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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: Hello, I am looking for an answer to a difficult question about evaluation of risk for fixed income assets.
I understand that for a long time, it was anticipated that the long decline of interest rates and correlated bond rally has ground down and the current prevailing question surrounding interest rates is how fast they may rise.
With this in mind, could you please offer thoughts on the relative risk of bonds? How much downside potential is there, and is it justifiable to buy their low volatility, even if it is believed to be a (apparently) horrible investment with no future potential, just for those two percents of yield?
Your thoughts are greatly appreciated.

Read Answer Asked by Peter on November 22, 2021

Q: Hi Guys
Just curious why last March during the big sell off, XLB traded down so far. I would have though during times of crises, people would run into buying Govt Treasuries for Safety.
Also, at what yield would people consider buying back into XLB, i think the current yield is around 3.3 % My current Portfolio weighting is 2.06% and I'm down 11% you think its a good idea to increase my position to around 4% at this time. I'm also about 40% in GICs , which should perform inversely .
thanks

Read Answer Asked by Gordon on April 30, 2021

Q: Hello 5i,
It was suggested that I switch from XLB, XSB, and VEE to ZAG and ZEM which I did. Lately I have seen on the daily watch report that XSB, XLB, and VEE are again mentioned as suggestions in many instances over the past few weeks. Should I switch back or maintain my positions in ZAG and ZEM?

Read Answer Asked by STANLEY on March 12, 2021

Q: Hey,

What would be some stocks and ETFs to watch during this rotation?

Thanks

Read Answer Asked by Bonnie on March 09, 2021

Q: As a follow-up to my question last week on interest rates up/down, please also advise which funds/ETFs perform best when interest rates move in either direction.

Thanks again.

Read Answer Asked by Arthur on March 08, 2021

Q: Is it time to start letting go of these long term bond ETF? Or do you see a role as part of a laddered portfolio? If so, what percentage of these long term bond holdings would you suggest at this point? Unless we have negative rates the only way is up? Not sure I believe that rates will be kept so low for much longer.
Thank-you.

Read Answer Asked by Debrah on February 09, 2021

Q: First a big thank you for the terrific returns we received in 2020 thanks to your stellar guidance (our largest holdings we first discovered through 5i -hello LSPD,XBC and WELL!). We gifted our kids memberships in December and praise your service to everyone. This is truly an invaluable service.
Now to the question, my brother is tired of paying high fees for his CIBC pension holdings. When I looked into this for him last year, some pools had MER in the 2% range! Hes moved the following into cash and is looking for lower fee/higher return alternatives in the following areas of his pension account:
-Imperial Canadian Dividend Income Pool
-Imperial Canadian Equity High Income Pool
-Imperial US Equity Pool
-Imperial International Equity Pool
-Imperial Short Term Bond Pool
-Imperial Long Term Bond Pool
Please charge as many questions as required.

Read Answer Asked by Warren on January 21, 2021

Q: Fixed Income portion of portfolio is 40% and some deposits came due so need to deploy that cash into fixed income. Thinking of putting 25% of the 40% FI into these two ETFs. I would appreciate your thoughts on this plan please. Alternatives are welcome. Thanks again.

Read Answer Asked by Dan on December 21, 2020

Q: Rightly or wrongly, I believe a market downturn is coming with negative rates a possibility. I have raised cash by selling many of my equities. I'm not confident in the health of the corporate bond market but was wondering if you can suggest a government bond fund/ETF (US and/or Canadian government) or other government fixed income strategy that may benefit from negative rates?

Read Answer Asked by Neelesh on December 16, 2020

Q: I just recently retired and within my portfolio have approx 60% in Bonds (As per above) - while these have been a great hedge against the equity holdings, I am considering either selling some of the bonds listed above - approx 10% and moving these monies into either high yield bonds - ie CHB or ZHY or if not into high yield bonds possibly a high yield dividend fund like XEI or ZWC or ?
While I would like to increase the income on these monies - do you think this is a good time to make this move?

Read Answer Asked by Greg on September 25, 2020

Q: Hello 5i,
I have the above ETF's in my TFSA as I believed the distribution is interest. I read in reports that distribution is dividend or "dividend interest") All quite confusing. In the TFSA's are also a GIC 5 year ladder, growth stocks (LSPD, LNF) and some high dividend paying equities. Should I journal the above ETF's to a non-registered account and refill the TFSA come January with more growth and GIC's or leave everything alone? I am 73 with a defined pension and 60/40 fixed / equity
Stanley

Read Answer Asked by STANLEY on September 21, 2020

Q: Hi 5iTeam,
I noticed that when the markets pulled back in early to mid March this year, both bond ETFs: XLB (approx. -28%) and XSB (approx -9%), pulled back as well although there were no movements in interest rates. I would think that these bond ETFs are a good proxy for cash, then what would investors' reason be for selling? Your comments on this would be much appreciated.
Cheers,

Read Answer Asked by Harry on July 17, 2020

Q: Looking for a safe place to park my Moms Money. I was thinking about XLB , but the risk reward there is crazy in my view.
The draw down the way i see it was around 26.5% back in March, this to me looks like the Bond Market isn't functioning properly. She currently owns Scotia Innova Income portfolio which pays a distribution of 3% . The draw down in that fund last March was around 8% i believe, this to me not making much sense either when comparing it to XLB
Considering the issues mentioned above, Does purchasing GICs seem rationale to you considering these crazy times.
Thanks !

Read Answer Asked by Gordon on July 08, 2020

Q: Hi, US long terms bonds performed very well during the recent market decline. Did the Canadian bond etfs perform well during this down turn? Which ones did well? I would add to such bond etfs. Thanks.

Regards,

Shyam

Read Answer Asked by Shyam on May 29, 2020

Q: Good morning! I would like to add to the fixed income side of my portfolio ... pls recommend the best fixed income investment today (retired, long-term hold, dividend investor). Thank you for this Q&A service!

Read Answer Asked by Patrik on May 21, 2020