Investment Q&A

Q: Peter,

I am trying to get a handle on the way the industry calculates debt to equity ratio. I look at ATD.B and on 5-I it shows .84. Morningstar shows 1.17. They don't seem to include other LT liabilities. My calculation shows 15,577 / 7563 = 2.05 ( April 2019 YE).
Please advise the calculation method that is consistent in the industry so I can compare apples to apples with different companies.

Thank you,

Paul

Q: Hi

My question is about structuring and managing a portfolio across multiple registered and unregistered accounts. Please forgive if this question has been asked before.

Between 4 family members (including two young children) we have 11 trading accounts on the go, including 5 unregistered (3 Cdn and 2 US), 2 tfsa’s, 2 rrsp’s, and 2 resp’s. My approach to date has generally been to try to diversify within each account and try not to duplicate between accounts, with an eye to overall diversification.

This results in three problems (at least): sub-optimal diversification within and across accounts, too many holdings (which are difficult to monitor) and a low average $ value per holding. For example, 11 accounts times ten positions per account is 110 holdings. As for low value, a 10% holding on a $50,000 registered account is $5,000, which represents only 0.5% of an aggregate $1,000,000 value (example).

I have been thinking of treating all of the accounts holistically rather than individually while accounting for tax considerations of course. My goal is to try to get the number of holdings down to 20 - 30, with an average value of 3% - 5% of aggregate portfolio value. I find the main difficulty to be in structuring the lower value accounts.

Two approaches I have been mulling over:

1) Scrap the individual account diversification approach and perhaps only hold 1 - 3 positions in lower value accounts. This approach would probably mean that no account on its own will be diversified but the aggregate portfolio will be (hopefully).
2) Try to maintain the account diversification approach by investing in only one etf per account until the account eventually reaches a size sufficient to hold more positions (then I suppose the approach would flip to the first approach). The idea being that each account would hold a different etf (and at least be somewhat diversified) that would contribute to the overall diversification of the aggregate portfolio.

Do you have any comments or guidance on managing multiple accounts? How do investment professionals manage their own family accounts? Any best practices that you are aware of, or good articles that you can direct me to? Any considerations besides tax; for example, how do you apportion risk between family members and accounts?

Thanks
Derek

Q: Good morning, i have taken the Canadian Securities Course, but what else would you recommend to get more educated and familiar with all of the financial ratios in a company, thanks? They seem to have different meaning from industry to industry.

Q: I know you have stated that "growth" stocks are best to be held in your TFSA.
I just turned 70 - I had put Dollarama and Savaria in this account and Dollarama is recovering but Savaria is not, to date, although I know you still like it.
The problem is that when you have it in this account and things don't work out, you can't sell and claim a loss vs putting it into your Non-RRSP account.

Shouldn't your age and time horizon come in effect when deciding on what goes into each account.
Thank you
Margaret

Q: There are a huge number of presentations at the money show in September. Are all or any of these taped and made available at a later date for viewing?
Thank you
Paul

Q: Hello everyone,

For the webinar, which I will not be able to view live, do I have to sign up in order to watch it at a later date? or will it be available to all 5i members regardless if they signed up or not.

Thanks

Q: Will not be available to watch July 9th Webinar live. Can we watch recording at another time?

Q: Good morning Peter, Ryan, and Team,
Will the July 9th Webinar be available to view for those who will be away on that day?
Thanks!

Q: Sometime ago you had an article called "Who is working for You." or some thing like it. I cannot find it in 5i . Has it been deleted or am I not looking in the correct place. Could you please tell me where to find this article... Thanks. Ernie

Q: Regarding the upcoming webinar on Portfolio Analytics, will you be archiving it for those of us who are not available to watch it live on the 9th?
Thanks.

Q: 5i Team
I currently own PHN Bond Fund (RBF1110), PHN High Yield Bond Fund (RBF1280) and GICs in my RRSP for the fixed income portion of my portfolio
Would adding a convertible debenture ETF complement the PHN High Yield Bond Fund (RBF1280) or would it be a duplication? The convertible debentures would not exceed 5 % of the total fixed income in the RRSP.
Are there any other Canadian convertible debenture ETFs other than CVD and CXF. Of the two ETFs mentioned, which is your preference?
Is it better to use an ETF for convertible debentures or should I purchase individual company debentures.
Where can I obtain the credit ratings (Moodys/S&P/DBRS) for individual company's convertible debentures.

Thank you for great service.

Q: Regarding Peters “Big Swim fundraiser” I like many others have done very well by 5i Research’s sage advice and would very much like to give back. Is it possible to donate shares “in kind” which would be very fitting and tax efficient means of donation.
Thanks 5i for all you have done.
Les

Q: Is there a search function or index for the Blog feature?
Specifically, I am looking for a list of Canadian companies that trade not just in Toronto but also on NYSE.

Q: I just found your section on "companies." Great site. I am interested in finding dividend and revenue growth for companies. Let's look at Enbridge as an example. You list the 3-year dividend growth as 11.01% and the 5-year dividend growth as 15.88%.
Enbridge currently pays a dividend of $2.96. In 2016 it was $2.12 and in 2014 it was $1.40. These represent growth of 28.38% and 111.43% respectfully.
My question: Is your posting of dividend growth rates an annualized rate? I assume your 3-year dividend growth of 11.01% and 5-year of 15.88% are annualized rates. Am I correct in this assumption?
The same question for revenue growth. You state the 3-year as 10.87% and the 5-year as 5.62%. Are these annualized rates?
Thank you
Michael

Q: Could you post the web site for Peter Hodson's 'The Big Swim', fundraiser for the Brigadoon Village.
Thank you,
Ellie

Q: Follow-up on bitcoin fever: What about futures on bitcoin ?
Is it a viable option ? (Expensive ? Complicated ? Available in Canada ?)
Thanks !

Q: Hello,

After reading the article on 5i 'Investment Model Portfolios' - May 6, 2019 I had a question regarding this post in relation to my current equity portfolio.

My portfolio analytics indicates that I should be allocating 25% to Canadian equity, which seems high to me. This article mentions that the big providers/firms allocate about 31-32% to Canadian equities, which I found a bit surprising, given Canada is only about 3-4% of the global equity market. The article does note that for Canadians, having a home country bias can make sense (dividend tax credit and tax reasons), which makes sense.

My question is this. For the average Canadian investor, does 25% of one's equity exposure to Canada seem high (even given the added benefits noted above)? I am guessing there is no 'perfect' answer to this question however, I look at this as making a big bet on oil and financials. If Canada is 3-4% of the global equity market, could one not argue that even doubling Canadian exposure, say up to approximately 10% of equity portfolio, be a reasonable allocation?

Thanks for your insights on this.

Q: I am looking at your : "Stocks that Pay Monthly Dividends" spreadsheet have a few questions. First, looking at CHP.un just as an example, debt to equity is 205.5%. Seems high to me but do you feel this is OK? What other metric would you consider if it is OK to you?
Second, their payout ratio is -52.9%. I understand that a payout ratio of more than 100% means part of your monthly dividend cheque is a return of equity (to be avoided as, theoretically, your equity position is diminished with each cheque) but what does it mean when the ratio is in a negative position?
Third, some listings, BPF.un for example list no payout ratio. Why is that?

Thank you, by the way, for this list. Fascinating.

Q: Hello,

A recent answer mentioned no-fee GIC's. I'm puzzled. We have several GIC's and with various companies. The yearly statements we now get from our advisor (statements that are supposed to be more transparent about fees) says every one pays a fee to our advisor. The GIC rates are net of these fees of course but, in my opinion, these are fees and all are pretty big percentages when compared against the net GIC pay-out. Your thoughts? Thanks.

Q: Hi 5i team, thanks for your information on beating estimates or not . I just want to see how volatile the short term price action is as it can move up or down in the 10, 15% range. How do you define profit taking as stock price drop ? Is there a maximum % drop before it is not profit taking ? Thanks.