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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: Firstly, let me compliment your staff on the VERY quick response to my latest question!
Now, picking up on our changes to the Cash Acct, I have decided to move the bulk of our RIFF accounts to the US to counter the larger CDN investments in our Cash Acts.
I have picked only ETFS as I believe they best represent US national growth potential at this time.
I would appreciate your best advice & rationale on 4 or 5 of the following: UDOW, DDM, SPSM, XLE, DIA, VTI, XLF, SPY, IGM. Thank you.
Read Answer Asked by Robert on January 22, 2018
Q: Greetings 5i,

I am making a effort to simplify my portfolio, and would like your advice on my current REIT exposure. Specifically, I currently hold REI.UN and CSH.UN at roughly 4% each, and am unsure whether both are necessary for my long-term strategy. REI is attractive to me based on its ownership of some of Canada's most important retail properties, its intention to diversify into residential holdings, and its excellent yield. CSH is held due to the nature of its business within an aging population, as well its stability in what I consider to be a relatively weak Canadian health care sector (my other healthcare exposure consists of UNH and JNJ). The income potential offered by holding both is nice, but, as a relatively young investor with a longer time-frame, I feel as if the funds from one might be better utilized on something with a slightly higher growth potential.

I am 36 years old, debt-free, conservative (although not totally adverse to risk), and greatly prefer long-term holds that do not require constant monitoring. My investment portfolio is strictly for the purpose of expediting my retirement, and I have no need of its funds for the foreseeable future.

Do you feel as if continuing to hold both would be beneficial, or would you recommend that I let one go and redeploy the capital elsewhere? If the later, which would you recommend I keep as a long term-hold?

Thank you.
Read Answer Asked by Lucas on January 22, 2018
Q: Greetings 5i,

I am considering adding a long-term, full position (5%) in V. This addition is attractive to me based on its international brand presence, solid track record, and the rising interest rates that will likely help profits moving forward. I am not concerned about the short-term ramifications of the recent US tax reform on its long-term viability.

My current financial exposure consists of TD.TO and BNS.TO (roughly 3.5% each), as well as full positions in BRK.B and BAM.A (although, due to the breadth of their holdings, I look at BRK and BAM more like diversified "hybrids" than single financial positions).

I am 36 years old, debt-free, conservative (although not totally adverse to risk), and greatly prefer long-term holds that do not require constant monitoring. My investment portfolio is strictly for the purpose of expediting my retirement, and I have no need of its funds for the foreseeable future.

Does the addition of V sound like a reasonable course of action at this time?

Thank you.
Read Answer Asked by Lucas on January 22, 2018
Q: Good Morning. UTX is approaching 7% of my portfolio and I will soon need to sell some of it for portfolio allocation reasons. I would like to deploy the proceeds to a stock, either Canadian or US based, in the same sector. Do you have some suggestions? thx JR
Read Answer Asked by John on January 22, 2018
Q: Stonegate Capital put out a favourable update today on Input Capital. They listed details like the market streaming initiative INP launched, noting the 180 new farmers y over y signed up, that this product has much higher margins than their legacy capital streaming contracts. In short Stonegate is endorsing INP. If Input Capital is not looking to raise money thus Stonegate has no opportunity for underwriting business then what motivation would they have for publishing this report... other than taking the report at face value? Should I be looking for bias here?
Read Answer Asked by Harry on January 22, 2018
Q: Hi Peter,
I have been researching answers from 5i on TFSA's. I am looking for a little help to define criteria for growth stocks in a TFSA.
Using TFSA for growth only
Using RRSP and Non-Reg accounts to balance portfolios (including consideration for TFSA)
In a growth model TFSA, is the TFSA to contain a "mix" of sectors or just the best growth stocks available (in recent history this would be almost all tech stocks)?
If you were to select 10 growth stocks from Canada and the USA, what would those 10 stocks be (ranking if possible) at this time?
Is a US stock without dividends the same as a Canadian stock in an TFSA.. i.e. not subject to any taxes or capital gains yearly or when cashing in the stock?
Our assumption is that we are missing out on growth potential if we do not have high growth US stocks in our TFSA. Should we be adding US tech stocks now?

Please take the number of points that are appropriate to answer our question.
Thank you for your great service.

Jerry and Debbie


Read Answer Asked by Jerry on January 22, 2018
Q: Hi. Peter and 5I.
I have also, as Carl, noticed the significant increase of questions on ETF's. This is one of the numerous red flags that are started to pop up all over the market universe in my opinion.
I have taken action against what I consider a risk reward more and more tilted to the downside and am way more concern today about terminal losses (unrecoverable losses) than I am about simple losses on further potential gains(opportunities costs)
I consider ETF's to be purchased only where I cannot buy company stock in certain asset classes or I need to buy in a foreign market that reflects a potential opportunity.
I have a general question about ETF and how they work. If ''everybody'' is buying ETF's now, does that means that the underlying stocks will also grow no matter their intrinsic value. In other words, would it be possible that the ETF's buyer may have now a predominant impact on the market than ''all'' the direct buyers of the underlying stocks. Tail wagging the dog kind of...
A comment on the extract from A wealth of common sense that you mentioned.
If the 16000 mutual fund are buying ETF does that not add to the overextended existing situation?
Passive investing is not just the domain of retail investors.
Thank you
CDJ
Read Answer Asked by claude on January 22, 2018
Q: I currently own small positions in CRT & CHP which seem to be lying fairly dormant. To get a bit more momentum, I am considering switching these to REI . Is this a good strategy. My thinking is that mall owners may be switching to condo development as online shopping increases.

Many thanks, as always.

Joanne
Read Answer Asked by Joanne on January 22, 2018
Q: My wife is looking to invest 40k in a TFSA investment portfolio. Which would you recommend for long term? KXS, PHO, SIS, TOY, PBH, SHOP and DOL or
IEFA, IEMG, XIC, XSH, VTI, ZFM and VUS.
Read Answer Asked by Enzo on January 22, 2018
Q: Hello 5i team,
Under the energy sector I currently hold MCB and RRX. I am thinking of selling MCB and adding another energy company from the balanced portfolio. I was wondering which of the 3 listed would be the best in terms of growth? All three have a decent dividend but I was leaning more towards Enbridge since it is the largest and most stable of the three.
Andrew
Read Answer Asked by Andrew on January 22, 2018
Q: Hello,
I am quite new to the investing world and just looking to get much more involved. I currently have some mutual funds through a balanced portfolio in a TFSA that I have discussed with my financial planner. I have a TFSA open through Manulife and RBC. I am looking and hoping to get into some index funds and passive investing as well. Looking to just get average returns with low fees. Any suggestions on the best way to start this and go about this on my own? Recommendations on which ones I should start with through the TFSA accounts I have? I seen some through RBC, but just find it tough to get answers from financial advisors as I always feel pushed toward active investments (which I am open to down the road as well).

Thanks from a early and trying to learn investor,

Matt
Read Answer Asked by Matthew on January 22, 2018
Q: The Constellation Software debentures, CSU.DB, seem like such a great investment, I wonder what the hidden downsides might be. They pay 6.5% plus CPI inflation – currently about 2% - which is a very high rate compared to ETFs like CLF, CBO, CPD and XHY and also compared to other blue chip corporate bonds in Canada. Moreover the inflation protection is an increasingly attractive feature. There is of course the risk of losing principal if CSU goes broke, but it is a great company with lots of sticky revenue and this seems highly unlikely, at least for the foreseeable future. The price of these debentures has been bid up, but the yield to maturity is still quite high. Are there other reasons not to give CSU.DB a large weight in one’s fixed income allocation?
Read Answer Asked by Philip on January 22, 2018
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