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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: Hi,

When holding various ETF's in your portfolio, should you account for the sector weighting within the ETF towards your sector allocation of your total portfolio? For example, VDY, sector weighting is tilted mostly 62% financials and 21% energy. So lets say VDY is 10% of your portfolio, would you add 6.2% of this towards financials, 2.1% energy, etc..?? I see that RY, TD, and BNS make up the top three holdings, so would you still even consider buying individual financial stocks if this allocation made up your full financial sector weight in your portfolio?

I understand that for specific sector ETF's, like ZUH that focus on healthcare or ZBK that focus on financials, you can count 100% towards that sector allocation in your portfolio. I'm just wondering if I should be doing this with those ETF's that hold more unequal sector weights within the ETF and how to account for those so I'm not too overweight in a specific sector in my portfolio. And how about those ETF's like VCN, where you have four sectors that make up 80% of the weight. Am I overthinking this?

Thanks!
Read Answer Asked by Keith on March 30, 2017
Q: Over the years I have tried to compare myself to indices to determine if my portfolio performance compares favourably. Basically if it does not I always consider 'firing' myself. Your service has allowed me to increase my overall performance I believe and stay 'employed'. Came across a service (from article in National Post) regarding a free service called ARC Private Client Indices. It would appear to provide a real nice comparison indices based on my portfolio makeup. Are you aware of this and do you have any comments on it?
Read Answer Asked by Greg on March 30, 2017
Q: Hello 5I
Could you please rank the following aspects of an equity in order of importance to yourselves. I know that these lists are a personal biased ranking but it gives me insight into how you perceive a stock when you need to buy or sell. Can you assume for the list that you are adding to a balanced portfolio and if you need to use an example, could it be from the Balanced Equity Portfolio. Would the list change between buying and selling?
Growth
Valuation
Cash flow as part of the valuation
Debt as part of the valuation
Management
Momentum
Sector Momentum
Recent Events
Past Performance/Execution
Dividends
Dividend Increases(History of)
Currency
Politics
Anything else
When I look at a marijuana stock I think this is impossible for me to purchase due to valuation. Am I wrong? I thought the same thing about Teck Resources when it was $6/share. I know that these stocks are not in your portfolios but I am hoping to apply your thoughts to stocks within your portfolios.
Thank You
Jeremy


Read Answer Asked by Jeremy on March 29, 2017
Q: Liquidity. As general rule regarding liquidity, I've tried to ensure that the number of shares held do not exceed 10% of the average daily trading volume. For a sizeable 20-30 stock portfolio this eliminates many thinly traded stocks including some in the Model portfolios.
I would appreciate your comments on liquidity considerations when buying/selling a security?
And, is it different for ETF's. Thank you.
Read Answer Asked by Lloyd on March 29, 2017
Q: You stated recently: (the investment strategy of DFN) "and the strategy could be quite easily duplicated." Holding the banks in a self-constructed portfolio would indeed be easy, but it would produce a 4% yield, similar to ZEB. How would you construct the portfolio, as you suggested.

Thank you for your services, esp of stocks not usually covered by analysts.
Read Answer Asked by Kurt W on March 28, 2017
Q: I see another member has asked about holding cash. I found this website helpful, please post if you deem appropriate:

https://www.highinterestsavings.ca/chart/
Read Answer Asked by Walter on March 27, 2017
Q: This is to bring to the attention of those who use TD webroker. The T5008 that was sent by TD to Revenue Canada(RC) reported the full proceed of disposition without subtracting the commission. There are two issues here:
- If you are using the trading summary as an input to your tax program, the net proceed will not match the net proceed that is reported to RC which is particularly important if you have a large number of trade.
- If you are using a tax program with Auto-fill and you don't report the commission as "expenses related to the transaction then you will be paying higher capital gain than you should.
Read Answer Asked by Saad on March 26, 2017
Q: Hi Peter and Team,

When we are adding to a position, how much capital should we commit at a time? If the goal is 5% of the total portfolio for a position, and we are say at 2.5%, would it mean buying the remaining 2.5% at that one time? Or would it mean buying as capital becomes available (i.e. buy 0.5% here and there), until the full 5% is reached.

Thanks.
Read Answer Asked by Marvin on March 24, 2017
Q: Hello 5i.
Thanks for the ongoing investor communication/Education.
I have had slightly positive overall results with mixed individual stock selection results utilizing 5i information.
Would have liked to be on the Shop ride but I could not buy into a stock moving up everyday and now doubled in three months. How do I not miss this next time?
I did buy the indicated holdings (SIS, GUD, ET, SYZ, PUR, TNC=cash)
Excluding TNC, the mix leaves me up 6.9% in the time frame of about a year or so..SYZ since 2014 and some various buying along the way.
I am not doing as well as you Portfolio so stock selection and timing clearly makes a difference.

With this list, should the Holdings be at full weights now for all of them?
For example, PUR is under small cap $ allotment while SYZ is over allotment.
Is there something I should be adding that is most appealing today even though I personally may have to hold my nose and buy? (Portfolio is well diversified and balanced)

Also, it is clear I am not benefiting from the stock category you sometimes highlight as "winners" or "1000% gainers" to help propel my portfolio gains. Should I be trying to buy all the investment in your total portfolio or how does one use 5i service to benefit to the max?

Thanks
Dave
Read Answer Asked by David on March 23, 2017
Q: Can you please explain he correlation between bonds, stocks, reits and gold?

id like 30% of my portfolio to move differently than the markets in case of market correction but dont want it all in bond funds due to rising interest rates. how would something like this look over the long term or do you have a better suggestion?

10% bond fund
10% REITs
10% Gold half xgd, half bullion
70% equities (CND, US and ITL)
Read Answer Asked by Carla on March 23, 2017
Q: During significant market corrections in the past, how much have dividend payouts by listed companies been affected? I am planning for retirement and wanted to know if I should use the current value of my dividends (mostly large cap companies) as annual income or whether I should plan that the dividends could decrease. If they could decrease, what would be an approximate percent drop to use in my plan? Thanks!
Read Answer Asked by Linda on March 22, 2017
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