Investment Q&A

Q: Preferred Shares

Upon reviewing the holdings of the four (4) largest preferred share etf, I have noticed the majority of preferred shares are issued by the banks, insurance companies, electrical utilities and pipeline companies. I am a holder of the common shares of the same companies (as they are stable long term dividend payers).
The first question I have is am I increasing my "company" risk by holding both common and preferred shares of the same companies? Should I continue to buy the common shares, which are paying very close to the available preferred share yield and gain long term from dividend increases.
The second question is of the four etf listed, which is your preferred etf. Are there other Canadian Dividend eft I should look at?

Thanks in advance for your excellent service.

Stephen

Q: Hello 5i...The preferred share space took a real hit from which it has not recovered. I am thinking of adding one of the above as part of my fixed income allocation but to my non registered account. All of my fixed income and GIC's are in my RSP. I am conservative age 68 and need 4-5% long term. The recent volatility however does concern me. I value your opinion ..thank you Gary

Q: Lately my capital investment in ZPR has been decreasing. This forms part of my income investment portfolio. I am thinking on making a switch. Which investments would you recommend for income with a little potential growth as a replacement.

Thank you,

Bob

Q: I am retired and have these preferred etfs making up about 7% of the income part of the portfolio. There is obvious overlap. Vrp has out performed the others and has a better yield. It is held in a rrif so the US dividend is intact. I am assuming that the downturn in preferreds will level out, as this is a long term income hold. Should I eliminate hpr as it is 50% US and just stay with the other two with the currency diversity? Also what portion of fixed income do you feel preferred should make up? Have a great holiday.

Q: Hi, why is ZPR down about 14% when interest rates have been going up the last year.
Thanks,
George

Q: ZPR is around 75% fixed reset and floating. I would have expected the unit value to rise this year as 5 year rates have moved from around 1.8% to 2.3%. Instead, the unit value has dropped around 7% ytd. Has the spread on preferreds to bonds widened or is there something else going on? Thanks for any insight.

Q: Can you recommend a preferred share ETF that has rate reset preferred shares. And what percentage of a portfolio should it be?

Q: I own some individual rate reset preference shares which pay dividends. I also own some ZPR/HPR shares which pay interest. Why are the payments classified as interest when the income comes from underlying pref share dividends? I can’t seem to find an explanation on any of the websites. Can you clear this up for me. Thanks as always.

Q: If I hold ZPR in my portfolio, should I consider this as my Financial and utilities allocation? Most of the preferred shares in this fund are from banks and utilities. Or should this be considered fixed income?

Q: I read in a previous post that you favored HPR and ZPR over CPD (Sept 18, 2017) because of the rate reset. I am currently adding to my fixed income and would it be a good strategy to add 50 / 50 ZPR and CPD for the preferred portion ?
(I also own a larger position in CBO).

Also, do you recommend adding a convertible bond etf (CVD or other) for diversification purposes ? Thank you for your comments.

Q: Over the last little while I purchased the above securities because of a rising rate environment. All have performed as expected except ECN.pr.A. Is there any particular reason for this. Would it be wise to average down . I’m still thinking that with rising interest rates their will be more demand for their services. What about the margin will this increase, decrease or stay the same ?

Q: Any comments about the recent ENB rate reset preferred issue....it seems to have a very favourable floor reset rate although the spread off 5 year Canada's does seem a little rich.
In addition, any new comments ZPR
Thanks

Q: Your opinions on these ETFs, please.

Q: Hi 5i, I am looking for a relatively safe environment in view of future interest rate increases. Please rate the above list, also can you tell me if there are any withdrawing charges in the Mawers. Perhaps suggesting other ones you prefer. I am 85 year young and like to have safety with some income. Like the new changes, many thanks for your help. J.A.P, Burlington

Q: Hello 5i team,
In calculating percentages of holdings and sectors: concerning complete portfolio vs, equities and fixed: are ZPR and and XTR considered equities or fixed?

Thank you
Stanley

Q: I am 70 years old, been retired for 14 years, and can't risk losing capital. Thus my portfolio is currently 100% in fixed income.... 65% in laddered 1-5 year GIC's, 10% in bond ETF's (CBO, CLF, XBB), 5% in preferred shares, and 20% in cash. In the preferred share category, I currently hold CPD, HPR, and ZPR equally. Given a steadily increasing interest rate environment, would you recommend selling CPD and adding to HPR and ZPR, due to their leanings towards rate re-sets? Is a 5% total weighting for preferreds appropriate for this fixed income portfolio? What do you recommend for the remaining cash, given my mandate for "safe" investments? Should I stick with additional GIC's or expand the bond allocation? Thanks!

Q: Greetings Peter and 5i Team,
I have $100,000 to invest in the fixed income part of my portfolio. All investments will be inside a RRSP. As a retiree, I'm hoping for capital preservation, (safety) with a reasonable return on my investment. Currently, the only exposure I have to fixed income is ZPR. I'm considering adding the investments in your Income Fund (CVD, XHY), as well as HFR to my portfolio.
-Do you believe these investments will provide solid fixed income exposure?
-Do you see any way I can improve my exposure to the sector? i.e. is there any need for exposure to foreign bonds?
- What percentage of the $100,000 would you allocate to each ETF?
As always, thanks in advance for your appreciated support.

Q: Hello Peter, Like most of us, are concern about the effect of the coming rate increases. How safe will the above preferred shares be, would you consider them as good choices for income and safety? Also, can you suggest equivalents in the Canadian market? Many thanks for your valued advise, J.A. P. Burlington

Q: Hi Peter and Team,

Could you please give me your thoughts on preferred shares in general given the current interest rate environment and the pending rate hike by BOC in about a week's time. Please also provide some names of ETFs of preferred stocks in both Canadian and US denominations.

Cheers,
Harry

Q: What are the pros and cons of these two ETFs? Looking forward, which of the 2 do you believe has the best price appreciation potential? Are there better ways to get exposure to preferreds? Please explain. Thanks so much for the guidance.