Investment Q&A

Q: I read an article earlier this week about convertible debt in the cannabis industry. I think the company was Canopy. The exercise price on the convertible debt was reduced considerably to entice the bondholders. I assume creating more potential downside for the shareholders. In any case, my question relates to the management rights to proceed with such a move. Is it voted by the shareholders ? What would the alternative be ? Borrowing at higher cost ? If no event of default has occured on the bond (maybe there was a default?), why give a better deal to the bondholder ? Can you please provide general comments about debt holders rights vs management/shareholders rights. Thank you.

Q: 1. As I approach retirement I am looking for options to at least slightly improve the dismal returns from the fixed income portion of my portfolio (currently in bond funds, PSA, GICs, returns 2.2-3%).
I am wondering what you think of market linked GICs? The 5-year TD Canadian Banking & Utilities GIC offers an annual guaranteed minimum interest of 2.75%, and maximum total return 25.00%. The 5 year Oaken GIC rate is 2.85%. With 100% principal protection, a competitive minimum interest rate and the potential for a modestly greater return I cannot see any downside to the TD product which makes me think I must be missing something.

Q: This is tax loss selling time. Is it a good time to buy or sell, neither or both?

Q: I notice that when asked 5i is able to give the payout ratios to members seeking companies(reits banks pipelines utilities etc) that provide. yield but more importantly the sustainable payment of their dividend/distribution. .. the payout ratio for me is a key metric when making an investment decision. it would be most useful if 5i could include payout ratios as a regular part of their metric checklist thanks Richard

Q: In yesterday's update there is a reference to an article featuring Peter..." five sins investors should avoid" (click here to read full article)." but the link takes you to an advisor only section of the Globe. Do you have another link?

Q: Two questions: One, would you consider ZMI as "fixed income" for that part of my portfolio? Or is there too much of an equity component? Second, so many ETFs have a return of capital; when the fund reports a yield, does this include the roc? If so, isn't that reported yield misleading? Is there a way to learn what the actual yield ( ie without my own capital) being included? Thanks for your excellent service.

Q: Hello Peter and team,

Is there a tax efficient way to have US exposure in a taxable account? Would you recommend a ETF? Trying to get more US exposure in my sons portfolio and the taxable account is quite a bit larger than the RRSP's and TSFAs (both maxed) so if we want more US exposure, it has to be in the unregistered.

Thank you,

Wes

Q: With reference to Thomas' unfortunate friend who has 92 absurd positions he should check to see it the account is charged trading fees. In some cases with a million dollar account the fees area percentage of the face value and no other charges i.e. trade fees apply. If so he could consolidate without costs.

Q: When donating securities to a charity where there is a capital gain that will not be applied, is there any restriction on replacing these shares? Can I buy them right away or is there a 30 day wait period?

Q: hi guys thinking about buying an etf would like a clarification on the fees that are charged and when and how they are paid and to whom thanks as always

Q: I have a friend who has trusted his advisor completely . His basic investment account has 92 positions ... less than one third of the value in US and Canadian equities ( all in odd lots, like 14 shares of AAPL @ a profit of $56.00 ) , but most are in Mutual Funds ( everything under the sun ) . RBC have convinced him that because it is a million dollar portfolio, he gets a very “low fee”, You have trained me well ... stop this insanity right ? Buy great stocks and where you want broad exposure and indices buy ETFs ...right ?

EXCEPT
I don’t know how he can get out of 40 mutual funds and 50 stocks without incurring ridiculous trading fees . His RSP,RESP and TFSA are all structured in the exact same manner ... same exact funds
If , for example , he directed his broker to transfer all positions to RBCdirect investing , would he avoid the initial hit of over 350 trades at 9.95 each ? OR does one make a deal with the advisor to get him out of this stuff ? OR does one make a deal with a different broker altogether ? OR does one complain to the securities people ?
I don’t know what strategy to use , but as per your video , he will be giving his advisor hundreds of thousands in fees and commissions .

Q: Thanks for adding the MER calculation. I find that number very useful.
I was wondering what a reasonable MER percentage should be on a larger portfolio of approximately $1.0 million. Should the range between .05 and 1.0 percent or should it always be less than .05 percent? It seems like paying $10,000 per year on a $1 million dollar portfolio is a fairly significant number.
Thanks for your great service!

Q: EVERYONE IS IN ON THIS OBSERVATION.
DOES MAKE SOME SENSE.

https://ritholtz.com/2019/11/value-has-never-been-this-cheap-vs-momentum/

Q: Co. stock buybacks are not what the mkt. wisdom says.

https://www.youtube.com/watch?v=nJkF2FdHAiM&t=328s

Q: I'm 21 years old and am planning on making a TFSA portfolio of Canaidan companies (Mostly Blue-chip dividend paying stocks, IE, Banks, Telcos etc....) to buy and hold forever. I'm also planning on adding SHOPIFY in my TFSA and placing BABA in my RRSP. I was thinking XAW in RRSP as well top get american/international exposure, Just wondering your thoughts on this and any advice would be great. Also do you think it's a good idea to invest now or wait for a market correction or just avergae in over time in all of these companies.

Q: I'm doing a review of my equity holdings. I note that there are 4 CDN stocks that have each made slow, but consistent gains, since purchase. Also, each pay a dividend. However, as components of my overall portfolio, they now represent less 2% (average is 1.7). (During the same period, my other equities have grown to surpass 5%). My question is whether I should increase those small weightings (all held for 5+ years with no worrisome setbacks)-- or let them go and deploy that capital to other more growth-oriented prospects. Thanks.

Q: Brookfield Renewable Partners (BEP.UN) now forms just over 9% of our joint registered investments and although that is much higher percentage than any other holding (and may be inadvisable), I am somewhat reluctant to sell any, because it is one that has been a winner from the day I bought it. That is in stark contrast to quite a few other stocks that I apparently bought at their height which have since plummeted.

I need a trimming strategy and would like you to give a detailed description of how best to maintain the number of shares held as long as possible, but sell some if the price starts to drop. Perhaps there is a link that you would prefer to send to me.

I have read your opinions on Limit and Stop Limit sales at one stage or other and have also tried this, but it hasn't always worked as I thought it would.

What would you suggest is the best way to address this?

Q: Hello 5i Team
I currently own ALA with a purchase price of $20.80.
I desire to sell the stock at $20.80 or greater before the end of 2019 with a preference after November 25 so I receive the December 15 dividend.
Which is the better option:
1 - Do I enter a limit order ($20.80) with an expiry date of December 27 and wait for the order to fill?
2 - Do I sell a call option (December 20, 2019) with a strike price of $21 which provides about $0.15 per share (before commission) and if the shares are not called away, then sell the shares after December 20? The option premium will further reduce my cost basis.
If I sell a call option with a strike price of $21.00, if the share price rises to $21.00 on November 25 (as an example) are the shares called away immediately or are the shares called away only if the share price on December 20 is equal to or greater than $21.00?
Thanks

Q: hi,5I
The question regarding the .05 cents. It intigued me also, I have seen 1 cent differences in trades also.
I think it is coming from the ''obligation '' of brokers to cover the the trades in the the ''best interest'' of their clients. So the first lot is sold or bought at .o5 less that what is supposed the ask or bid and the rest at existing bid.
I have lost also bids that were not covered for the same reason or only 500 units for a 10000 units bid... The ''creativity'' of the brokers never stops.
Everybody need to have their share of the ''retail''cake.
I have seen 1000 trades sold or bought per lots of 100 shares more and more. Also there is the practice of brokers to actually show on level 2 just 50% of the orders which is so wrong...
I have learned to live with it after so many years and moved on
I do not know if i am right in my suggestions, so any corrections will be welcomed.
Print at will

Q: There have been a few questions lately about dividends paid in USD into USD denominated accounts. In my experience with RBC, the USD-denominated dividends of BEP.UN were first converted to Cdn dollars at the official exchange rate by the company that distributed the dividends and then converted back to US-dollars at RBC's exchange rate. As a result, one gets less of a dividend than expected and, in my mind, this defeats the purpose of collecting the dividend in the USD-denominated account. Buyer beware.