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Investment Q&A

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Q: Context: We're retired and conservative, increasingly risk averse actually. Our portfolio throws off enough for our lifestyle, which comprises 50% GIC's/cash 50%, 15% preferred resets and 35% equities. Our equities are made up of 70% individual stocks (dividend and income) and 30% etf's (SPX and XSP). Though our equity % is much lower than most financial advisors recommend, it's enough for us.
Question 1: You are inclined to some individual stock holdings for a portfolio of our size. Yet, I'm mulling replacing our individual stocks with one or two etf's or funds to more easily get better diversification (mostly because we're presently twice your recommended financial weighting) and also because I'll sleep better if not dependent on ups and downs of our individual stock holdings. Your generic thoughts on the foregoing please?
Question 2: If one were to make this shift, would your generic thoughts be to more SPX and XSP or would you be inclined to another one or two etf's (or funds)?
Thank you!
Read Answer Asked by Bill on August 01, 2019
Q: Can you please advise which ETF you prefer and why: VTI or DIA?

And secondly, why is MSI rated as a hold? I'm up 40% over the last year...and it comes with a respectable dividend of 2.54%. What am I missing here?

Thank you.
Read Answer Asked by Maureen on July 31, 2019
Q: With respect to Larry's earlier question about ZST, I was surprised that you did not mention HFR as a better alternative. Althought ZST has a lower MER than HFR (0.17% vs. 0.4%) and a better distribution (2.9% vs 2.4%), its value has declined consistently (-15%) in the past eight years unlike that of HFR (0%). I see no reason to recommend ZST in preference to HFR so why would you?
Read Answer Asked by richard on July 30, 2019
Q: I am looking for ideas for 3 ETFs (to complement an existing portfolio):
(a) small cap equities (preferably, global; if not, then US-focused);
(b) global equities, ex-U.S.
(c) emerging markets.
This is for a LIRA account. I'd like all 3 ETFs to be non-hedged, in Canadian dollars, to be Canadian situs (ideally), and not to have 15% withholding on distributions. I think "VEE" might meet all of these criteria for an emerging markets fund (am not sure).
Ted
Read Answer Asked by Ted on July 29, 2019
Q: I just noticed that 60% of ZAG’s holdings are other BMO bond ETFs, and the rest are direct bonds. I am wondering about the implications of this of MER, yield, and taxation.

In the BMO documentation for ZAG, they note “as ZAG is a fund of fund, the management fees charged are reduced by those accrued in the underlying funds,” which I find confusing. ZAG’s MER is 0.09%, but the underlying ETFs have MERs ranging from 0.11% to 0.33%. Is the 0.09% MER in addition to the MER paid to the underlying ETFs, or is it just 0.09%?

Does the ‘fund of funds’ characteristic of ZAG mean there are taxation issues in terms of it’s dividends being eligible dividends in Canada?

Are the dividends considered eligible dividends or interest?

Thanks again,

Fed
Read Answer Asked by Federico on July 29, 2019
Q: Came across ZFC - BMO SIA Focused Canadian Equity Fund ETF Series in doing ETF research. Holdings are 100% Canadian ... Top 10 holdings account for about 67% of the fund (AC, QBR.B, CAE, WCN, BAD, GIB.A, CSU, CAR.UN, EFN). MER is on the high side .75 What is the 5i opinion on this for a more aggressive ETF for Canadian holdings ? Thanks as always for your advice, Steve.
Read Answer Asked by STEVEN on July 29, 2019
Q: Good morning 5i,
In the interests of simplifying my financial affairs for those who may have to look after them at some point, I have been moving in the direction of efts in my rif accounts on the US side. Up to this point I haven't considered doing the same for Canadian stocks, for two reasons: One is the capital gains that must be paid, as they are in a taxable account for the most part. Second, because of the fear that Canadian efts, like the Canadian economy, concentrate on only a few sectors. I thought, therefore, that I could simply make up my own etf out of individual companies that I buy. I can see, though, that one could suffer a real loss if one of these blew up, something like SNC Lavelan, which had previously been a staple in Canadian portfolios until recently. Also, there is the difficulty of managing these stocks by someone else, not used to doing so. I could approach it over a number of years to avoid some of the capital gain problem. So, I was wondering what you thought of this move in general? Also,I would appreciate your view on the relative dangers of holding Canadian efts? Which Canadian efts would be the best, general market or more focused? Appreciate greatly your reflections on this question.
Read Answer Asked by joseph on July 26, 2019
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