skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Just read the piece on negative interest rates and this question occurred to me. If monetary authorities control interest rates what leverage do bond the "bond vigilantes" have as long as a country doesn't borrow in a foreign currency?
Also, why is it that if rates rise from 1% to3% on a 10 year T-bond you loose 16% but if they rise from -1% to 1% you lose 20%? (see Cullen Roche July 26/19)
Not sure if this is your area of expertise but other members might know.
Thanks
Mike
Read Answer Asked by michael on July 31, 2019
Q: I have received notice that my TD.PF.B preferred shares are being reset & I have the option to convert these series 3 preferred shares to series 4 preferred shares. From my understanding of the TD.PF.B series 3 prospectus the series 3 interest rate will be fixed for the next 5 years based on the present Canadian Government 5 year bond rate plus 2.27%. While the series 4 next 5 years interest rate will be calculated every 3 months based on the Canadian Government 3 month Treasury Bill plus 2.27%. My question is, which would you choose, 1) series 3 which will have an approximate 3.8% interest rate for the next 5 years OR 2) series 4 which have the possibility of having a greater or maybe less interest rate over the next 5 years OR 3) sell the shares & purchase shares that have a better chance of future growth. I bought the preferred shares when issued at $25 per shares & am presently underwater by 10% when the 5 years of dividends received are added to today’s market prices. I do not need the dividend as income & the shares are in a registered account. Thanks … Cal

Read Answer Asked by cal on July 12, 2019
Q: Hello,

After reading the article on 5i 'Investment Model Portfolios' - May 6, 2019 I had a question regarding this post in relation to my current equity portfolio.

My portfolio analytics indicates that I should be allocating 25% to Canadian equity, which seems high to me. This article mentions that the big providers/firms allocate about 31-32% to Canadian equities, which I found a bit surprising, given Canada is only about 3-4% of the global equity market. The article does note that for Canadians, having a home country bias can make sense (dividend tax credit and tax reasons), which makes sense.

My question is this. For the average Canadian investor, does 25% of one's equity exposure to Canada seem high (even given the added benefits noted above)? I am guessing there is no 'perfect' answer to this question however, I look at this as making a big bet on oil and financials. If Canada is 3-4% of the global equity market, could one not argue that even doubling Canadian exposure, say up to approximately 10% of equity portfolio, be a reasonable allocation?

Thanks for your insights on this.
Read Answer Asked by Aaron on June 28, 2019
Q: Hi there, I've been invested in TSX listed stocks for the last few years. I recently transferred over a small amount (~2%) of my portfolio into USD thinking of buying Slack. This would be my only US holding. My question is, what would be your favourite listed US stock at the current moment if I were not to buy Slack? I am an investor who mainly follows your BE Portfolio with a tilt towards growth (ie: swapped a handful of names and replaced them with GSY, SHOP, LSPD etc).

Also, the market looks like it's been running up lately. Do you think we're possibly going to dip in double digits later this year (similar to last year's dip)? I've been hearing that earnings haven't been that great so far.

Thanks!
Read Answer Asked by Michael on June 24, 2019
Q: In assessing my portfolio weightings, I am wondering if most companies in a given sector should largely be expected to act similarly to events or will the across the board reaction differ from sector to sector? I would expect, for example, to see most REITs drop if interest rates were to rise or most oil companies not do well if the price of oil drops.

But I wonder how "homogeneous" the tech sector is. I currently hold full positions of KXS, SHOP, GIB and CSU. To me, these are all rather different kinds of companies. For example, GIB has a lot of recurring sticky government business, SHOP is growing in the retail sector and KXS is a smaller company selling to worldwide industrial companies. In your experience, would all these stocks be likely to drop (at least to varying degrees) in a tech sell off or are investors a bit more discerning than that? The reason for my question is to help me decide if being a bit overweight in tech is as risky as being overweight in utilities might be as I would expect every company to decline by similar amounts if rates rose.

I would like to add Lightspeed to my holdings but not at the risk of increasing my risk in my overall portfolio.

Appreciate your insight.

Paul F.
Read Answer Asked by Paul on June 24, 2019
Looking for more? Sign up for a FREE 14 day trial! No credit card required

We invite you to sign up for a 14 day free trial of 5i Research!
Experience all the benefits and tools we have to offer; stock research, model portfolios, Q&A with our experts, and so much more. Join a community of like-minded investors today!