Investment Q&A

Q: Another question regarding Martin Pelletier's Financial Post article about using oil to hedge against possible serious geopolitical events:

Would HUC work in this scenario? Please suggest at least three other Canadian-listed oil ETFs that could also work.

Thanks.

Q: Hi Peter, Ryan, and 5i Team,

Do you have a recent opinion of HUC? I'm thinking of it as a way to use dividends from our other holdings to periodically buy shares, as we can buy and sell HUC at no cost with iTrade. Being underweight in the energy sector, holding only ENB and PKI, I'm thinking that it's a good way to "dip our toes" into this commodity ETF. I do understand that HUC can be volatile, and has relatively high fees, but as a managed ETF, its MER doesn't seem to me to be excessive.

Your thoughts please, and thanks in advance.

Q: Please recommend some CAD etfs to play commodities. Is there one that covers a broad selection?

Q: Can you comment about all-commodity etfs such as PDBC and can you recommend one or two? Any based in Canada? Thanks Bill

Q: I’d like to dip my toe into doing a bit of technical trading. Are there signals that you prefer to use, and is there a specific kind of security (maybe an example) that this type of trading might work better on? Also, would this work for ETFs? I’ve been watching VGG using the MACD but I don’t think it’s a good candidate since it tends to trade in a narrow band and the signal seems to be too late getting in and out.

Thanks.

Q: About investing in oil directly, here is some information members should know. Please correct me if I am wrong: Although Horizon ETF "HUC.TO" is less liquid than "USO", it has a an advantage over it in this environment: It holds the December contract, not the next 2 months contracts. In other words, USO bets on oil in the short term, and HUC.TO bets on oil in 7 months.

From Horizon: "HUC’s unique methodology is designed to provide the best possible exposure to the commodity. This is done by gaining exposure to the winter months (December) contract of each year, which is often the most liquid, to eliminate the monthly futures contract roll which often creates negative roll yield. Because the oil market is most typically in a state of contango (upward sloping curve), the process of providing investors exposure to the near- month contract 12 times per year creates a constantly changing underlying investment which can prevent the ETF from accurately tracking the commodity. HUC invests only in the December contract and executes its underlying exposure roll once per year, each June."

Q: Instead of buying energy companies, which have bankrupcy risk, for those of us with little to no weighting on the sector, what do you think of buying oil directly with Horizon's ETF?

Q: About Tak's question on how to play oil, I have something to add. If you want to buy it with canadian dollars, one option is Horizon's non-leverage ETF $HUC. The volume it not great but O.K. Free to buy/sell that ETF on iTrade by the way. That's been my favorite vehicle because of it. Hope that helps.