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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: Any recommendation on where to park cash short-term within a direct investing account? I like the sounds of PSA, but 'for business reasons' TD Waterhouse does not allow TD Direct Investing Clients to purchase PSA. Instead, they offer their own savings account which only pays 1.60% in comparison to the 2.15% paid by PSA. Any suggestions?
Read Answer Asked by Chris on January 21, 2020
Q: Hi,

In your answer to James you suggested the following bond ETFS: XBB, XLB, XSB, CBO and/or XHY. I'm very interested in this as I'm trying to increase fixed income exposure.

What percentage would you suggest in each of the total bond portfolio? Also, unless I am missing something, CBO and XSB both appear to be the same thing, so why the need to own both?
Read Answer Asked by Pamela on November 27, 2019
Q: Within fixed income today, is it wise to move from longer term bonds into floating rate bonds...seems the longer bonds are beginning to slide while floating rates bonds are holding firm. both pay similar yields. thanks as always.
Read Answer Asked by Curtis on October 28, 2019
Q: As I mentioned earlier I have held 1800 units PSB in a corporate account since 2013 - 6 years. I failed to mention that I am paying management fees of 1%. I require a fixed income fund for this portfolio. Would appreciate any suggestions you have. Does this fund have a MER?
Read Answer Asked by lorraine on June 26, 2019
Q: looking ahead the next 6 to 12 months and with safety of principal in mind, how would you rank these fixed income etf's? thanks.
Read Answer Asked by Curtis on April 16, 2019
Q: ..given growing expectations of a Canadian recession, i'm thinking of moving away from utilities into fixed income. how do you expect XBB, XSB and HFR to perform in comparison to ZWU if a recession occurs. thanks, great service.
Read Answer Asked by Curtis on February 25, 2019
Q: Hi 5i,

A portfolio construction question. I've selected a mix of XTR (36%), XSB (7%), CDZ (17%), XAW (19%), and then a mix of laddered GIC options (17%) and a small cash holding (4%). This is for a family member's portfolio, retired, needing income, security, and modest growth (in that order).

This ends with an allocation of approx. 55% equities and 45% fixed income/cash, and 69% Canada, 22% USA, and 9% Global.

This mix also generates distributions/dividends almost dead on 4%/year, so following the 4% withdrawal rule more or less allows for not needing to sell anything to cover cash flow needs.

Wondering if you could comment on the ETF selections and overall structure with the understanding of course that its always a highly personal decision. More just want to know if you have better ETF or security selections for this scenario...

Thank you so much!
Ryan
Read Answer Asked by Ryan on February 19, 2019
Q: FTB has a dividend yield of 3.56%, actual mgt fee of .50% and an MER of 1.09%. Could the difference be imbedded fees paid to the financial planner recommending the fund and biasing his judgement. How do imbedded fees impact the recommendation of the financial planner. Is he looking out for your best interests or his? He gets a 1%management fee regardless of performance, although he says if I do better he does better. Perhaps they should be paid on performance

By comparison CLF has a yield of 2.66% and an MER of .17, XSB has a yield of 2.38 and an MER of .17 and HFY has a yield of 4.98% and an MER of 1.03. Funds with a higher MER seems to have a larger yield. Is the yield stated after the MER?

Thank you.
Read Answer Asked by Donald on January 24, 2019
Q: ..HFR is beginning to slide, what do you think about moving out of it and into the above ETF's. in your view, what is the best bond ETF mix to be in for the next 6-12 months. thanks.
Read Answer Asked by Curtis on November 23, 2018
Q: ..what is your view on interest rates....with trade wars and the next presidential election now fully in sight, all the good news seems baked into markets. would you raise fixed income and/or utility allocations. what about moving into longer term bonds....thanks as always.
Read Answer Asked by Curtis on November 15, 2018
Q: I will be retiring in 15 years. At that time I will have a livable pension.
I currently am 100% invested in equities (40 cad/40 us/ 20 international).
At retirement I plan on having a 50% equity and 50% bond/fixed income portfolio.
I am going to allocate 10% of my portfolio to bonds/fixed income shortly.

I plan on buying XSB and XTR.
1)Do you recommend a more diversified bond/fixed income portfolio? If so what geographic weighting and bond etfs would you recommend?
2)With a time horizon of 15 years would you hold off on purchasing long term bond etfs until after impeding interest rate increases?
thanks
Read Answer Asked by Timothy on September 06, 2018
Q: Hello 5i,
In the interest of understanding fully what i am buying, could you tell me how floating rate bond funds manage to float? When i look at the informarion for FLOT, for instance, i notice that the maturity dates vary from one month to five years, if i remember correctly. An etf like xsb doesn't seem to be a lot different. Is it because Floating rates are heavily weighted to the very short term, even though they do as well go out to five years?
Thanks for all the great work
Read Answer Asked by joseph on May 14, 2018
Q: On these 3 bond ETFs I am down between 4-6%. I was thinking of crystallizing
these losses. First, do you think this a good time to 'clean up' ones bonds? Second, could you recommend their replacements.

TIA
Read Answer Asked by Gerald on January 04, 2018
Q: I own equal amounts of these bond funds in an RSP. While CBO has a 2.3% return over the last year, and is considered one of 5Si"s "core" holdings, I am thinking that I should retain this position. XSB is off about 1% in the last 12 months, and its return over the last 5 years is dismal. XSH has about a 0.4% return in the last 12 months , with a 3 year return of 2.1%. Is there a benefit to selling any or all of these positions, and purchasing higher yielding bond etf's? If I were to sell, should I seek US or Canadian bonds fund, and which specific etf's might you recommend?
Thank you for your consistently good advice.
Read Answer Asked by doug on October 31, 2017
Q: Good Morning: I have been raising my cash holdings somewhat in light of a prolonged bull market with high equity valuations and increasing geopolitical risk. I have some of this cash in HISA's with an average yield of about 1.7% or so. However, I am considering putting some of it into a bond etf since I don't feel I have the know how to successfully put together a ladder of actual bonds. What I would like your opinion on is what would be the best 2 or 3 options in Cdn. bond etfs for preservation of capital combined with optimal yield (recognizing that the two are almost always working in opposite directions.) Of course, if you have another option for parking cash, that would also be appreciated. (I do have some preferred share holdings but past experience has taught me that they are not immune to market corrections.) Many thanks.
Read Answer Asked by Donald on June 15, 2017
Q: I am retired, and have a portfolio with a mix of equities, ETFs and bonds. I have some money from municipal bonds to reinvest and I am considering some ETFs such as XSB, CBO, XBB and XHY as options to invest these funds, with a 5 year investment horizon. In the current environment (interest rates and the US election), how do you think these ETFs will perform in the coming years? Thanks for your great service.
Read Answer Asked by Alan on November 14, 2016