Investment Q&A

Q: Currently, Invesque 6% convertible debentures series V are trading at about $83 US ( on the TSX). They mature on 30-Sep-2023 at $100, i.e. about 15 months from now.
This corresponds to a fabulous annualized Yield to Maturity of roughly 21%.
In your opinion, what is the risk that Invesque will default in the payment of these debentures? Does this seem to be a good risk to reward?
Thanks!

Q: As a follow up on Maria's question on June 29th.
Do bond prices differ from broker to broker?
Are some platforms more specialized for bonds than others?

Q: Hi 5i team,

If you were to do a bond ETF portfolio to complement equity and other holdings, what (Cdn-listed) ETFs would you choose for balanced exposure to a range of market environments? Long-term registered account. I am thinking:

XBB--Canadian universe
VGAB--Global universe
XSTP--Short term US inflation-linked government

Thanks.

Q: I can get 5% + annual return to maturity on many triple B+ rated corporate bonds in the 6-8 year time frame. Do you see much risk of default or other issues with corporate bonds with companies like Enbridge, TD, Loblaws, and BCE? (I realize their face value will fluctuate as interest rates go up or down)

Q: Many months ago, everybody and their brother was predicting interest rate increases, so I sold the bond funds in my RRSP (primarily ZAG) and bought short term bond funds like ZST and XFR. And for some fun /an experiment, I bought some TBF. I try not to time the equity market (as per your sage advice), but I could not resist with bonds (because it seemed like everyone was convinced about the interest rate direction). Good news is that TBF is up 22% YTD; and ZAG is down 13% YTD, but I do not understand why I do not hear anyone promoting TBF as a solution for this rising rate environment. What am I missing? Is there a liquidity risk for sellers when the rates start to flatten out; or is there a significant and quick price plunge risk; or...??? Thanks in advance for your comments.

Q: Hi, GIC rates are increasing. Where do you see them in 6, 9, 12, 18, 24 months? Any strategy to propose, laddered approach ? Most 1Y GIC now have the highest rate, but probably too soon to buy ?

Q: Based on your best guess, how high do you think Prime rate can go and at what level will the 5 yr Canadian bond yield stabilized?

If the 5 yr Canada bond yield was to increase above say 5%, would it trigger a much larger stock market correction? There was not many alternatives to the stock market over the last many years in view of the very low rates. It seems to be changing to fight inflation. I am curious of you general comments on this. Thank you!

Q: Hi, further to your reply on real return bonds to Alex on April 28th, I am trying to understand the return I could expect to receive on XRB from the underlying bonds vs. the inflation component.

For XRB, Blackrock currently shows the weighted average coupon at 2.33% and the the weighted YTM (coupon plus amortized realized gain/loss) at 3.43%. My understanding is that YTM is the true measure of bond return. If I bought this ETF could I theoretically expect to receive a 3.43% return from the underlying bonds in addition to an annual principal increase from inflation. So if inflation averaged 3% per year could I expect 3.43% YTM plus 3% inflation principal increase = 6.43% total annual return. Is that generally how it would work? Also would the annual principal increase just be added to the NAV of the ETF?

Thanks.

Q: Hi team,

The Globe recently published an article on high-interest savings account ETFs. It included this sentence: "A recent report by Canadian Imperial Bank of Commerce (CIBC) Capital Markets pegs the after-fee yield from these funds at between 1.8 and 1.9 per cent, which is far better than most other cash alternatives available to the typical investor."

Link: https://www.theglobeandmail.com/investing/personal-finance/article-this-cash-parking-spot-for-investors-has-never-looked-better/

Does this look right to you? I'm seeing more like 0.6% as the yield on these products.

Thanks.

Q: Based of a previous comment from you, I bought ZRR as a hedge against rising interest rates. I am down 10% since buying it. Perhaps I misunderstood what you said. Why is it dropping? Thanks.

Q: What do you recommend for high yield short term savings?

Q: I have held XSB in my fixed income portion of my RRSP for a year now down 7% plus dividend. In your opinion with rates maybe peaking this year would a move to XLB or CBO make sense or just hold XSB. Will not be touching for 4 years.

Thanks

Q: hello 5i:
A search of this DB indicates only one previous question asked.
At a 6% yield, a chart that doesn't show much volatility at all, and knowing you like the company and its management, it seems to be a security that would garner much more attention. Can you run through the pros and cons of buying /owning it? The current price looks attractive (to the untrained eye). We already own shares of ECN, and did very well with it over the years.
thanks
Paul L

Q: Hello,

I am looking at buying some corporate bonds for the fixed income portion of my portfolio.

Via my discount brokerage account, I see annual yield between 3% and 4.5% for terms between 3 and 4 years for bonds issued by big banks or Lifeco. If I hold to maturity, am I correct my annual return will be the annual yield?

Also, anything to watch for with these securities? To make my life easier, I was planning on buying a few larger positions to balance my portfolio (as opposed to the typical 7% max stock position for the equiy portion of the portfolio).

Thank you for your help.

Q: With respect to US long term treasuries ( 20 or 30 yr) please suggest an ETF.
As well, what event would one watch for if one wanted to time stepping into such an ETF?
thanks

Q: Hello
I am looking to buy a GIC. BMO investorline has the following 1-year term non-cashable GICs available at ~3.3% from Equitable Bank, RFA Bank, Haventree Bank, and Shinhan Bank Canada. I have never heard of these banks. Are they safe? Is there anything I should be concerned about? is there one over the other that you would go with?
thanks

Q: Hello Peter and team,
Looking at putting my cash which is doing nothing into GICs. Regarding bonds, would rather put directly into bonds rather an ETF and hold till maturity.

For now I am thinking about very short term GICs of 30 to 90 days with the expectation that longer term GIC rates will be higher in next few months as BoC hikes rates. Is this a correct assumption?

Please comment in detail about all of the above or other alternative approaches as I am trying to sort out how to best set up my fixed income. (Deduct as many questions as needed.) Suggested reading resources would also be helpful.

I have many income stocks in my portfolio, so not looking for advice about those.
Thank you so much for this service.
Tulio

Q: Hi Team,

I understand that TLT should decline as bond yields rise. On the other hand, why does TIP continue to decline? I was under the impression that TIP is indexed to CPI, shouldn't TIP be rising at this time?

Q: I am having trouble finding the maturity dates on tse listed bonds,is there a way to go that you know,Thanks Phil

Q: Could I get your comments about buying PDI.UN in an RRSP? The price has come down substantially (as might be expected), it is trading near its NAV, and it appears to have never missed a dividend. I recognize the high fees, but the 12% yield has caught my attention. What do you think of its holdings (in general and how risky), do you think the dividend is sustainable under current conditions, and would you see the price moving back up a bit if rates don't go much lower? If buyable, would you buy now or wait a bit longer on rates.
Thank you