Investment Q&A

Q: How does one buy mortgage backed securities? And what kind of risks do they have? In what environments do they tend to do well? Are they best held in registered or non registered accounts?

Q: It seems certain there will be several interest rate increases this year (and possibly more in 2023). That means fixed income will become more attractive. Please provide your outlook on this change and discuss how various fixed-income types (bonds, mortgages, mortgage-backed securities, consumer financing, etc.) will be affected and what opportunities for individual investors are likely to appear in the fixed-income sector as rates rise over the next 12-18 months.

Thank you,
IslandJohn

Q: Hi 5i.
While I have never been a fan of TD Bank Locking my sister in to GIC's for her childrens' RESP, I have remained quiet on the topic.
I can no longer do that so I turn to you for some information.


For the Market linked GICs held from 2016 to 2021 - 5 years - DESPITE MARKETS and SUB Indexes being near All Time Highs, TD Bank has told my sister the maturity value of the Linked GIC is the "Minimum Guaranteed Interest Rate of 0.389% total.
Instead of the 20% Max Payout that I can easily calculate based on annual sub index values.

It is my understanding these Linked GICs are a structured product with two pieces; zero coupon Bond and a futures contract. If Markets are at all time highs (annual index values below) how can TD Bank claim the product meets only the minimum interest payment? Do you have any insight into these products or know of a resource. The reason we are in the dark is due to the Financial Planner at TD saying, "sorry I can't help you understand that, it is calculated at head office".
(side note: I wonder if this Planner will be able to sell this product after the March Know Your Client changes? The TD Product is obviously not known to the Branch Planners)


The GIC - 50/50 link to TSX Bank Index and TSX Utility Index


Bank Index Values(Jan 3, 2017 thru Dec 31 2021:
3169.62, 3467.88, 3067.94, 3398.64, 3326.3, 4418.27
Utility Index Values ( Jan 3, 2017 thru Dec 31, 2921)
235.05, 250.41, 216.78, 290.84, 319.5, 343.21


Are these products just a TD Bank Scam and will never pay out?
How can the Markets be at all time highs, after a massive run from March 2009, and this TD Bank Market Linked GIC ONLY payout "Minimum Guaranteed Interest of 0.389%?

What are the steps to make TD Bank prove this outcome?
At Branch level they claim ignorance.

PS.....Unfortunately it does not only pertain to this year. Now I have to go back to each of the past three years to see if only minimum interest was paid instead of my calculated max Payout.

Q: This question may be a little premature however with on line discount brokerages such as CIBC Investors Edge about to charge fees to buy and sell Mutual funds where can I find a place to park short term cash?
I have been using Investors Edge high interest accounts which pay very little however are easy to use. Being a Mutual Fund this will incur fees in the future?
As I have twelve (12) different investment accounts this can become a little pricey for no upside other than minimal interest.
I am now looking for another home for short term cash . Ideas would be greatly appreciated.
Thanks

Q: I am trying to understand bond diversification better. I have a long term portfolio of mostly equity exposures and some XBB. Do you generally recommend further diversifying bond holdings? Eg to an inflation protected fund or more global exposure or specific maturity profile (eg shorter maturities)? If so could you recommend ETFs for diversification purposes?

I don’t want to over complicate things but also want diversification to different market scenarios in the spirit of an « all weather » portfolio. In particular real return bonds seem useful for this compared to XBB. I would be grateful for your thoughts. Thank you very much.

Q: I previously asked about this holding - ZTL, erroneously typing XTL.
Please comment on this ETF. Is it a hedge to market declines or does it have its own set of issue/risks right now?

Q: I own 100 shares of STIP in my RRSP. It's expected interest is listed as slightly over 4 percent. But in my TD Waterhouse account, under expected income it shows me getting $739 dollars per year in interest or 61.60 per month. That works out to 7% in interest. Is this right? I've owned the ETF for three months and sure enough I have received the 61.60 for each of those months. If so, it is a really good return for fixed income. I'm just not sure what accounts for the discrepancy.

Q: Why is there such a variance in the performance of these bond funds. XBB seems to be the lowest and FTB the best with PMIF the second. What would you recommend holding in a portfolio. I am a 79 year old with a private pension.

Thank you.

Q: Hello 5i Team,
I have a mixed basket of ETFs across assets types (equity, bond, preferred, etc...) in my TFSA for income.

I was looking at the dividend growth over the past 5 years and noticed that many of the ETFs have had a negative growth. Namely, bond indexes (VAB,XHY, HYI, and ZEF) have trended downward as well as prefs, REITs and europe/emerging equities (CPD, XRE, and ZWE).

I was wondering why that is? Is it because of low interest rates over the years or rising debt levels(or something worse)?

Thank You,
Andrew

Q: I currently own CLF,CPD,ZAG and HLY in a LIRA account. The weight of these 4 ETFs are all 2 %. each. I would like to sell 2 and then use the cash to increase the weight of the other 2 that I will keep. Which 2 ETFs would you sell?

Thanks

Q: Hi Peter and Team, Happy New Year!

The portfolio Analysics tool suggested me to add 20% of fixed income instead of 100% equity. Can you suggest any fixed income name that I can invested on? Does CVD can be considered as fixed income?

Thanks,

Q: HNY - Amid the confusion among predictions for 2022 is a recommendation from veteran income investor Mark Grant who says he's putting clients into ETF PDI from Pimco as a means of generating 10% income returns annually. I would be interested in having your analysis of this ETF including the risks, rewards, fees, etc. Obviously not in your growth wheelhouse but for an income position in US dollars what are your views on this one?

Q: What ETFs do you recommend for a retired senior with a company pension age 79. I am a conservative investor. How should covid developments affect my selection?

Q: I have about 10% of my portfolio in these bond ETFs XBB 2%, CLF 4%, XSB 2%, XSH 1%, PMIF 1%. They have shown a negative performance recently with CLF down 7%. The coupon reduces the losses. Will increased interest rates improve their performance? An alternative is to reduce my exposure and buy something like BCE with a low beta and a better yield (5% +). I am 79 years old and have pension income. My portfolio is conservative holding a large proportion in banks, telecoms and utilities. I am looking for stocks, ETFs with a low beta and good yield..

Q: Good morning. I have had RBF7280 for decades. It yields 3.43% and has an MER of 1.43. Would it be comparable to XHY which has a higher yield and a lower MER? Is there another alternative that you can suggest?
I don't trade or worry very much since I started with 5i a few years ago. Thank. John

Q: With rising interest rates predicted would it be a good time to include xfr.to as part of a broad spectrum portfilio?
Thanks.

Q: Would this be a reasonable investment for someone seeking income? I would hold it in my RRSP.

Q: HI
i understand that high yield bonds do better than the other types of bonds in an increasing interest rate environment. Do you agree? Can you recommend some high yield bond ETFS?
thanks

Q: Good morning, my daughter has $600,000 to invest for a two year period. She is looking for relative safety of principal, but a better return than GIC's or daily interest accounts, thanks?

Q: Is there a Canadian Dollar equivalent to the
US I Savings Bond?