Investment Q&A

Q: This is a response to Lotar's question. The fund would be prohibited from charging duplicative management fees. However, while a 2.3% MER might be in line for a Canadian equity fund, it is excessive for a Canadian bond fund, which is where the mutual fund on top has most of its funds - given the current interest rate situation, it may be almost impossible to make any money on the bond portion of the portfolio with that high an MER. Generally the higher the MER, the more that gets kicked back to the adviser, possibly the biggest conflict in the investment industry, one that has been banned in some countries and the Canadian regulators are considering banning as well on the basis that disclosure has been ineffective. With a 2.3% MER, probably 1% per year gets kicked back to the adviser (that would be disclosed in the mutual fund prospectus). For the adviser to put the money into a "balanced fund" like that rather than allocate the money between an equity fund and a bond fund most likely indicates incompetence or lack of integrity on the part of the adviser.

Q: In Amaya's last financing, I notice the following: The Common Shares issued under the Private Placement are subject to a statutory resale restriction until November 12, 2013.
Is that date likely to bring increased selling? In other words, should we expect a price drop on Nov 12? I believe the share price for the financing was $6.25 ? I realize you can't predict what those who participated in the financing will do, but I'm wondering if there is a general rule of thumb. Just want to brace myself or trim some before. Thanks

Q: What would you recommend as a first time investment for a young teanager that has about $1,000 of savings to invest?

I want my kids, who are in their early teens, to have some direct experience with investing; note that they are interested in this idea.

My goal is have them learn of the benefits, and risks, through some direct experience.

Also, what investment learning resources you would recommend?

Regards, Craig.

Q: ETF Short List question asked by Orion on Nov 1/13:

Horizons Funds has a seasonal ETF fund HAC.TO which came out about 3 years ago at $10 and it is now $13.59. The managers use seasonal and technical analysis to enter/exit positions. The managers (Brooke Thackery, Don Vialoux, and Jon Vialoux) appear regularly on BNN.CA video interviews. Thackery authors an annual manual on seasonal investing and has a free monthly letter and mid-month videos promoting the funds activities. Don Vialoux publishes a daily free letter at www.timingthemarket.ca where other ETF/seasonal articles exist. Also check out the structural differences between ETF's and ETN's. Yahoo finance has a components link to assess an ETF's components and weights. Trading volume of an ETF might also assist in determining 'best in class'.

Q: I read Hedley Dimock's article in the October Money Saver and didn't understand his reference to Bank of NS cap sp and Allbanc split cap.sh. What do cap sp and split cap sp mean? Thank you.

Q: Hi Peter,
With the banks hitting new highs would you be buying right now? if so which bank would you recommend? Thanks.

Q: Hi, I recently looked at relative growth and valuation of different economies and it seems that Norway stands out. Do you agree? If so, what would you think about NORW ETF right now?

Q: I have a mutual fund question, about a specific fund but more from an investment understanding perspective than picking on that fund. I know you're not fans of them, and the more I learn, the more I understand why (which is why I'm in the process of weaning myself away from our "advisor").

Our advisor has about 75% of my wife's $90k RRSP in a specific mutual fund, let's just call it Fund A from Company XYZ. This fund's investment objective & strategy is to "generate income and long-term capital growth by investing primarily in a diversified portfolio of Canadian dollar denominated fixed income securities". The funds top 30 holdings -- in fact, its top TWO holdings!, are 62% Company XYZ's (i.e. the fund company's) Bond Fund, and 37% Company XYZ's Cdn Dividend Fund, leaving 1% for everything else (unspecified).

Does this mean I'm paying the MER twice, once at the level of the fund itself, and again at the level of the constituent funds?

Would this situation, in isolation, be enough to get me out of this fund?

The funds MER is 2.3%, and its total return since the advisor bought it in July 2012 is 1.1%.

That certainly sounds like a good reason to get out of this fund especially and in particular.

Thanks again for all your investment advice, we beginning investors really appreciate it!

Q: Hi Peter and 5iResearch Team,
Can you tell me if you like Vanguard Dev. ex NA Index. I know it is small, but its Vanguard, not hedged? Do you think it is time to increase exposure to Europe?
Thank you.

Q: Peter;
It was a pleasure meeting with you at the Money Show in Toronto.
As discussed, I was looking for a useful Software Trading platform to be used in conjunction with the on-line Gold Circle program provided by RBC. The two I found interesting & am now trying out are Worden Brothers, Durham NC USA "TC2000" & Inovestor Inc "EVA" from Montreal. Will give you my assessment of both next month.

Q: Hi,

I see you like IEP from previous questions. One of Carl's investments is CVI (CVR Energy). It owns portions in refining and fertilizer business. Historically it has paid big dividends. They just reported bad Q3 earnings due to 53 days of unexpected downtime causing high margins and less revenue. This was exasperated by the tightened spreads in August on inputs which seem to be widening again. The stock is down on these recent developments. Carl likes this company and may have plans for the future - company has cash on hand. Is this a good value opportunity given these one time events or do you still see too much risk in the refining space? Appreciate your comments.

Q: Do you have any insight into why BTE Baytex has not been able to hold onto recent gains after good Q3 numbers? I own it. Just seems there may be something other then weak WTI oil

Q: Hi Peter and 5iResearch Team, I would like to add a lumber company to my portfolio. I am looking at West Fraser WFT, Canfor CFP, and Western Forest WEF. Based on location with respect to beetle problems, products and markets, which of these companies would be best to buy. Also, should I wait for a pullback in the sector?
Thanks so much.
Linda

Q: Hi Peter and 5i

BEP.UN down today on acquisition news. Doesn't look like issuing shares so is this an over reaction and improved buying opp?

Thanks, Greg

Q: Hi Peter and Team, This is more of a comment than a question. Your recent article "Selling Too Early Might Be A Mistake: Five Things To Consider First" was very helpful to me. I bought CSS and the price dropped quite a bit at first, but is doing considerably better now. Had I ignored your advice, I likely would have let 'emotion' rule my decision and sold it at a loss. Your service, advice and articles are outstanding! Thanks so much.

Q: can you please update me on your thoughts on ABT.

thank you.

Q: lot of the junior oils are down today WCP,SGY etc what would be the reasoning after positive announcements

Q: I would like to invest in the solar energy space, and to that end have been keeping my eye on First Solar (FSLR) and Canadian Solar (CSIQ), both trading on the Nasdaq.

Of the two, which would you recommend for a full position, and why?

Alternatively, would you suggest a half position in each? (2.5%) Both seem to be making great gains in the past 6 months, and I'm not sure if I'm really comparing apples to apples anymore.

Thanks!

Q: Hi Peter
I value your opinion . I have been offered to buy Sanofi SNY. ADR . I want to hold about 5 years . What do you think of this pharma company ?
Candi



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Q: TTFS Trim Tabs Float Shrink ETF I've always had an admiration for the thinking behind Trim Tabs. This ETF is a case in point.
It has done well in a market where nearly everything has done well. What do you think of it and how do you think it would perform versus S&P index in a down market?