate resets? Will this lead to it moving up again when we are in a rising rate environment?

Thanks, Greg

Q: With the speculation that a recession may occur in the next year or so and given the current downward trend of interest rates, what are your views of buying/holding preferred share etfs like zpr and hpr ? Thank-you

Q: Hello 5i,
I am up 125% on Target (10,000) and down 25% (5,000)on ZPR. Should I sell ZPR and substitute it with something else that you can suggest and sell TGT. This to buy back in a month.
Would you suggest buying back TGT with the full amount gained or get back to the original amounts splitting the proceeds between your suggested replacement for ZPR and TGT?

Should I just keep everything as is, collect the dividends and watch TGT go up? I do not need the funds.
Thank you and please remove the appropriate amount of credits.

Q: I previously asked why ZPR has decreased lately with the trend for interest rates declining. ZHP the identical fund of US preferred shares is increasing with an increased trend of lower interest rates. Decreasing interest rate trends should increase bond and preferred shares yet the CDN version has not acted liked the US version. I can see no logical reason for these different trends?

Q: Hi there,

Just some follow up questions on these two etfs. Neither has done well over the last several years in terms of growth, so i suspect one buys these for income only. If so, wouldn't one just buy the one with highest dividend? if you had to pick only one preferred ETF which one would it be and if not one of these 2 which one and why?

Q: Could you recommend an etf that holds few or no resets. Greetings, Peter.

Q: With interest rates stable or downward sloping why would a preferred share fund be decreasing in stock value? This should normally increase the value of the preferred shares in the fund, would it not?

Q: Any specific reason for the continued drop in value in ZPR.

Thank you,

Bob

Q: I'm having a hard time understanding the difference between these two etfs. The yield is much higher on zpr and since this is for the income side of my portflio I am wondering if I should purchase it over cpd.

Q: For many years I had held individual perpetual preferred shares, which I gradually sold and replaced with ZPR about 3 years ago. It had a similar yield, was of course more diversified, and could be easily traded if need be. This seemed like a good move, but after some decent gains it is recently moving back towards my purchase price (not counting dividends). I am contemplating selling ZPR and replacing with individual rate-reset preferreds with a floor. My thinking is that the rate-reset feature should help hold up the price when interest rate are increasing, and the floor should do the same if rates are falling. Could you comment on this strategy, and list some the the pros and cons of the rate-resets with a floor. My preferred share holdings make up about 7-8% of my total portfolio, and I am an income oriented investor.
Thank-you

Q: Hello,
Can I make a simple assumption that ZPR seems to be following the general market up an down (below 200 day line and possibly forming base at around $10) and hence at todays' lower number may indicate a buying opportunity?
Cheers
Arzoo

Q: Why is this EFT so volatile ? Is it worth holding for the long term ? Thank you

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

Q: Preferred Shares

Upon reviewing the holdings of the four (4) largest preferred share etf, I have noticed the majority of preferred shares are issued by the banks, insurance companies, electrical utilities and pipeline companies. I am a holder of the common shares of the same companies (as they are stable long term dividend payers).
The first question I have is am I increasing my "company" risk by holding both common and preferred shares of the same companies? Should I continue to buy the common shares, which are paying very close to the available preferred share yield and gain long term from dividend increases.
The second question is of the four etf listed, which is your preferred etf. Are there other Canadian Dividend eft I should look at?

Thanks in advance for your excellent service.

Stephen

Q: Hello 5i...The preferred share space took a real hit from which it has not recovered. I am thinking of adding one of the above as part of my fixed income allocation but to my non registered account. All of my fixed income and GIC's are in my RSP. I am conservative age 68 and need 4-5% long term. The recent volatility however does concern me. I value your opinion ..thank you Gary

Q: Lately my capital investment in ZPR has been decreasing. This forms part of my income investment portfolio. I am thinking on making a switch. Which investments would you recommend for income with a little potential growth as a replacement.

Thank you,

Bob