Q: You responded to a March 21st question by Esther confirming that, in your view, Canadian rates are fully expected to drop faster, sooner than US interest rates - leaving a positive outlook for the US$ and stocks.
My question is in 2 parts;
- What are 3 interest sensitive Canadian investments would you recommend that take advantage of a faster/sooner drop in Canadian rates (and why they may be good investments), and
- Should one hold off on investing in US investments such as TLT short term, or not try too hard to time the buy and invest now?
Thanks as always.
My question is in 2 parts;
- What are 3 interest sensitive Canadian investments would you recommend that take advantage of a faster/sooner drop in Canadian rates (and why they may be good investments), and
- Should one hold off on investing in US investments such as TLT short term, or not try too hard to time the buy and invest now?
Thanks as always.
5i Research Answer:
Dividend stocks and utilities can be sensitive to rates, and we can suggest H, ENB and FTS. All are cheap, well-managed, have some earnings growth potential anyway and have good records of dividend increases over the years (FTS more than 50 years). On TLT, keep in mind markets move more on 'expectations' rather than actual moves. TLT as a long term bond fund has more leverage to rates, but we think for those expecting rates to fall one can position themselves now fairly comfortably.