Investment Q&A

Q: I sold my business and started investing last year. I am trying to build balanced portfolio and struggling with the bond portion. I don't want to buy individual bonds and was looking into something like HBB for unregistered portfolio and VAB and XSB for registered. Yet, I am very uneasy about buying bond ETFs in the near-zero interest rate environment - the rates can only go up (unless we end-up with negative rates here) and, obviously, bond ETFs will be going in the opposite direction. I was thinking about VSC but almost 35% of it are junk bonds, so no comfort there. With PSA now paying only 0.65%, I am really out of choices for the fixed income portion of my portfolio. Any suggestions (both for CDN and USD positions)? My time horizon is 10 years and I want something safe and tax efficient.

Q: I like the Vanguard family of ETFs and am looking for safe income in these uncertain times. I am aware of VBAL and VGRO, but could you suggest other Vanguard offerings that focus on earning investors relatively safe distributions. If there are other companies that offer superior ETFs for income I would appreciate your suggestions.

Q: Hi, for my fixed income portion of my portfolio, I am contemplating either VAB or just buying a GIC that has 2.65% interest. (Or both?) Medium term investment of about 10 years. Is it a good idea to get into bonds right now?

Q: Reviewing the issue of asset allocation and I must say that I have been avoiding bonds. The ETF approach interests me, but when to by is a mystery, re; haven"t seen bond gains lately. Appreciate any clarification you can provide & thanks!

Q: In this ultra low interest rate environment, where it is maybe more likely for rates to climb than to fall, do you think the best place for the income component of a portfolio, aside from GICs, is in a bond ETF like VAB or a savings ETF like PSA?

Thanks.

Q: My adult son (Canadian citizen/resident) is in his early 30's, has maxed out his RSP and TFSA (he holds high-quality individual securities within these accounts, which have done well over the years), and he is lucky to have a high-paying job in which he has surplus funds (Canadian dollars) that he can invest, within a non-registered account, approx. $20k to $25k per month. The goal is long-term growth, aggressive (80% equities), with the possibility that he may need some of the funds within the next 3-5 years, to join a group practice (capital contribution toward partnership). My advice to him is that he purchase each month among the five following ETFs (% as indicated below), rebalancing as he makes new monthly contributions:
20% VAB = Vanguard Canadian Aggregate Bond Index ETF;
20% ZCN = BMO S&P/TSX Capped Composite Index ETF;
25% VFV = Vanguard S&P 500;
25% TPE = TD International Equity Index ETF;
10% ZEM = BMO MSCI Emerging Markets Index ETF.
What do you think of these 5 particular funds and the overall allocation? For his situation, are there different ETFs you might suggest we look at that would be better-suited for his situation? Thank you.

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

Q: Hi 5i team,
Group A: XCV 35%, VVL 35%, VEE 10%, VAB 20%
Group B: VSB 15%, ZPS 15%, XSB 15%, XIU 30%, VCE 20%, XAW 5%
For short term 2-3 years, which group would you pick? or any better idea?

Q: How can I make XTR, CDZ, IGRO, CLF & VAB tax efficient? Which should be held in registered accounts and which in non registered accounts and why?
Thanks
F

Q: For the purpose of simplicity I would like your opinion on these 3 ETF portfolios.
My idea is to rebalance 1 / year.
non registered: VFV 30% VDU 30% VAB 40%
TFSA: VFV 50% VDU 50%
RRSP: VOO 30% VIG 30% IWO 30% VAB 10%
Any suggestions as to changing the etf's used for better tax purposes ?
Are there better etf's that you would recommend using?
Thanks for your help .
Victoria

Q: Hello,
I own both of these ETF's in my RRSP. The position in VAB is higher by 3 fold as compared to XLB.
I will be adding to one of these with my 2019 contribution. Given the outlook for rates (I lean towards the notion that they have most likely peaked), I was going to increase my position in XLB. Would you agree with this decision or would you favor VAB? As background, I am retiring in 13 years if that helps.
Secondly, do you view preferred shares and corporate bonds issued by public companies comparable in terms of asset categories? Both respond for the most part to movements in interest rates as best I can tell but would like to get your opinion please.

Thanks,

Dan

Q: Hello,

I am currently looking to increase my fixed income exposure by $70,000. I currently hold the above 4 Fixed income ETF's. Each one represents less than 5% of my overall portfolio. I am looking for growth. Your suggestions would be much appreciated.
Thanks.

Q: A lot of research and writing has addressed the reality that it is *very* hard for an active fund manager/stock picker to beat the indices on an after-fee basis.

But what about the bond market? Does 5i know of a body of research/evidence that explores whether or not over time, an active bond trader/manager could beat a passive bond index fund such as XBB/VAB/ZAG? Should I go passive or active with my fixed income allocation? Which actively managed fixed income ETFs do you like, if any?

Thank you.

Q: I own all of the above in roughly equal weights in my TFSA. I am attempting to replicate your Balanced Equity Portfolio. I am also trying to get more defensive. I think I am overweight in the Info Tech sector. I am looking at a 5 year hold. I have cash to buy another position. What would your advice be - hold the cash or make a purchase. If purchase what would be your recommendation for defensive position?

Thanks for your help.

Q: Hi 5I,

Could you please rate the following bond ETFs.
VAB, ZAG, XBB.
I'm thinking about XBB because I can trade it for free on my itrade account.

Thanks.
Steve

Q: I own both ZAG and VAB in equal amounts, are they similar enough that I should own just one?
I am retired and follow both the Income portfolio and Conservative ETF portfolio fairly closely.

Q: I have a question about fixed income ETFs and the bond market. Is this the time to be putting large sums of money into fixed income ETFs like ZAG, VAB and ZCM? What risk do these ETFs pose in a rising interest rate environment? Should one even be concerned with the price fluctuations over a month, 6 months or a year?

Q: I have MFT as my fixed income holding. I have noticed that it is dropping and at the same time VAB is rising. What would cause this to happen and is it time to swap to VAB or have both in my portfolio?
Thanks and have a great holiday!

Q: Greetings 5i,

My question is twofold, so please deduct two credits if you see fit. I have some cash to deploy into the bond portion of my fixed income allocation, and would like your advice about how to proceed. Currently, I have VAB.TO and AGG for broad based bond market exposure, and XRB.TO for inflation linked bonds. To this, I am considering adding an ETF strictly devoted to Canadian government bonds in an attempt to add increased long-term safety (I am becoming a little skittish of corporate bonds).

This addition would be a very long-term hold (likely 20 years or more), and would bring my bond allocation to roughly 15% of my total portfolio (the majority of my fixed income investments are comprised of GIC ladders).

I am 37 years old, debt free, and fairly conservative in my risk tolerance. My investments are solely for the purpose of providing for my retirement, and I will have no need of their funds for the foreseeable future.

My research has led me to either an overarching fund such as XGB.TO or VGV.TO, or to one with laddered maturities like CLF.TO or CLG.TO. Given my situation and style, do you feel as if the addition of a Canadian government bond ETF makes sense for my portfolio (as opposed to simply adding to VAB and AGG)? Moreover, if you do approve of said addition, which of the aforementioned funds would you consider to be the most beneficial?

Thank you.

Q: I am retired and have significant positions in vsb and vab and both are valued less today than a couple of years ago.
I was thinking to sell one or both and purchase xhb and /or xcb and bep.un and/or ala.
I look forward to your comments. Thank-you