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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: My Grandsons are 3 &1 old. They have 43% ZUT, 35% VFV, 21% ZWB and 0.9% BTCC.in their present RESP. I am looking for thoughts for the coming year deposit.
My thought are add to VFV (not enough now to reinvest),add a Reit ETF like TGRE or add an telecom ETF. I can not find a telecom ETF in Canada so maybe an alternative would be T.
All thoughts would be much appreciated.
Thank you

Read Answer Asked by David on March 22, 2023

Q: AS A RETIRED AND CONSERVATIVE INCOME INVESTOR I AM CONSIDERING THE PURCHASE OF ZWB IN A TFSA AND WOULD APPRECIATE YOUR OPINION DETAILING THE PROS AND CONS OF SUCH AN INVESTMENT AT THIS TIME.
1.I NOTE IT IS DOWN ABOUT 20% THIS PAST YEAR WITH A PRESENT YIELD OF ABOUT 7/12 PERCENT, IS THIS YIELD NET OF TRADING AND MANAGEMENT FEES?
2.DOES THE ETF WRITE COVERED CALLS ON THE ENTIRE PORTFOLIO?
3.GIVEN THE RECENT DECLINE IN THE BANK SHARES AND THE MARKET IN GENERAL AND WITH A 5YEAR TIME HORIZON, WOULD YOU AGREE THERE IS MINIMAL DOWNSIDE RISK, OTHER THAN GENERAL MARKET RISK,AND
4.WHAT TYPE OF MARKET AND ECONOMIC CONDITIONS LEADS TO AN INCREASE OR DECREASE IN THE PERFORMANCE OF THE ETF.

THANKS BRIAN

Read Answer Asked by Brian on March 17, 2023

Q: I am looking for ETFs that trade on the TSX with a yield of at least 4-5%. From the income portfolio, I see CPD (preferreds) / CVD (convertible) / XHY (US HY) / ZRE (REITs), and I am also aware of ZWU (Utilities) / ZWB (Banks).

Are there any others that don't have much overlap with the above that you would recommend?

Read Answer Asked by Alexander on January 31, 2023

Q: A portion of my portfolio is invested in the BMO Covered Call ETF's. In their fund prospectus, they indicate that a portion of your return is a return of capital. Is this a return of invested capital or is this the return of the premiums collected from writing the calls against the underlying securities?

Read Answer Asked by Michael on January 17, 2023

Q: Is there some way to score-board enhanced-yield Canadian bank ETFs/funds that assigns more weight to the factors that make more of a difference? Yes, fees add up, but even over the long term it's hard to see how basis-point fee differences could outweigh percentage-point yield differences. And won't either of these factors be outweighed by distribution tax treatment and, especially, by central bank rate-pivoting?

Further, in side-by-side comparisons, 5i often prefers larger ETFs (recently, for example, when comparing CBNK vs BANK.) But given large-cap banks' similar value-propositions and tendency toward mean-reversion, why should higher AUM matter (other than w/rt second-order effects like trading liquidity)? Put another way: what, if anything, could a new entrant to this sector do to make themselves attractive to 5i?

Please add to the supplied symbol list if other names provide more instructive comparisons.

Read Answer Asked by John on January 12, 2023

Q: I need to add income equities to the TFSA as the income target is underwater. With this, I'm pondering adding BMO Covered Call Canadian Banks ETF(ZWB-T) to the TFSA for extra income, rather than say ENB that I would prefer to hold in a trading account and also rather than hold a small capitalization stock like AW.UN. What do you say about this option, ZWB for a mate over the age of 71?
If you are aligned with this approach, are there other Covered Call ETFs that you would suggest from my consideration?
Many thanks for the hints!!!......Tom

Read Answer Asked by Tom on January 10, 2023

Q: Hello 5i
In one of the recent questions it was said that you do not like covered call etf’s. I didn’t know that was the case. Maybe it isn’t, even i don’t know. I have concentrated my covered calls on American companies that i own. Also many uncovered puts. I have concentrated on the US because the premiums are much higher than on Canadian stocks. I have quite a few Canadian stocks, however. And i hate to see them languishing and unproductive. I have therefore been thinking of a way to make some money on them. The premiums are so low that it doesn’t seem to be worth the effort. But, covered call etf’s would be easier. I don’t know much about them, however. I wonder whether you might provide some information and some pros and cons. Whether you like the idea or not.
Thanks for the excellent service.

Read Answer Asked by joseph on November 24, 2022

Q: Could you please recommend at least three Canadian products (stocks, etfs, bonds, whatever) that have an annual yield of at least 6%, but are ‘lower risk’. If you could list them in order of least risky to most that would be greatly appreciated. Thank you.

Read Answer Asked by Toge on November 24, 2022

Q: I am currently somewhat overweight bank and gold stocks. Would these covered call funds be complimentary or simply increase sector exposure even more?
It's very hard to ignore the 11% yield with GLCC and BANK for an income seeking investor.
Why is ZWB 7% while BANK is 11%

thank you

Read Answer Asked by JOHN on September 09, 2022

Q: I often hear money managers talk about buying a specific stock (e.g. Apple to choose a simple one) and then writing covered calls against it ….. and emphasizing the prospect of winning both ways.

I am not keen on taking a course in options trading at this point.

Does it make sense to attempt the same kind of thing using etfs?

For example, in technology using XIT or TEC and pairing it with ZWT;

or other sectors too, such as energy XLE … or XLF for financials? In this case can you suggest a couple of covered calls - one for energy and one for financials?


As usual, thanks…. much appreciated.

Read Answer Asked by Donald on July 26, 2022

Q: Could you give me 7 diversified income etfs for 200000 rank them in order which ones you would pick up first etc. thanks

Read Answer Asked by Ken on May 09, 2022

Q: Could I get your favourite enhanced income etfs for a registered and non registered account

Read Answer Asked by Terry on April 23, 2022

Q: Hello,

I own the whole list (weights 1% to 2%) thinking I was being diversified but maybe went too far.

1) I am on the right track to reduce to about 3 names?
2) Which names optimise income?
3) Alternative names that I might have missed?

Many thanks!

Read Answer Asked by Arzoo on April 22, 2022

Q: Among banks, 5i seems to favour TD and BNS, though since 2019 patient investors have done well with just about any of the Big-Five-plus-NA.

But supposing interest rates are now set to rise, won't banks tend to find a trading range? In which case, wouldn't ZWB, with its covered call component, provide greater total return? Or do its MER and trading expenses claw back too much of its income?

Interestingly, since inception, ZWB's share price seems to have done as well as (for example) BNS, in spite of the potential for its positions to be called-away.

Read Answer Asked by John on March 25, 2022