Investment Q&A

Q: This is a general strategy question for younger investors. At what threshold ($-wise) would you recommend switching from an ETF-based strategy to buying individual stocks to build your portfolio?

Thanks guys,
A.B.

Q: Good morning 5i
I can identify with Neil, who wrote about buying bonds at this time and finds them going down and also looking for an alternative. I have no bond allocation, either, and a couple of months ago bough BSV:US, just putting my toe in to test it. Like Neil, I am also down a little, even after the payouts.
So, I have been wondering whether it would be a reasonable strategy to wait this period out. Would it make sense, for instance, to buy something like FLOT in the US in order to do this? If so, is there anything similar in Canada, as well?
thanks

Q: Hello Peter and Team:

As a recent retiree, I am looking for a good book to educate myself on portfolio construction for an income investor. I would appreciate any recommendations.

Thanks

Q: I have not made use of DRIPS in the past but am considering the conversion for some stocks like banks. I have been appreciative of the extra cash for more buying in the past but locking in the dividends may be a better way to go. Thoughts?

Q: Hello 5i team,
S&P Dow Jones Indices and MSCI recently announced revisions to the Global Industry Classification Standard (GICS®) structure for 2018. I think it would make a great topic for a 5i blog. In the meantime, I have a some questions: (1) does this announcement confirms that we should not always follow blindly industrial classification? (2) the classification is not always up to date, especially in developing industries (internet, telecom, media, communication) or when companies are transitioning activities? (3) Investors should allow themselves to split classification 50%/50% for some companies? (4) Could you list some companies that you think are currently "misclassified" by index providers (SHOP communications?) including companies either under coverage or in 5i Research portfolios or that will be reclassified?; (5) Would you agree that this announcement confirms that long term investors should not care that much about short term sector weighting fluctuations (rounding to the closest 5% is good enough) and should focus on selecting the best investments (stocks) whatever the sector, while just avoiding too high sector concentration, instead of doing mandatory diversification among all sectors in less good companies (for exemple recently : energy)? My main point is: many investors will change the composition of their portfolio (trade) following S&P and MSCI decision while their portfolio exposition (economic drivers) will not have change. Reading most 5i Research questions every day, I see many questions about sector allocation. I thought my questions would help some clients. Any other thoughts?
Thank you for your collaboration, Eric

Q: hi guys : at this time' I have zqq and have done very well with this ETF it is hedged to the cdn. dollar . could you explain the differnce between hedged and non hedged and is there an non hedged that would be better ? tanks Gary

Q: When determining geographic allocation of a portfolio, is it more appropriate to categorize a company based on where the majority of they business is transacted rather than where they are domiciled?

For example, is New Flyer better classified as US for geographic allocation purposes since 90% of their revenue currently comes from the US, or BAM.A as international since 90.4% of their assets under management are outside of Canada and spread across the world?

Also along these lines, is it worth the (very small) effort to sub-allocate companies that have meaningful exposure to more than one broad geographic area, e.g. classify approx. 1/2 of BNS as Canadian and 1/2 as emerging markets based on their business operations?

I ask this in the context of your previous comments that a 45%/35%/15%/5% CAD/US/INTL/EM allocation is appropriate for an average Canadian investor. Thanks as always for your sapient and perspicuous advice!

Q: I am fairly new at this and of the companies mentioned above I want to set up a Dividend portfolio using 3 to 4 of them. Suggestions would be very much appreciated as I am not well schooled in this area.
Thank you

Q: Hello 5i, Have you any information as to the financial problems at TD Waterhouse direct investing as I have sent emails with no response and tried to phone also with no answer after a long time on hold. There are financial errors in my accounts which is quite concerning. Thanks

Q: Is there a web site that lists Canadian corporate bonds that are available for purchase and their rating? What minimum rating would you recommend for purchase of Canadian corporate bonds?

Thanks

Q: Good morning 5i Team.
I'm starting to be concerned about the potential for a significant correction in the markets. I'm interested in your opinion on using a bear ETF on the TSX or S&P as a cost effective way to at least partially protect investments from significant correction? I've read that these tend to decay over time and should only be used for short periods. Is that correct? Does it apply only to the leveraged bear/bull etfs or all?
If the etf idea is not advisable, what would you suggest?
I've got a few questions in there so please take as many credits as necessary.
Thanks
Peter

Q: I would like your opinion on using a market order or a limit order.
Which one do you suggest?

Q: With the repatriation of US dollars from overseas, what is your expectation of the impact on the USD specifically compared to the CAD?

Thank you.

Q: With JP Morgan giving their earnings report tomorrow, do you think the tax changes in the United States are reflected in the current pricing? Also do you think at current pricing that it is a good entry point (new record high)? Would you recommend starting a position today before the report or waiting? Would you recommend this being added to an RRSP (no-withholding tax)?

Finally, I have tried to find that blog post that was written a while ago about what account is best to put certain securities (CDN vs. US vs. Dividend (CDN/US)) but I cannot seem to find it. If you would be so kind to provide a link to it I would greatly appreciate it as I find its a great guide for new investors like myself.

Thanks so much for all your advice and great service! I cannot say how much I learn on a daily basis thanks to you and your team!

Q: I would like to purchase some protection against market volatility but am unsure of the best way to do this. VXX and HUV are a play on the futures but if I am correct there is a time/price decay involved in the price as well. Is there another way to to protect against market volatility other than holding cash? Thanks

Kenn

Q: Good Morning
In my portfolio review AUG/16 you suggested the following for my fixed income portion (50%) of my rrif- xhy 5.6%, Clf 5.7%, MDL 240 14.1%, XSH 12.3%, ZAG 12.1%. Reading the last mutual fund/etf update I am wondering whether you would make any suggestions as steady interest rate rise seems more of a certainty than at that time. A conservative income oriented portfolio.
Tom

Q: Could you please explain the difference between a bond ETF (like XSB or CBO) and buying a bond portfolio in a mutual fund.
Are the ETFs safe for capital retention or do they act more like equities?
Thanks

Q: What books/web sites/resources do you recommend that deals with Estate planning for Canadians, ON resident. Something that is easy to decipher with the emphasis on transition of wealth to adult children in a tax advantaged manner?
Unfortunately most of the advisors/banks seem to interested in selling Universal/Whole Life insurance or asking to make their organisations be the Trustee/co-executor. Prefer that is something conflict free like 5i !!
Thanks in advance.

Q: For a retired investor with 2/3 of his portfolio in an diversified dividend equity portfolio and with 500 k to invest in safer income producing investments and just purchased 73k of CPD, 60k of ZPR, 40k of XHY, leaving 327k still to invest, would you add to these positions or could you suggest other places to invest for income. Would you wait till after NAFTA is decided and then invest. Thanks for your opinion.

w

Q: I own about 16% utilities - all have been falling quite a bit recently. Based on my limited knowledge of technicals, it seems that they are all at their support levels (except TRP which appears to be below that level). Is it time to buy into these utility stocks based on technicals, or does it seem that they are going to fall some more based on interest rate hike fears, so it would be best to lighten up on utilities? or just do nothing?