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Investment Q&A

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Q: 5i
Being retired with~40 % in bond ETF`s as my fixed income and thus part of my relatively safe part of the portfolio , i was quite surprised when equities dropped so much today , that the bond ETF`s dropped considerably as well ie CBO , ZAG and XBB . They all dropped ~4% .
Can you help me to understand why bonds would drop so much under this scenario ? If investors are fleeing to safe havens such as treasuries and bonds and out of equities why do bond prices drop particularly as much as it did today ?
Thanks
Bill C.
Read Answer Asked by Bill on March 13, 2020
Q: Hi,

I don't know much about bonds, but am considering the fact that perhaps I should have some in my portfolio. It's hard enough for me to keep with with the few stocks I own and watch and I'm hoping you can provide a few simple 'set it and forget it' type ETFs that provide good bond exposure.

Cam.
Read Answer Asked by Cameron on March 11, 2020
Q: I am a long time subscriber and an avid reader of the Q&A. Even with all I have learned, I am still having a difficult time understanding how to invest the fixed income portion of my portfolio. I want fixed income to provide portfolio stability by protecting on the downside while offering the possibility of capital gains along with some income.

I am a buy and hold investor on the equity side and I am comfortable deciding when to sell a company. However, the fixed income side seems to demand a more active approach - or does it? For example, you have been suggesting that interest rates seem likely to decline in the coming months so that would favour long term bonds. But for stability, or as an offset in case I am wrong, should I also hold short term notes? Should my fixed income portion be split 1/3, 1/3, 1/3 among cash, short term and long term and just left at that or is it necessary to continually monitor and adjust these weightings? Or is there one fund that does all that already?

Appreciate your insight.

Paul F.
Read Answer Asked by Paul on March 02, 2020
Q: Hi,
There are slim pickings for the retail corporate bond investor at the moment. I found a five year Ford Motor Credit bond with a BBB rating paying an effective yield of 3.55%.

Do you think the risk/return on this bond is reasonable? I am hesitant to buy it because of the history of the auto industry during recessions and the current state of personal debt in Canada.

Thank you. Michael
Read Answer Asked by Michael on January 27, 2020
Q: I'm looking for a safe place for cash with a decent yield. This could be for several months or several years. How would you compare ZSH to PSA? Is one better than the other? With uncertainty over interest rates, do you have any recommendations for the fixed income portion of an investment portfolio?
Read Answer Asked by Jack on January 21, 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
Q: I start withdrawing from my RIF next year. At this point I have just under 6% in VSC, 5% in XBB, 2% in XHY and was thinking of adding some CBH for the longer term corporate bonds.

If you feel my thinking is correct what % limit would you set for CBH? I know there is more to my investments than what is listed here with BCE and ENB et al also held for their income stream but I want to get your thoughts.

Thank you,
Ron
Read Answer Asked by Ronald on December 02, 2019
Q: Hi,

In your answer to James you suggested the following bond ETFS: XBB, XLB, XSB, CBO and/or XHY. I'm very interested in this as I'm trying to increase fixed income exposure.

What percentage would you suggest in each of the total bond portfolio? Also, unless I am missing something, CBO and XSB both appear to be the same thing, so why the need to own both?
Read Answer Asked by Pamela on November 27, 2019
Q: Hi
I am looking to add a bond etf to my portfolio. I am looking for something with a reasonable yield, that is defensive with some possible growth opportunities. Could you recommend the one that fits that those criterion or if you have a better choice, I would appreciate it. Thanks
Read Answer Asked by Leonard on November 07, 2019
Q: Hello 5i team,
My portfolios are mostly stocks and with a possible recession coming next year, I would like to purchase bond ETFs for both my CDN and U.S. portfolios. At this point would you recommend long or short or ultra short ETFs? and could you suggest a couple of each ( CDN and U.S)? Thanks Carlo
Read Answer Asked by Carlo on October 31, 2019
Q: Within fixed income today, is it wise to move from longer term bonds into floating rate bonds...seems the longer bonds are beginning to slide while floating rates bonds are holding firm. both pay similar yields. thanks as always.
Read Answer Asked by Curtis on October 28, 2019
Q: Back in June 2011 we purchased Scotia Dividend Fund 6372205 no load @ 41.95 today it's at $68.80 for RESP for Granddaughter.Initial inv. 2,763.29 and today worth 4531.41.We will be visiting them next week.Usually receive div. in December.She has 2 years to go before graduating.Should we sell and buy bond fund XLB to make sure we don't lose any value that has built up.Tks
Read Answer Asked by Guy on October 25, 2019
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