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Investment Q&A

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Q: Further to my earlier question about ZST and HFR, I don't think you have addressed the issue. The l0yr average total return for HFR is practically 25% more than for that for ZST. (as per your references). They are both ultra-short bond funds but their behaviour is vastly different. Why?
Read Answer Asked by richard on March 10, 2021
Q: The etfs ZST and HFR are both classified as ultra-short term bond funds. HFR has an active designation and a slightly higher MER (0.47% vs 0.16%) but their long term behaviours are markedly different. Over 10 years, ZST has lost ~15% of its value whereas HFR has remained flat. In the covid-spring of 2020, HFR briefly lost 20% of its value (now regained) but ZST hardly moved. Do you have any idea what accounts for this different behaviour?
Read Answer Asked by richard on March 08, 2021
Q: Hi,

I am retired without pension and reliant on income from my investments. I do not want to exceed 55% of my portfolio in equities and thus am left with a sizable amount to invest in fixed income. I am concerned that bond ETF's are returning too low a yield to justify the risk of losing invested capital as interest rates rise. I have considerable GIC's(laddered terms), some ZCS and too much(20%) of my portfolio in Cash. I have been looking at HFR as an alternative for my cash/GIC's and would like your opinion if you think this represents diversification and yield improvement over the GIC's & cash while reducing the risk of capital losses?

And BTW - thanks for this service. It is great value.
Read Answer Asked by Morgan on March 08, 2021
Q: Good morning team,
A few years ago I purchased ZAG as my bond portfolio for a long-term hold. It did will rising to $17.15, but as interest rates rose and it declined to my purchase price of $16.40, and given that I am over 70 years old, I sold out to preserve capital. I am looking for an alternative, safer place to put the fixed income portion of my portfolio. GICs and money market funds offer weak returns. I am looking at ZST (and ZUS for $US). Do you think these are a good places to go for safety of capital and rising return assuming interest rates continue to go up?
Read Answer Asked by Ken on March 05, 2021
Q: Given current markets and in the near term, I'm considering a 1/3 position in Equities, Fixed Income and Cash. Are these levels reasonable and what is your view of the above ETF's making up my fixed income allocation? You guys are awesome, thanks for your help.
Read Answer Asked by Curtis on February 17, 2021
Q: With a Democrat Senate, higher government spending, rising inflation and an expanding 10 yr yield, what would be your fixed income allocation for the next five years? Do any of the above choices make sense? Thanks.
Read Answer Asked by Curtis on January 08, 2021
Q: Hi 5i research team - Can I have your opinion on the ZCM, ZCS, HFR ETFs?
I am looking for ETFs in the bonds category that do not fall much if the market tumbles (relatively safe) and at the same time pays a good interest compared to money market funds. I dont have any in the US market.
Any other ETFs you can think of in the CAD and US markets?
Thanks for your input!
Read Answer Asked by Ahmed on December 23, 2020
Q: Hello 5i Team. My question relates to the dividend on HFR. My plan is to use this ETF as a cash savings fund in hopefully a tax efficient manner. As such, can you confirm or comment on the following: from the Horizon web site (T3 Tax Distribution 2019) it lists the dividend as 93% "other income" and 7% as "foreign income". Can one assume that other income would be taxed as interest income by the CRA? If my assumption is correct, what other ETF options might one look that combines safety and tax efficiency? Many thanks. Steve
Read Answer Asked by Stephen on October 13, 2020
Q: What is your opinion on using VCIP as a 'slightly riskier than cash' investment vehicle for a holding period of 6-12 months? It is obviously riskier than HISAs/GICs/PSA, but do you think it is riskier than XSB/VSB/HFR? There is an equity component to VCIP, but given its greater diversification compared to XSB/VSB/HFR, I wonder if, paradoxically, it might actually be 'safer'. I note that when the pandemic hit, even VSB/HFR fell quite precipitously. Would you advocate a mix of VCIP/VSB/HFR instead? If so, how would you weight the three? Thank you.
Read Answer Asked by Walter on August 28, 2020
Q: I would like to park some cash, with the eventual purchase of a residence and am interested in more than GIC's and I understand that this will entail more risk, though less than equity risk. What do you think of MFT, XHY, PYF, PSA, HFR and PMIF and would you split them in equal percentages?
Thanks for your service
Read Answer Asked by Ozzie on August 21, 2020
Q: ..likely a dumb question but if a company running an ETF finds itself in trouble for some reason and goes bankrupt, or is put out of business for some other reason, what happens to the unit holders? overall, do you see the ETF space as a safe place to invest in and which management companies would you try and stick with....ishares, BMO, Horizon for example. thanks.
Read Answer Asked by Curtis on July 24, 2020
Q: Hi,
I'm trying to create a well balanced bond fund for that portion of my portfolio and have come up with this: HFR-T, CBO-T, CLF-T, TLT, XBB-T, CVD-T, SHY, FLOT, IVOL, BNDX, VSG-T
I guess I should have something that will generate monthly income as well? If I am overdoing this, please let me know...it seems like a lot of holdings. Is there a better way? A mutual fund?
Thanks.
Read Answer Asked by Gregory on May 13, 2020
Q: Considering a 5 year time frame, what would be your allocation toward cdn oil (xeg), cdn ag (ntr), utilities (zwu), fixed income (hfr) and US (zwa & xqq). Above average risk tolerance seeking yield and capital gain. Are there any other suggestions....LSPD would also be a holding. thanks.
Read Answer Asked by Curtis on April 09, 2020
Q: If I believe that there will debt problems before this is over , does one want to continue to hold HFR. I have held it for a couple of years but would sell it if things go down to add to stocks I like. A couple of weeks ago it went way down when market crashed. I read your answer to stay put as things were a little crazy in bond market. Is it the worry of the bond holders that the companies will go under and in fact this is not a real safe holding right now as I see 1|2 of it's holdings are BBB?
Read Answer Asked by Geoff on April 09, 2020
Q: I Have held these bond etfs for a long time and they are down considerably. (-16 & -30% -9.00 % -5.16%)and still counting

My question is :
Do I have any reasonable reasonable expectation of ever recovering the capital if I hold them ?
Or I am reasonably safe in selling them and putting what is left in a better place ?


Read Answer Asked by Leonard on March 20, 2020
Q: Looking to increase my fixed income exposure. Currently hold CBO, XBB, and CPD (preferreds). Thinking of adding XHY in addition to these, would you recommend additional ETF's in this space to help diversify?
Read Answer Asked by Patrick on December 05, 2019
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