Investment Q&A

Q: Hi,
I'm looking at sectors, both Cdn and US as I have a lot of cash to redeploy as the market gets stronger, hopefully over the coming weeks or months. REITs are something I've been considering and I'm wondering about the effects of rising interest rates on them in general. Are REITs that are based on residential rentals better than REITs based on commercial properties? What about REITs for industrial properties vs commercial? Or would it be best to just steer clear of this sector until interest rates stop rising? I am retired and count on my investments to generate income, but am also lucky enough to be able to handle risk and I am very adamant about maintaining stops to protect capital and profits.
As always, your thoughts are most welcome!
Dawn

Q: hi folks:

i was always led to believe that reits are a group that falls into 'interest sensitive' assets
and they would get hammered in an increasing interest rate environment
hasn't happened and many are at all time highs
is this because the hope that inflation will raise rents/values to offset increased interest payments?
or because raising rates indicate an improving economy?
or because rates are increasing very slowly
or because we feel the rate increases are finished?
or what?

thx

Q: Some company valuations are based on Net Asset Value (NAV) while others are based on Book Value (BV). What is the difference between NAV and BV per share?

Q: Hi Guys

What are your top reits at this time. Given a slow interest increase

Thanks Mike B

Q: Good evening,

Multi-part question.

Had just finished reading ‘The Little Book of common sense Investing’, decide to make the switch, and am beginning to plan my transition to CPD, ZAG, VFV, XEF, VCN, VEE, and XRE, when I come across the new Vanguard products, of which VBAL to me seems the most interesting.

I see the pros of this ETF as being straightforward and dropping from 7 commission fees (re-balancing myself), vs just one trade a year to add money (portfolio currently around $26,000).

Cons: no preferreds or real estate. Less control (e.g they decide the asset allocations).

Do you have an opinion on this ETF?

Not sure the yield on VBAL but am guessing 2.5-3% maybe? Any idea?

Also, If I go ahead with VBAL would you give it some time to settle down (trading looks a little erratic), or is that volatility purely a product of price changes of its holdings already?

Thanks!

Q: Hello Peter and team,
Further to my previous question on buying these REITS:
AAR.UN
WIR.UN
RUF.UN
NVU.UN
DRG.UN
I'd like to put them in my non-registered account but would that be tax efficient? Are there any on this list that would be better in an RRSP? Thank you.

Q: Is there one REIT that would be affected less by rate increases or a market correction and do REITS qualify under the dividend tax credit.Thank you

Q: I am 53 years old. I have worked 31 years in my Federal Government job, making $100,000 + a year. I will have a defined benefit pension. Currently, I have a $200,000 in an RRSP, self directed,with 100% in equity divided 60/40 between CANADIAN AND US dollar investment. I am planning to retire in 2-3 years.

With this in mind, I want to rebalance my portfolio to make it more conservative. What ETF funds/percent allocations do you recommend to build the fixed income/bond portion of my portfolio both on the Canadian and US side of the house? What funds should I buy (Canadian and US) and how much should I buy of each?

Thanks in advance.

Q: Hi 5i team, I'm looking to add one more name in the real estate sector. I currently have BTB Reit, Artis Reit and the etf XRE. Could you please suggest a few ideas. What are your favourite reits at this time and would you replace any of my current holdings? Thanks. Mario.

Q: American REITS are regarded as core holdings of a US income portfolio because of their growing dividend payments. (O, WPC, VTR etc.)
My question is, why don't most Canadian REITS (AAR.UN, AX.UN, HOT.UN, etc.) annually increase their dividends like the US REITS? Most Canadian REITS have been paying the same dividend for years.

Q: Hi 5i,
Just a comment on Nino’s question and your answer about the choice between paying up for a REIT ETF like ZRE/XRE versus holding 8-12 individual REITs. My choice has been the latter and I have been happy with it. Your answer suggested that rebalancing 12 holdings annually would cost $120 at $10 a pop. My experience has been that the reality is much less than that. Because the REITs tend to move as a group more than their individual movements relative to the group, in holding 8-12 decent quality REITs I haven’t had to do more than 2 or 3 rebalancing transactions in any given year. Except for a couple of extraordinary years my REITs have really been low maintenance holdings. Cheers!

Q: My wife and I, retirees, are considering adding a real estate ETF to our portfolio, to hold in TFSAs. You commented that ZRE has an equal weighting in REITS and is more diversified than XRE (that has a 30% weighting in RioCan and H&R). ZRE has a slightly higher distribution % that appeals. My question is on safety of capital. I perceive Rio Can and H&R to be high quality REITs versus say an Artis or Cominar that have a higher weighting in XRE. Which of the two ETFs would you consider safer, or is it a coin toss between the two? Thank you for your comments

Q: Hello 5i:
could you give me your opinion of the CEF RFI (Cohen and Steers Total Return Real Estate Fund) for a conservative investor please?
thanks
Paul L

Q: In the REIT sector I currently own ZRE & XRE. I am moving my REITS to my RRSP due to the tax implications ( ie no Dividend Tax Credit ). 1)
1) What are you favourite investments in this sector ?
2) Do you see a need to own individual REITS as opposed to an ETF?

Thank you.

Paul

Q: Since income trusts are taxed as income (highest tax rate), would it be a good strategy to hold them in a TFSA? and is there an ETF for income trusts?

Q: Hello 5i team,

Which ETF is best suited for a long term hold (30 yrs) in a TFSA that will be DRIPPED and contributed to annually. I like the equal weight positions of ZRE but with a higher MER of .61% over the long term it seems the fee's could really start corroding my capital. VRE is the cheapest but also has the smallest yield and is market cap weighted. Is it possible BMO could lower these fee's in the future to stay competitive? I would eventually like to draw income from the holding.

Always appreciate the you insights

Q: I have no REITS in my portfolio and since I do my own taxes I like to keep things simple and did read that it better to hold REITS in an RRSP account if you don't want to be bother with return on capital, etc. I am wondering if I have no room in my RRSP would it be okay to put in my TFSA? I am looking at ZRE and XRE which one you prefer and CSH.UN or is just one index fund good enough.

Thanks
Dolores

Q: Good Morning 5I team, I have been building a cash position and would like your opinion on these stocks/etf to add to a mostly buy and hold dividend generating portfolio.

Q: I currently hold BPY (up 50% over cost) and H&R in my portfolio 4% and 3% respectively.
I am considering swapping BPY for BEP for the additional income. Your thoughts?

I also plan to crystallize my capital losses and purchase the following ETFs:
Non registered:
ZPW – US Put Write
ZWE – Europe Covered Call hedged to CAD.
ZWH – US covered call
CPD – CAD preferred
XRE – Capped REIT

Registered (RRIF):
PGX:US – Preferred.

Each would constitute 2% - 3% of my portfolio. Diversification is my intention, but risk and surety of income is the primary consideration in all of the above noted.

Again, your thoughts.

Thank you for considering my questions

Gail

Q: BMO US Put Write(ZPW)
BMO Europe High Dividend Covered Call Hedged to CAD(ZWE)
PowerShares Preferred Portfolio(PGX:US)
BMO Laddered Preferred Share Index(ZPR)
BMO US High Dividend Covered Call(ZWH)
BMO Equal Weight REITs Index(ZRE)
iShares S&P/TSX Canadian Preferred Share Index(CPD)
iShares S&P/TSX Capped REIT Index(XRE)
BMO Covered Call Dow Jones Industrial Average Hedged CAD(ZWA)
iShares Convertible Bond Index(CVD)
BMO Canadian Dividend(ZDV)
Above are ranked as to yield - high to low. Can you rank as to risk - high to low?
Thank you for considering my question
G. Reynolds