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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: As younger person starting off their professional career, I am now contributing to the federal public service pension plan and look forward to benefitting (defined benefits) from that in 25+ years. I am hoping you can provide some guidance and insight on how I best manage my own self directed portfolio in combination with contributing to the pension. How should I be looking at equity to fixed income ratios as well as sector allocations between my own directed holdings and that of the pension. Or is it better to treat them independently? As a subscriber to your portfolio analytics, I am just trying to figure out how to balance everything as I continue to develop my first portfolio during these turbulent times.

The pension website breaks its net assets per asset class (not broken down in an easy format to compare with portfolio analytics) as: 47.8% capital markets, 14.2% private equity, 14% real estate, 10.8% infrastructure, 7.8% credit investments, 4.5% natural resources, 0.6% complementary portfolio, and 0.4% other.

I also just wanted to say that subscribing to 5i has been the best investment decision I have ever made. You provide an amazing service. I just wanted to highlight the significant financial and investment education you provide through your answers, blogs, monthly updates, etc. These have been extremely valuable to me as a new investor.
Read Answer Asked by Justin on September 08, 2020
Q: I have some US GIC's that have matured and my advisor at RBC is recommending the RBC US Short-term Corporate Bond Fund as interest rates have declined so much for GIC's.
Would you consider this to be a good move or is there something else I should be considering.
Read Answer Asked by shirley on September 04, 2020
Q: thanks for the recent risk ratings answers for US stocks....I use the information to set my target weights.
and I want to mention this is one thing I struggle with, like how to set target weights for each stock in a portfolio.
yes, I know for a blue chip stock, the weight could be 4 or 5% and for smaller cap stocks, like 2%......but really in setting the target weights, I'm in the dark!!!
with this in mind, perhaps you could keyboard your thoughts on what the process is or key factors are.......anyhow, thanks!......Tom
Read Answer Asked by Tom on September 03, 2020
Q: Hi Everyone at 5i! My advisor is suggesting that I invest in a “Note” which invests in Canadian large cap stocks, pays 3.4% for two years, with 50% downside protection. These things leave me a bit leery. What’s the catch??? I keep trying to avoid them and she says I am missing a good deal and gets a bit annoyed. Could you please explain to me again why these are usually not a good deal? I am short on comeback lines when talking to her. Thanks, Tamara
Read Answer Asked by Tamara on September 01, 2020
Q: After reading a previous question about Bam.a and which account to place it. You suggested TFSA or non-registered where it is a growth name. I’m wondering of the 3 accounts I have regular cash (non-registered), TFSA, RRSP. What types of stocks does your team suggest should go into which account generally?
I was under assumption that a non-registered taxable account would be a good place for High Div stocks, not growth stories. There by eligible dividends be tax free and low capital gains to be actually taxed. Or is growth stocks good for there too because of claiming any possible losses?
Thank you for your clarification
Read Answer Asked by Allen on September 01, 2020
Q: Hi, are you willing to comment on a macro issue of the economy? I am perplexed by the housing market where volume of sales and prices seem to be hitting highs in some Canadian urban centers (not Alberta). Lumber companies are doing well. The long term Covid impact on the economy and jobs seems murky at best. Why is there so much confidence in the Canadian housing market? Due to historically low interest rates and some pent up demand? Federal policies designed to prop up the economy? I keep thinking this is all going to end badly if the jobs aren’t there to pay those mortgages. Appreciate your service. You may post this question publicly if you feel it’s Of general interest.
Read Answer Asked by Calvin on August 28, 2020
Q: I have been following a gradual dollar-cost averaging type approach to adding cash into the markets over the past several months.
With the US presidential election coming in the fall and a possibility of substantial political volatility there, would you advise deviating from this general approach? ie, is there a substantial chance of this event causing a market drop, that would merit changing a market approach?
Are there specific events that you are watching for that may act as triggers for coming market movements? The one that is holding my attention is Trump's overtures that he may not cede power if he loses, or if the election decision is unclear.

Thanks for your valued input,

Peter
Read Answer Asked by Peter on August 25, 2020
Q: Hello,

I know they don't ring a bell at the bottom (or the top), but I am wondering whether any of the airlines, hotels, cruise lines or restaurants seem compelling right here. Not really the restaurants that are Covid beneficiaries like the pizza joints or Chipotle, more than the ones that have yet to recover. I am very concerned that with more gov't money being plowed into these industries the pre-restructuring shareholders would be wiped out. Thanks.
Read Answer Asked by David on August 24, 2020
Q: I would like to thank Paul L for his reference on August 10th to a Seeking Alpha article about factor investing. I have since read both the Seeking Alpha article and the associated book "Your Complete Guide to Factor-Based Investing" by Andrew Berkin and Larry Swedroe.

This book contains historical charts which plot the premiums over time for the main factors (i.e. market beta, size, value, momentum, profitability and quality). Based on these charts, it appears that factors work for several years before their success switches to its opposite factor (e.g. value outperforms for a number of years, then there is a switch, and growth outperforms). Given that the factors outperform for a number of years, the charts can be viewed as long-term trend charts. On these long-term charts, it appears fairly easy to see when the switchover takes place. Unfortunately, the charts in the book only cover the period of 1927 to 2015.

Do you know where I can find updated chart information which clearly shows factor premiums? I would like to understand which factors are "working" now, and where they are in the cycle so that I can properly position for any switchover. For example, although value and size outperformed in the decade of 2000, for the last several years, large US growth firms are dominant. On a long term factor chart, based on historicals, it may be possible to predict when the switchover will take place again, and a portfolio should be positioned for small, value stocks.

Do you agree with this approach? Do you know where I can find this information?

Thank you for this excellent service.
Read Answer Asked by Dale on August 19, 2020
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