Investment Q&A

Q: Please comment on Turkey's financial crisis and how would it affect US ,Canada and China stocks price. How should we prepare for the impact. Thanks a lot

Q: Good morning 5i,

Can you please provide me with your top 10 Canadian growth companies regardless of sector or market cap?

Q: Hi,
Im young (33) with good income and savings for investment for the long term. Im thinking of putting my portfolio 50% into etfs for long growth and 50% into equities for faster growth. I like the etfs since it has been shown time and time again that it is rare to beat the market long term with just selecting individual companies. With the 50% in individual equities, I would rebalance probably once per year (unless large bumps in price happen) to take profits and move them to the etfs to maintain the 50% split for a while and protect against losses. Do you think this is good approach? What basket of etfs would you recommend for this approach? Or would you look at something all in one like VGRO? If a basket of etfs is recommended would you prefer hedged or unhedged? I have read/heard a lot about a coming recession and potential dive in the US dollar (from people like Peter Schiff), so Im not really sure how to protect against that (other than growing my cash reserves also to be ready to purchase on a large drop). Or would you use a combination of ETFS and gold somehow? Thanks for putting up with my rambling here, please deduct what you need to for credits.

Thanks

Q: Hi Peter and Team,

My question is about what is the best strategy and behavior during a downturn in the markets?

From my reading of previous answered questions and on other posts on the internet, the advice seems to be, do not sell while the market is dropping. How can one be disciplined enough not to do it? What if one stock in our portfolio is dropping more that the rest during a downturn in the markets? At what point while the market is dropping, should we consider buying more quality stocks?

Thanks again for your good work.

Marvin

Q: Hi,
Have inflationary pressures become real due to the tarrifs? Do you expect this to start having impact on prices and therefore on the stock market? I suspect Trump might back pedal once these tariffs start impacting markets. What are your thoughts? Thanks.

Shyam

Q: Hi group I am taking a bath on tech stock both in US and Canada . Looking like market is going to value on these stock as opposed to growth. I also am losing a lot on financials like Visa + PayPal. What strategy should I use going fwd . Preserve capitol or wait out what happening or? . I know that this info is scattered info but generally what is your thoughts going fwd Thanks for your guidance

Q: Hello 5i, This is about re balancing my non registered portfolio by region. I currently have a my portfolio at 20% fixed income and 10% balanced. Now for my growth portion, what mixture would you be balancing your portfolio. US, European, Emerging markets and Canadian. It seems that over the next couple years the growth will be from the US and Emerging markets but would like your assessment for the regions and then what sectors. Thanks

Q: Hello 5i I haven't seen a sector percentage recommendation since last Dec. Could you please provide some guidance based on our current political and economic situation.
Thanks T.

Q: I've been waiting for a significant market correction for awhile. I blew it with a 3x U.S. bear ETF at the beginning of 2017. I'm getting itchy again. What U.S. market strategy would you suggest if you felt that a downturn is overdue? I'm not as liquid with my Canadian holdings so I'm only focusing on the U.S. for the time being.

Q: Hello 5i: Is there and indicator (or set) to help identify an eminent bear
market, and if it happens what would be the best step to take to minimize
the downturn of a portfolio
thanks
F

Q: I recently saw Phil Davis suggest that the stock market reacted very negatively during Nixon's presidency when members of his inner circle were indited and that this was a good time to go to mostly cash. Can you please comment on whether you think this is good advice for investors and if it is historically accurate. Any other opinions you have with regard to Trump's presidency affecting the market would also be appreciated. Use as many credits as you think appropriate.

Q: Hi Peter/Ryan,

Most of the companies in the BE portfolio have significant US or Intl exposure in terms of operations/revenue. With a portfolio allocation of Canadian (BEReport) 50%, US (ETF) 30% and Intl (ETF) 20%, the actual allocations will be higher for US and Intl since a portion of BEReport is derived from US or Intl. Please let me know your thoughts and any suggestions in terms of portfolio allocations.

Thanks
Ninad

Q: I am writing in regard to a question posed by John on Jun 25th regarding alternatives to mutual funds that his TD adviser had invested in for he and his wife. We too (my wife and I) WERE invested with a TD adviser up until a year ago. We also had a TD Direct Investing account that we use for investing in stocks. The final straw for remaining with the adviser came in 2017 when TD started charging a yearly fee over and above their MER's when investing in a TFSA. They also stopped allowing us to invest in D series units of mutual funds. We transferred all of our assets to the Direct Investing account and haven't looked back. We are now able to buy any type of mutual fund, ETF, stocks or fixed income product like GIC's that are sold through Direct Investing.
Also, when answering John I believe you may have replied with alternatives to a couple of wrong mutual funds. I believe he was asking about CIF843 (not 842) and FID231 (not2312).

Q: Please suggest weighting for 9 sectors for a balanced Canadian equity portfolio. Exposure for US and Fixed income is elsewhere:
Consumer
Staple
Energy
Financial
Health
Industrials
Technology
Material
Utility

Q: With interest rate hikes seemingly imminent and tariffs not going away for a while, which 3 categories of the 10 following in the Canadian market make the most sense for new money today, especially for immediate short term 1-2 years gratification?
Materials, Consumer Cyclical. Financial Services (includes real estate), Communication Services, Energy, Industrials, Technology, Consumer Defensive Non cyclical, Healthcare, Utilities

Q: I am 75% in equity with less than 10% in Canada, and mostly US with tech emphasis, plus Global and EM. The rest of the 25% is invested with a well known active manager (0.6% MER) of corporate bonds who invested in short-term corp bonds of no more than 2 years duration plus floating rate bonds. No Government or long bonds. With rising interest rate albeit not rapidly over time, bonds are not really a place to be in. Corporate bonds can lose capital as well if there is a significant downturn. What is your view on holding cash in MMF in lieu of corp bonds as a fixed income allocation of a portfolio in the foreseeable future as capital preservation? USD MMF instead of CAD cash?

Q: I’m investing for a parent who is currently 100% in cash, is nearing retirement and has never invested. They will not actually need income for another 3-5 years, but I would like to generate some dividends, so they can see actual cash coming off their investments (this may be reinvested). I think dividends will help psychologically if the equity portion declines as they will at least “be paid to wait” while the market recovers.

I am considering constructing the portfolio as follows:
30% Cash – PSA
50% Bonds – ZAG
10% Equity – International Dividend – PID
10% Equity – International Broad Index – XAW
10% Equity – Canada Growth – 5i

Can you provide 5i’s 2 or 3 highest conviction calls right now. I’m looking for growth at a reasonable price. Not looking for yield, but would like it to at least pay a modest dividend.

I would also be interested in any views you have about the suitability of the portfolio and any alternative / additional suggestions you may have.
If there is a correction in the equity markets in next few years or one of 5i’s A companies slips on a banana peel, I may look to put some of the cash to work and increase the equity potion.

My tactical views are: interest rates will rise with the US leading the way, the US broad equity markets are looking very expensive, Bonds are generally not a good investment and at low rates they will get killed by inflation over the long run (but they reduce volatility).

Also, in terms of allocating these investments between non-registered and TFSA, how should I generally be thinking about this? International stocks and bonds into the TFSA until it’s full and cash and Canadian stocks in the non-registered account? I don’t think they will be making any new contribution so perhaps there is no way to use the RRSP.

I look forward to your thoughts and apologise for asking a multi-part questions. If you start to run out of steam, don’t worry about the tax questions.

Thanks

Q: Seems likely we’re headed for a bit more inflation. Assuming this thesis plays out, which sectors do you think should benefit and which sectors should be avoided? Are there specific companies that could benefit greatly and which companies could be badly hurt?

Q: I like the overview that is provided there.

However, with diversification and sector blends being frequent topics of interest and sources of questions, it would be helpful, at least for me, if 5i were to provide a sector overview each month as well as a frame of reference for managing our own portfolios. For example, technology 25% of TSX in May, up 3% over 2017; etc by sector and in a simple chart format. Any chance of that happening?

In the meantime, where can I find that kind of information. I have looked at the TSX.com website as well as the RBC Direct Investing sites and been unsuccessful.

Thanks for you help and guidance here.

Q: Good morning,
A large portion of my non registered portfolio is comprised of a combination of Mawer Equity funds which over time have all performed very well.

In reviewing the annual performance of these funds, I noticed that the asset under management (AUM) for the Mawer Canadian Equity fund has grown to nearly $3B and that this fund has had difficulty beating its benchmark in the last two years.

My question is whether or not you would recommend switching to another Canadian Equity mutual fund or ETF with a lower AUM amount, lower or equal MER and better performance potential.

Thank you for your thoughts and recommendation.