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Investment Q&A

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Q: Good Morning: I have been reading some of the recent questions related to bond etfs. I have been avoiding bonds and using preferred shares instead for fixed income in my portfolio, slightly better yield although also struggling through 2015. I notice that the yield for the two bond etfs mentioned is roughly 3.2 (CBO) and 3.1 (XCB). (Taken from BMO Investorline trailing 12 months average payout.) In your opinion, what can I expect in terms of yield from these instruments going forward -- roughly the same, a little more, or a little less? Also, I notice (not surprisingly) that the share price for CBO is near its 5 year low, whereas for XCB it is slightly up over the same period. What would your opinion be in terms of share price direction for each over the next 2 to 3 years as well. Many thanks. Don
Read Answer Asked by Donald on July 12, 2016
Q: Hi Team,
I was hoping you could help explain something. I own a five-year corporate bond ladder. This year to date the value of my bonds have fallen 0.91% (which on its own is fine as I hold the bonds to maturity). I am unclear why my bonds would underperform VAB (up 3.56%) and CBO (down 0.16%) in the same timeframe.

I realize VAB has a longer duration on average than my ladder or CBO. Credit quality may be better in both funds, and mine are typically in the BBB range. But is there any other reason why bond funds should outperform specific bonds in a ladder? Is there a scenario where a bond ladder will outperform the bond funds?

Finally, is there any advantage to owning bonds in a ladder at all?

Thank you. Michael
Read Answer Asked by Michael on July 07, 2016
Q: I have been wanted to diversify my portfolio and I was wondering if this is a good list or a bit of overkill. I have recently bought some XBB. I want these for fairly long positions, my concern is that I might be over paying for these as everyone is fearful and flocking to bonds as a safety net. Would it be wise to let things settle or buy partial positions in these etfs. Also would it worthwhile also owning some us long term treasuries. I am looking to try to cover all possibilities so I am not chasing in the future when market conditions change. I would like diverse group to cover inflation, rising market, recession. I know that I cant take all risk off but I would like have some safety net and not hold all equities.
Read Answer Asked by Geoff on July 07, 2016
Q: One more question regarding asset allocation in my RRIF-- how would you rate a 50/50 split of XBB and CBO as the bond component? Given all other factors remain the same. Thank you!
PS - loved the question "what makes 5i so great?"
You provide fabulous service and take some of the angst and mystery out of investing.
Read Answer Asked by Jen on June 29, 2016
Q: The fixed income portion of my portfolio has been suffering for the last few years, what do you think of the above and what recommendations would you have, thanks, Jean
Read Answer Asked by Jean on June 24, 2016
Q: Hi Ryan and Peter,
My question is of a general nature and concerns a problem many seniors are having with portfolio construction. I'm 70 years old, have a defined benefit pension which, along with my wife's defined plan, covers our monthly commitments. We are underinvested in the fixed income part of our portfolio but because of the lack of returns on bonds and GIC'S, are hesitant to commit a large portion of our savings to this sector.
As with many seniors who have their monthly expenses covered by pensions, we need guidance as to what percentage of our funds should be in fixed income. What percentage do you think is appropriate and could you suggest a few specific investments.
If you believe, as I do, we would be better off investing in Canadian Blue Chip companies that offer relatively safe growing dividends, could you suggest several such companies.

Thank you in advance for your much appreciated guidance.

Read Answer Asked by Les on June 22, 2016
Q: I am looking to invest about $200K (non registered) for a minimum of 5 years into a moderate growth couch potato type portfolio. I am 5 years from retirement. I am considering the following portfolio and would like to know if you would agree with these ETFs and distribution.
XIC or VCN 25%, VUN 25%, XEF 20%, XEC 5%, VAB 15%, CBO 10%
Read Answer Asked by Kimberley on June 20, 2016
Q: Given today's market and the expectation of a US rate hike, could you identify 5 ETF's that you would be comfortable with to provide safety of principal and income. Thanks.
Read Answer Asked by Curtis on June 03, 2016
Q: I am thinking about parking some cash in one or both of these ETF's (perhaps a 50/50 split) for the next 12 months. I understand that rate increases could adversely impact the unit price but given that rates are not expected to increase in Canada anytime soon and these are Canadian corporate bond funds not American would there be any impact from a US rate hike? If so, why? Secondly, what do you think of the downside risk and is there a better option you would suggest.
Thank you
Read Answer Asked by Douglas on June 02, 2016
Q: Peter and team,
I have about 18K to invest in my daughters RESP which will be required in the following two years, and about 24K to invest in a non reg account for her to use in around two to six years timeframe. This is not money I can afford to loose so I need to invest it carefully. Some say I should be keeping it in a GIC due to the timeframe, however that will not even keep up with the cost of living.
Any suggestions please?
Read Answer Asked by steve on May 09, 2016
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