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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: Good morning 5i
Please advise on the above and similar income related funds. I am trying to set up a retirement income. At 76 yrs old and I have about $100,000.00 to invest. Safety is important as well as income. Your previous advice has been taken.
Thank you
Terry
Read Answer Asked by TERRY on June 09, 2017
Q: You were not enthused with this issue when it did an IPO on November 1,2016. Have you changed you view? If not what would you recommend as a good place to park cash.
The cash balance usually $100K would fluctuate; but would never go to Zero.

Thanks Team
Read Answer Asked by Warren on March 30, 2017
Q: hello 5i:
2 questions.

I am interested in the fund above, and the question asked by Robert yesterday. One thing I can't quite understand: how is the fund generating a (greater than) 6% return. How is the fund able to do this with present interest rates? Through leverage?

Could you give me your opinion on the CEF WEC (Western Asset Premier Bond Fund), and would you consider this a viable holding in a TFSA?
thanks
Paul
Read Answer Asked by Paul on March 30, 2017
Q: You stated recently: (the investment strategy of DFN) "and the strategy could be quite easily duplicated." Holding the banks in a self-constructed portfolio would indeed be easy, but it would produce a 4% yield, similar to ZEB. How would you construct the portfolio, as you suggested.

Thank you for your services, esp of stocks not usually covered by analysts.
Read Answer Asked by Kurt W on March 28, 2017
Q: Is the takeover of CEF.A sure to happen?

If so what is the last date to sell CEF.A?

Also, is there some similar alternative to own that will have any payouts in the form of dividends rather than distributions?
Read Answer Asked by jane on March 22, 2017
Q: This is a comment on Ken's question of this morning regarding LFE. I have analyzed this split share and I thought this might be of benefit to subscribers.: LFE net asset value (NAV) as of February 28 is $ 5.44. The dividends will be discontinued again if NAV goes below $ 5. The portfolio which consists of the four insurance companies Manulife, Sunlife, Greatwest life and Industrial Alliance has to produce a net return of $ 1.825 per unit ($ .625 for the preferred and $ 1.20 for the common) to maintain its dividends. Adding a .75% management fee so the total return for the portfolio has to exceed 11.8 % based on the NAV today. This I think is difficult for a portfolio manager to produce consistently. But if interest rate environment favors life insurance companies this might be achievable. The common share dividends is declared by the manager and to my knowledge the amount is not specific, so it could go up or down. The company uses options to supplement the return and according to their document uses some sort of derivatives which may help increase or (decrease) the value of the unit. Since its IPO, of $25 for both units in 2006 it paid $ 13 ( $ 6.35 for the preferred and $ 6.70 for the common). So yes I consider it risky but the IPO was right before the 2007 crash and lower interest environment which devastated life insurance companies. Although its past is not great, perhaps the future is brighter and it is not without its risk.
Read Answer Asked by Saad on March 18, 2017
Q: This is a comment on Jerry's question this morning. DFN holds a portfolio of 15 high quality large cap companies. Its net asset value now is about $ 19. The preferred shares can be surrendered at maturity on December 2019. If he is comfortable with holding these preferred shares until maturity and getting a 5% yield I think the dividends and the redemption price of $ 10 are reasonably safe. It will take a total market collapse to reduce the net asset value to below $ 10. There are many split preferred with different maturities, yields and risks. Considering their price stability and yield, with the right choice, I think these split preferred are better than holding GIC's or money market funds.
Read Answer Asked by Saad on March 15, 2017
Q: Please don't answer this with the standard reply about split corporations. I know 5i is not crazy about split corporations. No one ever mentions the preferred share side of the split. Everyone talks about the ultra-high yielding Class A shares that pay over 10%. That's not what I'm asking about.

The preferred shares yield about 5%. DFN.PR.A was priced at about 10.50 in 2004 and today its price is 10.34. There was a 30% dip in 2008. Otherwise the graph is amazingly level, showing only a fraction of the losses "normal" preferred shares showed in 2015-16. Also, distributions have never been suspended. A graph of dfn.pr.a compared to the preferred share etfs CPD and HPR may be surprising. The question is, How dangerous are preferred shares of a split corporation? Certainly they have to be safer than the Class A, high yielding shares. Seems like a good place to park some cash, which is what I've been doing. Thank you for your thoughts.
Read Answer Asked by Jerry on March 15, 2017
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