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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: Hello, I will have to liquidate a substantial amount of my portfolio in the near future and figured I may as well take the opportunity to rebalance my holdings. My goal is to build a fully invested portfolio based on the 5i Balanced Equity portfolio core, with a minor growth tilt. I have read through the Q&A section thoroughly and have come up with the following solution and wanted your opinion:

NON-REG: AIF, BLX, PKI, WSP, XTC (5 holdings)
TFSA: CCL.B, CSU, KL, KXS, NFI, PBH, PHO, SHOP, SIS, SYZ, TOY (11 holdings)
RRSP: ATD.B, BYD.UN, CAE, CLS, ENGH, GSY, GUD, MX, SJ, PEO, ZZZ (11 holdings)

I have 2 questions (please feel free to deduct more credits if necessary):

1) Are there any names you would remove and/or swap out for other names? (I am nearing 30 holdings which from what I have read could be getting too large and inefficient) and

2) Is the division of holdings across the NON-REG/TFSA/RRSP best spread for growth efficiency?

As always, thanks for your amazing service!!
Read Answer Asked by Michael on August 14, 2017
Q: I've recently changed jobs and now have access to funds that were previously tied up in a group RRSP. I would like to start building the balanced equity portfolio, and at this point in time believe I have enough cash to buy about half of the portfolio now, with the intention of rounding it out in the new year.

Which 10 or so stocks from the balanced equity portfolio would you recommend starting with at this point in time? I'm in my late 20s so therefore have a long investment horizon.

Thanks in advance.
Read Answer Asked by Michael on August 10, 2017
Q: I am retired and living on dividend income. 80% of my funds are in my income portfolio, which is focused on dividends and yield (approx. 20 stocks) and meet my income needs.
So I am considering investing the remaining 20% of my funds in your balanced portfolio for more capital appreciation. How would you recommend I go about this? If I also mirror your balanced portfolio, I would have 40+ stocks in my portfolio.
Would you therefore recommend 5 stocks that look most attractive at current valuations and invest equally in each?
Read Answer Asked by Curtis on July 20, 2017
Q: Hi 5i,
Just a comment. For anyone looking at historical returns to evaluate the future prospects for a balanced (equity + fixed income) portfolio, it is extremely important to consider that the next 30 years of fixed income returns are virtually guaranteed to be significantly different than the past 30 to 40 years. Bond yields (interest returns) were in a generally declining trend, originally from nosebleed levels, for about 35 years from approximately 1980, during which even government bond yields dropped from double digit peaks to the negligible rates available over the past couple of years. The portfolios of investors who held bonds of significant duration early in that period reaped high interest rate bond returns while they watched the paper value of their bonds increase with each downward tick in interest rates. The fixed income component was potentially a tremendous contributor to very good portfolio returns over much of that extended period of declining interest rates.
Looking out over the next 30 years, the prospect is vastly different. Bonds don’t have anything remotely approaching the same kind of return potential. Current interest rate returns are still very low as rates are recently just beginning to move off what may later be viewed as ‘the bottom.’ The prospect for people who hold bonds of any significant duration while rates rise is that their holdings become less valuable. Low interest instruments may need to be held to maturity in order to avoid a loss of principal. In the meantime, those low interest bond returns will be a drag on any better portfolio returns that may be generated by equity holdings. If you have 50% of your portfolio in bonds that pay 2%, and you hope for an 8% overall portfolio return, you have to generate a return of 14% from your equities. Maybe bond yields will return to levels where they are not so detrimental to significant portfolio returns over the next 5 to 10 years but maybe they won’t. If they do, then holding bonds while the rates are rising can be painful. If they don’t, then they may go through an extended period where the chief value in bonds is the secure return of capital at maturity but the return prospects until maturity are relatively dismal.
The fact that someone buying a 10-year Canada Bond in 1982 got a 16% annual rate of return on it is not an indication of what anyone putting together a bond portfolio or balanced portfolio today can expect it to realize. It is completely irrelevant.
To assess the return prospects of a balanced portfolio today, you need to consider the relevant details and prospects for today's bonds, not the irrelevant details and portfolio contributions of bonds that have long since expired.

(Please print only if you think doing so may be helpful.)
Read Answer Asked by Lance on July 19, 2017
Q: Where can I find past model portfolio updates? I am a new member and would like to review the historical trades in the portfolios along with a brief description but I can't find anywhere that has past trades unless I open up every monthly report.
Read Answer Asked by Curtis on July 13, 2017
Q: Hello team,

Please advise what is in vogue regarding dividends accumulated in both registered and non registered accounts. I am able to reinvest these as it is not an issue in the non registered account, which has the bulk of the dividends. Would you recommend reinvesting in growth stocks,IE growth portfolio, or to plow back into the Beport stocks?

the dividends amount to roughly a 1/2 position in my current holdings.

Thanks

KC
Read Answer Asked by Kelly on July 11, 2017
Q: Hello,

With the market in a bit of a down spin these days which stocks from your Income, Growth and Balanced Portfolios do you think are good to top up now, with this current decline. Please choose your top 3 from each portfolio and why for each.

Thank You
Read Answer Asked by Ben on July 10, 2017
Q: I have repatriated my holdings from a full service broker and now using a self directed account to manage the portfolio.
I wish to construct an Income Porfolio and a Balanced Portfolio look a like. To that end can you list the first five holdings from each portfolio that you would be first to acquire in, order of preference if possible?
Thanks
Read Answer Asked by Peter on June 30, 2017
Q: Hi there,

I currently own a slightly modified version of the Balanced Equity Portfolio (MG/XTC, SLF/GSY, BNS/ZZZ and ENB/BLX). In addition I also own SHOP, ZCL and PHO. In your opinion, do these 3 names from the Growth Portfolio represent your best ideas or would you substitute any of them at this time? I know SHOP had been one of your top ideas when it was trading at a much lower price - does it still remain as one of your top ideas with the recent run up in price?

Also, I noticed Peter had selected BOYD as a top pick when he was last on Market Call. I was curious to know if this is somewhat of an indirect play on the auto sector and if I should swap XTC for BOYD at this time?

Thanks for your excellent service and advice!
Read Answer Asked by Michael on June 21, 2017
Q: Hello Peter,

I am planning on making a 30% capital contribution to my stock portfolio. With my holdings predominately being the Balanced Equity Portfolio, which stocks are OK to add to given the latest market activity and specific company outlook, regardless of weighting?

Thanks,
Angelo
Read Answer Asked by Angelo on June 21, 2017
Q: Could 5i please list the companies that are no longer followed or no longer in portfolios due to under-performance? The dates they were pulled would be great too. Thank you.
Read Answer Asked by Jerry on June 19, 2017
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