Investment Q&A

Q: I have most sectors covered thanks to your Portfolio Analytics. Thanks so much. However I have a very large and growing allocation in Vanguard Dividend Appreciate (VIG:US). My international investments (non-US) are small and need a boost. What would you suggest I do to diversify internationally using ETFs?

Q: Hello Peter and team,

I am considering how to allocate the US and International equity component of my portfolio. I will be using ETF's solely held in my RRSP account which will comprise roughly 40% of my total portfolio, growing to about 45% with new deposits over time. Currently I am using Canadian-based ETF's (XUU, VGG, XMC for US and XEF and VEE for International) but I am looking at using US-based ETF's, with the idea of both reducing costs (lower MER and avoiding withholding taxes on dividends) as well as introducing some currency exposure.

In a response to an earlier question today, you indicated: "Our one comment is that the suggested ETFs might result in US dollar exposure somewhere close to 50% of the portfolio. This might make sense depending on individual needs, but 50% exposure to the US dollar might be a bit high for a lot of investors. " which has led to some follow-up questions:
In general, what would you consider to be an appropriate range for non-CDN exposure? More specifically, what factors might an investor consider in one's own situation to hep decide where in this range is personally-appropriate or whether it makes sense to exceed the suggested range?
I hadn't considered currency risk very closely, so the other member's question was quite timely and I look forward to your response. I have found 5i to be such an invaluable resource, providing so much opportunity for learning about the world of investing.

Thanks in advance,
Rory

Q: MCHI Vs FXI
What's your opinion regarding potential return in 3-5 years.

Q: I am continuing to try and "perfect" my portfolio allocations. Your Portfolio Analytics program has been a huge asset, and has caused me to really re-think things. I am close to retirement, and can accept some risk but not looking to create an above-average risk portfolio.

For equity investments, I am aiming for about 35% US, and 35% international. I would like safety and growth, and am willing to have some risk. Once I am happy with the final portfolio, I hope to be able to "walk away" for the next few years and let it grow. I have a preference for the "dividend growers" strategy.

Does this allocation make sense to you, for both international and US equities? Are there any changes you would recommend?:

US Dividend growers (e.g. DGRO, VIG): 20% of equity portfolio
US Quality: 10% (e.g. VOO)
US SME: 5% (e.g. IWO)

International dividend growers (e.g. VIGI, iGRO, ZDI): 20% of equity portfolio
International Quality: 10% (e.g. XEF)
Emerging markets: 5% (e.g. VEE, ZEM)

Thank you so much for this amazing service!

Q: I am planning on adding emerging markets to my portfolio via an ETF. Which one do you recommend for lowest withholding tax, lowest MER, and best stability? Are there any that are Canadian ETFs owning EM stocks directly? And which account would these ETFs be best placed in (taxable, corporate, RRSP, TFSA)?

Thanks again,

Fed

Q: What are some high yield ETFs that sell in US dollars?

Q: I'm considering one of these ETFs to hold in my RRSP for the Canadian portion. They only have about $4M assets under management and I'm curious what the downside to this is. This would be a long 20+ year hold so should I be worried about the low trading volume or anything else that comes with small ETF's? Do you see an advantage to one of these ETFs over the other?

Also this DRMC claims to have a 4.07% weighting in the energy sector but Enbridge has a 6.4% weighting. Do you know why this would be?

Thanks and deduct credits as you see fit.

Q: The last question I asked (below) was about a name in CAD.
The answers were about ETFs in USD.
Thank you for providing names in CAD.
Question:
Could you please suggest a Gold bullion ETF in CAD - Not a "paper ETF" but an actual physical like PHYS? Thank you.

Answer:

We would be fine with PHYS here. SGOL is another option, holding physical gold bars in Swiss vaults

Q: I realize that there is some overlap between these two funds, but would you say that there is too much, or would they compliment each other, thanks?

Q: Looks like the trend is lower for rates going forward even with the recent drop. If we were to assume rates were going lower wouldn't owning Pref ETF's like the CPD, HPR etc be a bad idea?
Wouldn't rates need to go higher for these to really be a buy right now?

Q: What is your opinion of gold as an asset class and what do you think of using HEP to get exposure to gold while still getting income from the covered call overlay?

Q: I hold all of the above in roughly equal weight in the income portion of my portfolio. The first three are at roughly breakeven, the latter five are up, two of them over 20%, as economic conditions have weakened. I am wondering why I don't simplify life by selling them all and buying the PDC ETF which provides greater diversification and has a dividend yield of 4.59%. I realize that 25% of PDC is in energy but mostly safer pipelines. Would this be a good move or am I better off to keep what I have?

Q: I am looking to get some exposure to the health care sector and thought I would look at an ETF as opposed to a single company. I'm considering either XLV or IHI and would like your opinion of these two ETFs, and which you would prefer. I would be adding the ETF as a full position in my RRSP.

Also, if there is another ETF that you prefer over these two, please include that in your response.

thanks for your insight
Paula

Q: Could you please suggest a Gold bullion ETF in CAD - Not a "paper ETF" but an actual physical like PHYS? Thank you.

Q: Which one would 5i prefer, VIG vs DGRO?
Thanks!

lil

Q: I have about 1.5 million in stocks and another $500,000.00 in cash just sitting doing nothing. I am 86 years old and skittish about investing additional money in the stock market. My inclination is to invest the cash in PSA. Would appreciate your opinion. Thanks Bill

Q: I am interested in investing in a technology ETF. Would you prefer the QQQ or XLK?

thanks

Kim

Q: I would appreciate your recommendations for the most tax-efficient ETF's for US equities in non-registered , RSP & TFSA accounts .
Thank you.

Q: I bought these ETF's a couple of years ago for diversification purposes. They have not performed well and I am wondering if I should keep them or move on and forget about diversifying outside of North America. I do not like exchange risk.

Q: For a retiree, does it make sense to invest all in VBAL or might you supplement VBAL with some additional ETFs along with some individual income/growth stocks?

Thanks
Bryan