Investment Q&A

Q: I own these Just Energy debentures that are trading around $.17 cents on the dollar. Where would you put the odds that this company ends up either filing for creditor protection or does a debt restructuring within say the next year.

Q: What do you think of this fund? Wanting to put some of my elderly parent's cash in USD. Can you put Canadian dollars into this, or do you need to convert it first (trying to avoid transaction fees)? Also, as I read about it, it seems to have a fair number of Canadian holdings. Does that make sense? Thanks.

Q: Investors seem very nervous about Wells Fargo. Just today (May 14th) someone on this site expressed some trepidation. What’s your opinion about buying Wells Fargo bonds at this time? One is for a three year hold, the other for six years. If Wells merged with another bank, how would that affect those bonds? Some are speculating that Wells could be another Lehman waiting to happen. Does that have any merit? Are their bonds safe? Thanks.

Q: For an individual bond that I hold to maturity, I would consider the yield to maturity as being more relevant than the current yield. But when it comes to a bond etf what is the relevant metric? Possibly the average current yield? As presumably the underlying bonds are not held to maturity as they would be bought and sold to keep the etf's duration in line with its target.

Q: 5I Team, good day
Your Opinion on long term on HTB.U, for 3.5% US cash available ?
I like the TRI & reasonable fees
Don't own any bonds on this corporate account.
Thanks
Regards.

Q: Hi,
I'm trying to create a well balanced bond fund for that portion of my portfolio and have come up with this: HFR-T, CBO-T, CLF-T, TLT, XBB-T, CVD-T, SHY, FLOT, IVOL, BNDX, VSG-T
I guess I should have something that will generate monthly income as well? If I am overdoing this, please let me know...it seems like a lot of holdings. Is there a better way? A mutual fund?
Thanks.

Q: Could you please rate these ETFS for safety. How would they react in a higher interest environment and which would you lean to.
Thanks

Q: Good Morning Peter & team,

Once only thought of as a European/Asia market phenomenon, There is talk we could see negative interest rates in Canada in the next year. Technicals for the big banks are all similar - the beginning of a recovery last week in March as things started turning around then, plateau. Still higher highs and higher lows but not the same recovery as the Markets in general.

I own TD & BNS. I have read your comments on both. Do you feel these are worth holding? Do you think Negative rates could happen? And if so what effect could we expect on the big banks?

Thanks for all you do.

gm

Q: In a recent question, Shirley asked about high savings accounts. She should look at Motif Financial, which is a division of Canadian Western Bank. Their current interest rate is 2.2%. Hope this helps.

Q: I'm trying to make decisions for my retired mother's taxable account.

In the current environment, do preferred shares make more sense than bonds or other fixed income strategies? If so, can you recommend a few of the best preferred share funds (or would an ETF like CPD or ZPR be a wiser option)?

Q: Some people have been inquiring as to where to park cash. Do you have any information about the Manitoba Credit Unions? I have recently inquired and have found that deposits in a high interest savings account are guaranteed under the "Deposit Guarantee Corporation of Manitoba" for an unlimited amount, paying 2%. Has anyone used one of them and did you like them? I also put this out in the forums. I would like to hear of someone that has opened an annount, and if they were satisfied.
Thanks for any help

Q: I have decided to go to a cash position for next while. Only stock I kept was SHOP and one I should also have kept KXS. My year to go away in May and come back another day. It has been quite a ride this past 7 weeks but I am back to where I started my year. Where would you recommend parking cash for the next 3 to 5 months.
As always we are grateful for your service.
Regards,

Q: Does 5i have a recommendation for parking cash looking out 1-2 years? Thanks, Bill

Q: There has been a lot of talk lately, especially in the US of going to negative rates. If this was ever to happen, how would this ETF do in that kind of climate. I have a hard time understanding the idea of negative rates and what would be the end result.

Q: Hello Peter et al.

I hope you are all doing well in these unprecedented times. I would like an explanation of the ETF price movement of XLB.TO through these markets. When the markets began to crash to the lows in late March, XLB price surged all the way up to $29.00 and then dropped suddenly all the way to $22.00 and has since bounced all the way back to around $27.00 now? I expected the rise in price because stocks were dropping precipitately but I did not expect it then to drop all the way down to $22. Why did that happen? Also it has bounced back to $27.00 now and why is that as well? What am I missing here in my understanding of this bond ETF? I would have thought the bond prices would have went higher because people would have transferred into bonds for security in these uncertain times. Am I wrong in my interpretation here? I expected the same with gold and gold stocks went down for a bit because of mine closures due to COVID-19. They have since rebounded nicely due to mines being re-opened now and they are producing gold again at good prices. Thanks for the great service. Please educate me here.

Regards,

Brendan

Q: We are managing the assets of my elderly parents. They have $1.5 M cash in a Canadian interest account. We are wanting to diversify and put some of this into a US interest account of some type, thinking the USD will gain over the next couple of years. Do you have any ideas of how to do this that will avoid the usual 2.5-3% currency conversion? Is the an ETF they could purchase that will basically give them US cash, or something else that you are aware of? Thanks for any advice you can provide.

Q: Hello
The Bank of Canada Target Rate is set at .25% until the Fourth Quarter of 2021.
However, I also noted that the forecast for the 5 year Government of Canada bond is different as follows:
Q2 2020......54%
Q3 2020.......63%
Q4 2020........75%
Q1 2021.........98%
Is it possible to have a gradual increase in the 5 year bond rate while the Bank rate is kept static at .25% ??
Thanks

Q: From an investment perspective, is the primary reason to invest in a real return bond to receive the inflation-adjusted value of the principal at maturity to maintain purchasing power, and not so much to receive the "real" interest rate payout on invested capital along the way?

If this is so, is it better to hold individual bonds with fixed maturities of shorter duration rather than an ETF like ZRR where the value fluctuates with the perceived interest rate environment, and purchasing power isn't preserved because it never actually matures?

Q: Hello 5i-
what do we do with Canadian $ in cash. We've got cpp, oas, work pensions : however, all of this can go down significantly too and we need to preserve for our later years.- - my ? is this: what shoud we do with xtra cash now? Should we buy usa $, usa stocks, etfs? thank you for your time

Q: I am looking at the fixed income side of my portfolio and I am questioning the wisdom of holding CLF. Now I know there can be some sense in holding bonds even when interest rates are low (ie for the yield to maturity (YTM) and for the possible capital appreciation if interest rates go even lower). But for CLF this barely applies: the avg YTM is only 0.56% and the avg duration is 2.66 years (according to the Blackrock website on Apr 27). Thus the potential capital appreciation is very capped as the appreciation would only be in the 1.5% range if interest rates dropped to 0 and yet the potential capital depreciation is much much larger if interest rates rise significantly. So one is risking capital for a very low ytm without much potential upside and if interest rates rise, a potential rather large downside. Wouldn't holding cash make more sense?