Investment Q&A

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?

Q: Hello strictly as an'income source could you give-me your opinion,payout divi.
Tank You
Dan

Q: What are your top 5 Fixed Income ETFs (Cdn or US / International exposure) to hold long term in a RRIF or RSP in the current environment?
Thank you in advance.

Q: What are some best ETFs, Mutual Funds that is best to park temporary cash holdings? Preferably something that's safe (but not an interest-bearing savings account) with the expectation that it's better than holding actual cash and that I can sell easily to use within less than a year time-frame?

Q: Please review the current environment on this ETF and would it be worth selling and moving money to higher income geared ETF. If so, what would you recommend?

Q: I currently owned XHY and CPD in my LIRA account and have funds to increase these holding from 2 to 4 % weight. Would you be a buyer of these 2 ETF or wait ?
Thanks

Q: I have about $500000 in cash from the sale of securities and would like to
put into a very safe vehicle for several months.Can you sugggest something.
Thanks Phil.

Q: What do you think of this ETF for fixed income portion of a portfolio?

Q: I have a question about Corporate Bonds that are now deemed 'junk bonds'. Bombardier is one example.
1. Is the primary risk associated with the company going into insolvency?
2. Is there a risk, like Dividends, that the Yields on those bonds can be changed / amended later on?
3. What are your thoughts on corporate bonds like Bombardier? Are there any corporate bonds that you see as a good holding to have?

Q: What is your opinion of getting into investment grade corporate bonds at this time? Yields look particularly attractive compared to government bonds. Are there any that you would recommend?

Q: High yield funds have had a nice run up. Would you consider it too late or too risky to buy either of these funds at today’s prices? Wait for a drop?

Is there another etf that you could suggest in this area?

Thanks.

Q: Hello 5i and I hope you're well.
Under current conditions with interest rates, Feds and bank of Canada injecting so much money into the economy, would you recommend corporate bonds or T-bills ETFs. And, what terms: short/medium or long?
Thank you and be well!
Carlo

Q: Are there Canadian equivalent to TIP and STIP. I don’t want to add to my risk by not being hedged. I’m looking for a way to protect against inflation at some point. Is there another way besides inflation protected bonds?
Thanks as always for your insight

Q: If I believe that there will debt problems before this is over , does one want to continue to hold HFR. I have held it for a couple of years but would sell it if things go down to add to stocks I like. A couple of weeks ago it went way down when market crashed. I read your answer to stay put as things were a little crazy in bond market. Is it the worry of the bond holders that the companies will go under and in fact this is not a real safe holding right now as I see 1|2 of it's holdings are BBB?

Q: Would please comment on events that possibly would negatively impact on the above 3 ETFs?

Cheers