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Investment Q&A

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

Q: Covered call ETFs are gaining popularity. Does the technique have risk that isn't being talked about (yet)? It seems too good to be true. You can buy ZWA which owns 30 awesome mega-caps and has a 5.2% yield. Or, you can buy ZRE which contains companies that max their payout to get you that same yield of 5.2%. The first, ZWA, is not exposed to rising interest rates, or, to the housing mania. In that sense, ZWA seems to be a clear winner for income. But something tells me that as more firms make similar ETFs, something will happen. Won't the increase in put/call writing become crowded and a problem? Maybe fees will increase? Have you come across some writing on the subject? I'd like to investigate before putting 3 years of savings on ZWA. Thanks team.
Read Answer Asked by Matt on July 11, 2016
Q: I own HEWJ and ZDM as my International exposure (5% of my portolio). Neither are doing well, especially after the Brexit vote and I'd like to replace them with ETFs with a more positive outlook for the next 2-3 years. Your thoughts and recommendations please!
Read Answer Asked by Michael on July 08, 2016
Q: Hi Team,
I was hoping you could help explain something. I own a five-year corporate bond ladder. This year to date the value of my bonds have fallen 0.91% (which on its own is fine as I hold the bonds to maturity). I am unclear why my bonds would underperform VAB (up 3.56%) and CBO (down 0.16%) in the same timeframe.

I realize VAB has a longer duration on average than my ladder or CBO. Credit quality may be better in both funds, and mine are typically in the BBB range. But is there any other reason why bond funds should outperform specific bonds in a ladder? Is there a scenario where a bond ladder will outperform the bond funds?

Finally, is there any advantage to owning bonds in a ladder at all?

Thank you. Michael
Read Answer Asked by Michael on July 07, 2016
Q: I have been wanted to diversify my portfolio and I was wondering if this is a good list or a bit of overkill. I have recently bought some XBB. I want these for fairly long positions, my concern is that I might be over paying for these as everyone is fearful and flocking to bonds as a safety net. Would it be wise to let things settle or buy partial positions in these etfs. Also would it worthwhile also owning some us long term treasuries. I am looking to try to cover all possibilities so I am not chasing in the future when market conditions change. I would like diverse group to cover inflation, rising market, recession. I know that I cant take all risk off but I would like have some safety net and not hold all equities.
Read Answer Asked by Geoff on July 07, 2016
Q: I have transitioned a substantial part of my own RRSP from mutual funds to individual stocks & other investments, with the help of 5i (thanks! Done quite well), over the past 3 years.

My wife is still reluctant to do the same, so we are transitioning her RRSP from mutual funds to ETF's, with only one purchased so far. The specific ETF our advisor put us in was BMO ZDV. At the time, I specifically wanted an ETF with lower exposure to the energy sector.

Unfortunately, we bought in at the August 2014 peak, and are underwater by 20%, even after distributions. Moreover, the distributions have been steadily dropping since we bought in.

Is it time to bail out of this ETF, and if so, what would you replace it with?

Thanks.
Read Answer Asked by Lotar on July 07, 2016
Q: This is a company that is not discussed often. It appears to have a reasonable balance sheet and has raised its dividend for 27 straight years. It does operate in a cyclical industry but it has seemed to manage this well, in part, I would think, because of its used equipment and repair operations. Is this a company you would recommend?

Also, refrigeration is a part of its operations. How does that unit fit in with its heavy equipment franchise? Are there resulting synergies, is it a different customer base, thereby offering diversification or are they the same customers and therefore there are reduced sales and marketing costs?

Appreciate your insight.

Paul F.
Read Answer Asked by Paul on July 06, 2016
Q: Hi
I'm looking for a handful of high yielding companies with a good balance sheet.
In what order would you rank the companies listed? Any other companies you really like that could also be included or preferred over these? Thank you.
Read Answer Asked by Carlo on July 04, 2016
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