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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I am just entering retirement and my financial advisor wants to increase my fixed income weighting to 55% of my portfolio, in order to reduce risk. My feeling is that this would be dead money (at best!) for some time to come because interest rates are likely to rise.. Can you get out your crystal ball and estimate the probability of each of the following annualized total return outcomes for a bond portfolio over the next 5 years. The portfolio would be geographically diversified, 70/30 investment grade vs, high yield and average duration of 5 years.
> +5% -
+2.5% to +5% -
0 to +2.5% -
0 to -2.5% -
-2.5% to -5% -
worse than -5% -
Thanks.

Read Answer Asked by ROB on May 03, 2021
Q: I am hoping you can help with some suggestions for review for a RRIF portfolio. The plan is for one third to be invested in a 5 year laddered bond portfolio. Is it best to buy bonds or an ETF ? Please suggest a couple of bond ETF's for review.

The remainder would be invested in equity ETF's. Half would go to 3 or 4 ETF's which would pay dividends and would have some growth potential. The remaining third would be invested in 3 or 4 ETF's focused on growth.

Obviously the dividend tax credit is of no benefit in the RRIF but currency fluctuations would be a consideration.

Any assistance you can provide would be appreciated.

Mike
Read Answer Asked by michael on April 30, 2021
Q: Hi Guys
Just curious why last March during the big sell off, XLB traded down so far. I would have though during times of crises, people would run into buying Govt Treasuries for Safety.
Also, at what yield would people consider buying back into XLB, i think the current yield is around 3.3 % My current Portfolio weighting is 2.06% and I'm down 11% you think its a good idea to increase my position to around 4% at this time. I'm also about 40% in GICs , which should perform inversely .
thanks
Read Answer Asked by Gordon on April 30, 2021
Q: I need a bit of assistance knowing what to do with bond ETFs. With interest rates projected to change in Canada and mounting inflationary pressures in the US, would you go long (as per a G/M article today 'A contrarian case for bonds - and stellar returns ahead' which suggested the CND ETF XLB) or short term (eg VSB, CBO as in an answer you provided today)? In the past I have opted for aggregate bond ETFs feeling interest rate calls were beyond my abilities to 'call the market'.

Thanks for your valued input.
Read Answer Asked by David C. on April 28, 2021
Q: Looking for both US and Cdn (GIC replacement) ideas for an 80+ year old, looking for some income, not looking to shoot the lights out. Sitting in cash is tough. 4-6 suggestions would be appreciated. Thanks.
Read Answer Asked by David on April 28, 2021
Q: Hi 5i,

Just looking for your opinion on the dentures of SOT.un. This would be part of my higher risk bond portfolio. It’s a 5.25% debenture (SOT.DB) due 28/02/23 currently trading around par.

The balance sheet seems strong enough to handle the repayment in 2023. I don’t think the conversion price of $10.53 will enter into the conversation.

Any concerns and your opinion would be most helpful.
John
Read Answer Asked by John on April 26, 2021
Q: I see IFC has issued a subordinated Note which acts like a rate-reset preferred. It has an 80 year maturity with resets every 5 years based on the 5 year GOC. Is there a movement away from preferred shares as a source of capital or is this just another alternative? Put another way, should I as an investor include these notes in my toolbox for future capital allocations?
Read Answer Asked by Greg on April 01, 2021
Q: Looking to establish a portfolio of higher yield equities. What are your thoughts on the above ETFs as part of the portfolio and which would be a preference if choosing only one? Have just started building recently with 1/2 positions in each of POW, PPL and BCE so far. Expect to hold 7-10 positions in total.
Thanks
Read Answer Asked by Robert on March 31, 2021
Q: Suppose an investor believes that the US Treasury market is at the end of its multi decade rise and likely to collapse within the next 1-3 years. Is there a low cost way to short US Treasuries you could recommend? If so then what about at different maturities? What would be your opinion about this strategy and its risk?
Read Answer Asked by Steven on March 22, 2021
Q: Hi!

I used to own these ETFs for my fixed income exposure. I went to 0% fixed income during the downturn last year, instead using the proceeds to buy stocks that were crushed. I'd like to slowly start to build a position again in my RRSP. Am I too early? It seems like rates have started to rise and where they go is anyone's guess, but if bonds have an inverse relationship to rising rates, aren't I setting myself up to lose money? Does a laddered approach negate that somewhat? Maybe its best to start with CBO since its Corporate credit and laddered? How would you rank these in general and in order of which I should accumulate first. I realize XHY is riskier than the others.

Thanks,
Jason
Read Answer Asked by Jason on March 19, 2021
Q: As a follow up to my earlier question, where in you mentioned "if the focus is on bonds....", last line. I am looking for opportunities in fixed income investments. So where should the focus be, other than fixed deposits . Thanks for the excellent advice you have consistently provided over the years.
Read Answer Asked by Vinod on March 10, 2021
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