Investment Q&A

Q: Back in 2020, I started a position in ZUQ BMO US High Quality ETF. I still have a copy from your ETF & Mutual Fund Update from 2020/21 about your ETF Madness Contest. XAW was the winner and it narrowly beat ZUQ in the semi finals. In it you said, “Overall, we would be comfortable with ZUQ taking an average investor’s entire US equity portfolio.” ZUQ beat ZSP in 5 year returns according to BMO’s ETF Comparison Tool, ZUQ 17.7% average return vs ZSP 16.2% average return. I’m building my portfolio and soon will build up ZUQ to a 50% position. Do you still feel that this ETF would still make you comfortable at a 50% position in an average investor’s entire US portfolio?

Q: I am looking at putting together a medium to high risk portfolio of ETF's to generate above average returns (above 9-12%) over a 5 to 10 year timeframe for a portion (5-10%) of my overall portfolio. Sector diversification is not a major consideration in this portfolio of ETF'S, more the long term growth. If I were to pick 4 or 5 what would you recommend from this list or if you have a better alternative please suggest that. I am looking to equal weight into each of the ETF's. Thanks in advance for your suggestion.

Q: I have partial positions in listed 10 ETFs - plus JPM Quality US Factor [JQUA] ETF.- did not come up on your list.
Your advice is requested on which ones to move to full positions now:
a) rank those to buy now and add others you like;
b) rank those to buy later when your price points realized
c) rank those that are could be sold.
Thank you

Q: I am a big fan of factor/smart beta investing, but I am having difficulty identifying Canadian made etfs with both adequate size and daily volume. Please suggest etfs sold in Canada to build a couch potato diversified portfolio covering a Canada, US and global geographic area. I am quite impressed with WXM and ZUQ. I am a senior with a conservative growth inkling. Please charge question credits approriately based on your time to provide a workable response. Thank you.

Q: Thanks for your previous response confirming these etfs cover major asset classes and geographies for an RSP with 5 years to retirement. Could you please suggest a couple of etf alternatives that could be added to provide a little more torque with a 5 year timeframe. A brief explanation for each would be appreciated. Thanks.

Q: With BAM's takeover of BPY I will have some cash in my RRSP to invest. I want to add to my position in the US market. I currently hold the above ETFs in my RRSP in fairly equal weightings and represents a total of 20% of my total investible assest. The cash from BPY would represent a half position relative to my other US holdings. I do not need to RRIF for another 8 years.
2 questions:
1. Can you recommend another ETF for the US market in CAD that might supplement my current holdings or simply add proportionally to my existing holdings.
2. I am a bit concerned about the S&P 500 and the recent addition of Tesla which is at a stratospheric valuation in addition to the FANG stocks which are also at high valuations. (I also have a position in FANG with ZQQ). Would a switch to EQL or similar ETF provide a better balance and take advantage of a more broad market recovery in 2021.
Thanks.

Q: If you were to start an resp now, would you consider these etfs as suitable or a combination thereof,or do you have alternatives? Thanx.

Q: The rise in stock prices of a few mega-caps (Apple, Facebook, Amazon, etc.) has distorted the concept of broad diversification through index investing (S&P 500). While the index rises, many index constituents have performed poorly.

Some ETF providers have created funds that hold a subset of the components of existing indices. Inclusion is based on their concept of company "quality". Presumably this eliminates poor performers and results in a "better" fund.
Examples are: ZUQ, SPHQ, QUAL, ZGQ, ZEQ.

Please comment on this idea of "quality" subsets of existing indexes. Do you consider this to be a useful investing strategy? Would you consider the examples listed to be preferable investments compared to the broader indices?

Thank you.
IslandJohn

Q: I am thinking of purchases of these 6 ETFs (or some of them). Would you see ZPAY, FCIQ, and FCUQ as being defensive? And back to the "where should I hold" issue: where would these 6 best be held for tax or other efficiencies: Cash account? RRSP? TFSA? Corporate account? Many thanks.

Q: Hi 5i
Hope you can help me. I've managed my and my wife's registered and unregistered accounts for a number of years and I'm satisfied with the results. Those accounts primarily hold equities and I spend quite a bit of time overseeing them and tweaking as I think necessary.
I've now been put in the position of acting as trustee of funds for two minors. The time frames the two trusts will run are 7 and 9 years respectively and the principal amount of each is approx 75K. I want to invest the funds but I don't want to put them in individual equities and manage them as actively as I do our personal accounts. I would prefer to put them into ETF's that I can keep an eye on monthly or quarterly and not worry too much about tweaking.
Being optimistic by nature I'm hoping to arrange to get it all for these two trusts - capital appreciation, income, sensible degree of risk, Canadian, US and international exposure, favourable tax treatment, etc.
There are an awful lot of ETF's out there and I really don't know how best to evaluate them to shake out a reasonable number to look into further - especially considering how difficult it can be to identify individual holdings to effectively avoid overlap and provide diversification.
With all that in mind, could I ask you to list 5 (or so) equity based ETF's for each of CDA, the US and internationally that you think might accomplish the goals I've listed, so that I can then look into those ones further and make some decisions about where to put these funds I'm charged with managing.
Also, if you do have any general or specific advice that you think might be useful to me in the situation I've described, I would certainly appreciate your including it in your answer.
Thanks very much and please deduct credits as you feel appropriate.
Peter

Q: i would like your opinion on these 3 US ETFs. Do you think DXU and ZUQ are too expensive right now to purchase? Can you recommend one or two US ETFs with long term growth potential?
thanks

Q: Hi, I am looking to invest a new half position in SLF or add to a half position in PBH. Would you favour one over the other today? I don’t mind risk, I favour growth, but am slightly light weight in financials.

Also, I currently hold VUN in my RRSP. After reading the ETF fund update, would you recommend switching to ZSP or ZUQ? I recognize the withholding tax advantage of the other two over VUN. Is that alone worth the switch?

Thank you.

Q: Hi Peter & 5i, Hope you are keeping safe. Is there any overlap with ZSP & ZUQ, is it okay to have both in a portfolio. Also what do you think of OGIG in a portfolio for the Tech sector. It has 65% in the USA, 20% in Hong Kong. Thanks for the great work.
Ivan

Q: Hi Peter, VCN and XAW are in one portfolio, VXC is in another. Would you add to these or is there a better choice considering the Canadian dollar or Covid? Thanks.

Q: Hi Peter. I own ZWH.U which is down about 26%. I had thought that the covered call strategy would have provided some shelter from the downdraft, but it appears that really isn't the case. Oh well. My question relates to going forward. Since the covered call strategy will likely limit future gains, what ETF would you suggest for ZWH.U's replacement in my US accounts? thanks, J

Q: I am looking to pair ETFs or stocks for growth and safety. What do you think about this idea and XMU [or ZLU] and ZUQ, for example. What portfolio percentage would you allocate to this strategy?

Q: Hi 5i,
Can I get your thoughts about any of these 3 ETF's from BMO for a buy and hold investor? Should one be concerned with the relatively low trading volumes? The general performance of all three ETFs look better than their underlying indexes.
The ETF's appear to rebalance/reconstitute semi-annually so my thinking is these might be good as core holdings for a long term investor since they are always suppose to hold the best quality stocks.

Here is the BMO summary of the product;
1. selects high ROE stocks
2. selects stocks with stable year over year earnings growth
3. selects stocks with low financial leverage
4. caps max. stock weighting at 5%

MER Holdings AUM AvgVol Description
ZUQ 0.34 126 330M 7,200 US High Quality
ZEQ 0.45 126 260M 6,400 Europe High Quality CAD Hedged
ZGQ 0.50 330 80M 2,500 All Country High Quality

Q: Hey I am considering adding ZUQ to my TFSA for growth to compliment some US dividend ETF's that I hold and ZIN to a non registered account for capital appreciation. Any concerns with either of these ETF's and this strategy for future growth?

Q: What do you think about replacing a combination of VGH and ZQQ with a single holding in ZUQ--you gotta love the sound of "high quality". thanks Gary

Q: I am looking for ETF similar to IHI US Medical Device in Canadian dollar and your thoughts on ZUQ Etf.

Thanks for the great job.