Investment Q&A

Q: My question is about US/Cdn exchange rates. If I go to my bank as I understand it, I pay 2.5% on top of the exchange rate when both buying or selling U.S. dollars (I do pay less than 2.5% on my online brokerage account, though). This 2.5% fee results in a different final exchange rate depending on whether I am buying or selling U.S. dollars.

So my first question is, in an etf like VGG which is denominated in Cdn dollars but invests in U.S equities, when they apply the exchange rate to show the unit value in CDN does it include this 2.5% fee? Or is this 2.5% fee not applied?

My next question is related to the first one. You recently answered a question describing an (apparently) cheaper way to convert dollars between US and Can. As I understood it, if you want to convert USD to CDN, buy a non-volatile Canadian stock that trades on a US exchange with your USD, then phone your online broker and ask them to "journal" the stock to the Canadian exchange, and once they do that you can sell it for CDN. So the question is, does this avoid the 2.5% fee? (I would think it must, otherwise why not just go to the bank and change your money.)

Thank you.

Q: I sold my K-Bro linen several years ago because I got nervous when they expanded --- a bit too much too quick I thought. But recent financial results seem OK. This should be a solid long term business.

Can you comment on my observations and more importantly on the quality of the management and board ?

Q: Peter; Both smu.un and dir.un reported, I thought, really good earnings but both dropped on higher than usual volume. Am I missing something here ? Thanks. Rod

Q: There are plenty of forecasts telling us that bond yields are declining and may go to zero.
If they continue to decline , what does this mean and how can an investor take advantage of this. Your Asset Allocator tells me I need to move $500,000 into fixed income to balance my portfolio, which is predominantly equities.
Do I go to a bond fund , or actual bonds? If so what would you recommend? If bonds what type and term? I will hold for min 5 - 10 years.

Thanks and take as many credits as you wish.

Q: Can you tell me the breakdown of the publicly traded Bam. subs that make up the % of Revenue and profits of the parent.

Q: I note that a number of Alberta based companies, especially the oil and gas companies, are reporting better profits in part because of the reduction in the Alberta corporate tax rate that came into effect on July 1, 2019. As the earnings period now being reported is for the quarter ended June 30, how do the companies already get a tax benefit? I don't think the rate reduction wqs retroactive.

Q: Peter; Is there a CAD etf that’s tracks the long end of the US bond market - and if no what would be a US etf that does it ? Thanks. Rod

Q: I am thinking of putting some money in gold and would like to get your thoughts on if I should put the money in gold etfs or stocks in gold producers. Your thoughts on this would be appreciated. Also would you please recommend some names in both gold etfs and gold producers.
Cheers,

Q: Hi , Please can I have the updated short positions on Exchange Income. Positions may get interesting after hitting a 32 month high . thanks man

Q: David Rosenberg is once again talking of a doomsday secenario. Whether he is right or wrong, I have a feeling a recession is due and it is all about timing. I know you have previously fielded questions regarding taking a defensive stance for protection against a recession but I am wondering where long trem bonds fit into this story. Is an investment in Long Term Bonds a good strategy in this case and if so, how does one make such an investment and what percentage of a balanced portfolio would you dedicate to long term bonds?

Q: FYI. 2 articles in The Van Sun on RAY.A. E Boyko,its ceo has a vision to become the biggest music streaming co. in the world.He has 2 main policy concerns.Our government should have a policy of buying local.He dislikes Finance Minister's plan to tax stock options more heavily,even thogh the government indicated that fast growing cos like RAY.A will be exempt. 2nd article states that Bombardier & SNC are being replaced in the public's consciousness by digital economy outfits such as RAY.A, LSPD & Stradigi AI,all of which talk about becoming world leaders,but without the sort of heavy government support received by older champions of Quebec Inc. RAY.A has risen $1.09 since Aug 6 Q results.

Q: Is the only difference between VGG (Cdn) and VIG (US) the currency denomination and fees? Is VGH the same as VGG, but VGH is hedged to the Canadian dollar?

VGG has higher fees than VIG, so I would assume that over several years, its returns would be less than VIG. However, I have looked on a number of sites and VGG seems to have higher returns. For example, over the last 5 years, VGG has had an annual return of 13.58% and VIG of 11.63%. What is causing this apparent difference in performance?

VGH has 9.11% 5-year performance. The lower performance I assume is due to it being hedged to the Canadian dollar. Can you please confirm my assumption is correct.

Thank you very much for all of your excellent advice.

Q: Hi Team,
Would you please recommend 3 to 4 C$ denominated etfs that are focused on us equities (I already own XQQ and ZUB).
Cheers,

Q: This is a follow up to my question about EM ETFs.

The way I see it, XEC holds only IEMG, but in Canadian funds. With XEC, there are 2 layers of foreign withholding taxes, one from the EM countries, and one from the US, neither of which are recoverable. This amounts to up to 27.75% (15% + 15% of the remaining 85%) withholding taxes on dividends, none of which are not recoverable.

With IEMG, the US withholding taxes are recoverable, so the total withholding taxes are up to 15%. That is a significant difference.

The same holds for VEE (holds only VWO).

ZEM looks like it holds about 15% US based ETFs, and the rest are direct holdings. That means that the withholding taxes are mostly recoverable (4.16% are non recoverable (from 15% of the holding times 27.75% from the above calculation), but the rest may be, depending on the treaties Canada has with each EM country).

Is this correct reasoning?

If it is correct, are there any other EM ETFs that have mostly direct holdings in addition to ZEM? Also, why would you recommend XEC over IEMG and VEE over VWO, especially considering the lower MER for IEMG and VWO?

If my reasoning is not correct, why, and which ETFs would be best from a taxation perspective?

Thanks, and I hope my question is clear,

Fed

Q: I have a half position in MX. Given its recent weak price movement, would you recommend doubling up to full position?

Q: RPI announced earnings recently and has fallen about 10% since. Can I have your opinion on the results and is this an opportunity to enter? Thanks!

Q: OTEX reported a 0.1% constant currency organic growth rate for F19 implying revenues were basically flat because of a slowdown in Q4 license sales ex-acquisitions. Slowdowns in license sales should impact customer support revenues which is an important recurring source. Is this strictly a grow-by-acquisition game that can produce too many negative surprises and nasty stock corrections to bother with? If so, which TSX tech stocks would be a higher quality choice? Appreciate your service!

Q: How do you select th 70 companied that you cover?

Q: In reference to my last question you made a couple of suggestions. I parted ways with CHR and NFI. You also suggested that I lacked diversification in some areas. I have accumulated cash since my last question to be deployed at an appropriate time. I have listed again the stocks in which I am currently invested in. Percentage allocation in each was listed in my last question. I have wonder if you maintain an investment profile of your clients. Doing so would enable you to provide more appropriate advice and/or suggestions. It would negate the need for clients to keep repeating investment objectives. Thanks

Q: Curious about your assessment of Cymbria for a long term hold of 3-5 years? Also, is low volume a concern?
Appreciate your wise advice.
Lorraine