Investment Q&A

Q: I had to raise cash, and as a result I have no energy or pipeline stocks left in my portfolio. I have the cash to buy one position in a growth portfolio. Do you suggest a single stick (and if so, which one) or an etf. Thanks!

Q: Wanting to add Cdn. oil & gas producers to my portfolio. I would like to add 2 ETFs, one to go into my TFSA and the other into the taxable (cash) account. What I would like some thoughts/suggestions on, are possible alternatives. Obviously, one of my major concerns is tax efficiency. Thanks to other subscribers for their questions and, of course, to the 5i Team. Bill

Q: It looks like, regardless of oil price movements or direction of the market, XEG only goes down. I am currently down 15% on XEG and wondering if there is any hope for oil sector in Canada? Would you keep this ETF/sector for 1-3 years timeframe, or get rid of oil sector entirely and relocate money to some other sectors?

Q: Dear 5i team.
Please explain the differences between these two etfs for O&G exposure. Do you lean more to one vs the other?

The 8 listed CO's you suggested earlier today as a possible DIY version, how would you rank them in terms of risk/reward assuming oil prices stay elevated or increases?
(CNQ SU WCP TVE TOU XOM PSX CVX)

Thanks for your help.

Q: Hi,
In your answer to Jerry today (11-01-24) you had mentioned that you prefer ETFs like XEG and ZEO for the O&G sector play. Thank you.

If I want to avoid MERs and willing to put together a group of large/mid cap oil companies (not Gas) what companies would you recommend? About 5 to 8 names would be fine.

Also, why doesn't HXE as an ETF get the "love and respect" not only from you but from others in the financial media? Is there something inherently wrong with HXE?

Appreciate your response.

Mano

Q: Another question regarding Martin Pelletier's Financial Post article about using oil to hedge against possible serious geopolitical events:

Would HUC work in this scenario? Please suggest at least three other Canadian-listed oil ETFs that could also work.

Thanks.

Q: Hi, Energy sector has been weak for past few months, for a variety of reasons. Oil and NG prices have been drifting lower and OPEC keeps sending mixed signals. US sanctions on Russia have only produced a muted response, with their Oil finding its way to India, China and many other countries. Oil is hovering back to $70 level and still there is no sign of US ready to fill in their SPR. After a strong 2021 and 2022 (and 1st half of 2023), do you think, current weakness could be temporary and it's just a short term breather ? Or, considering the cyclic nature of the sector ( possible recession concerns ) and history, it might be time to take some profits and reduce the sector weight, from your generally suggested 10% to say 5% ? If so, would you trim equally or in any order among these holdings ? Thank You

Q: Dear Peter et al:

Thanks for your nice answer to Don's question today. (Friday, the 8th of September) regarding commodities. You gave a nice selection of ETFs. Looking at them they all have high concentration of energy sector and metals. MER in 70 or 80 basis points.

I wondered however if it would be better for me to hold XBM and XEG instead and lessen the fees plus opt for these bigger fund names with much higher market cap.
However I know I will miss sectors like corn, soybean, cotton etc.,

BNN had Mr. Rick Rule yesterday and he is of course a Metals and Mining Guru! This plus your answer to Don's question made me think of taking a small position in commodities . Looking at the most efficient and cost effective way to do his. Any thoughts?

Thank you in advance.

Q: What do you think about this ETF for the rest of this year? I like the chart , it's turning up. Thanks

Q: I listed in descending order securities that under performed since their 2022 highs. Please rank the securities in order of the best chance to recover their losses when we get back to the risk on mode. Thank you

Q: How do these 3 compare? Is US energy exposure necessary?

I have a chunk of each of these names.

Please rank in order of preference for overall rerun in next 3 years. Do all names have to be kept or can I consolidate them?

Thank you.

Q: Good afternoon,

I currently hold XLE in my US Non Registered account and am considering taking profits now and adding an equivalent amount of XEG in my Cdn Non Registered account.

Notwithstanding the capital gin tax implications, do you think that the Canadian Energy sector offers better potential returns than the US Energy sector should Oil prices go to $90 and above and if so what would be your best idea in the Canadian Energy sector?

Thank you.

Q: Hello 5i
I have read recently that several US analysts think that the Canadian market will do better than the US this year. T Rowe Price was the most recent one in the National Post, i think. Wondering what you think of this thesis. And if you believe it, how would you organize to profit from it? I imagine the thesis has a lot to do with resources with the possible re opening of China. Is there, for instance, a good etf? Or, what stocks would you choose to create your own etf substitute?
Thanks as always for your excellent advice

Q: Hi,
I was bit surprised by your answer to Kevin's question today about your sector preferences. You had chosen the following: XIT/XRE/XFN/XLY/XLV.

I thought given the current possible recession scenario lurking in the background and also from your own answers to others, you would have chosen XLP, soft or hard landing people need Staples to survive, XEG because of all the uncertainties, XBM/GLD as one expects demand to go up when China opens up. Plus as a hedge against the USD going down.

There must be a reason for your choice. I am curious to find what your rationale was/is.

Q: Good morning,

Following the sale of XLF in my US$ Non registered account for tax loss reasons, I'm considering the purchase of an Energy ETF.

Q1. Between XEG in Canada and XLE in the US, which do you prefer and which d you think has a better risk reward profile?

Q2. Assuming you prefer the Canadian market for the Energy sector, is there another Energy ETF in Canada that you would prefer to XEG?

Thank you and I'll await your response.

Q: Hi,
O&G sector is taking a beating!
Is this downtrend going to be sustained or short lived?
What is your prediction going forward for the O&G sector in general? For the medium term, say one year.
Add to one's position or shed some or stay the course?
The perma oil bulls like Eric Nuttal are saying stay positive! Others especially Technical Analysts seem to be ringing warning bells.
Curious to know where you stand.
Many thanks.

Q: Hi,
What do you think about the so called "windfall tax"? If O&G companies are going to be taxed for share buy backs, is it good or bad news for the shareholders? Should I add to my already held positions or sell and lighten up a little?
I saw briefly on Twitter feed Eric Nuttall thinks it's actually one of the few taxes that can be good for O&G stocks. I couldn't find his entire statement. So forgive me if I am misquoting Eric.

Q: Hi, TRP and ENB had a bad day with both stocks declining 2.5%, by close. There was no specific news for either company. Oil was weak today and price dropped about $2.50-$3, during course of the day.
My understanding is that movement in oil prices has no direct impact on these stocks, in a meaningful way. XEG, on the other hand was down just less than 1%. Was TRP/ENB drop unusual ? Thanks

Q: Hi, Any comments/change about our Energy Sector Holdings strategy of 7.5-10% weighting, in light of Oil prices tumbling below US$100 today. Oil and Gas equities are taking a big hit and now trading back at the most recent lows made a few weeks ago when oil price dropped to $104. Do you think, sector could see more pressure in coming weeks/months, with fear of recession growing ? Is any action warranted ?Thank You

Q: Hi, Energy sector was creamed today with 5% decline on the top of 15-20% drop over past week. I also learnt from CNBC that many large investors are buying significant amount of September Puts. We trimmed 25% of our 10% Energy weighting, selling XLE, XEG,CNQ and TOU, mostly at market open. Do you believe , Energy sector could be range bound for near term and has further downside ? Would it be prudent to cut the sector weight to 5%, in General, without being specific to our portfolio ? Which companies would you reduce, in order of priority, among, CNQ, TOU and SU, based on balance sheets and possible further downside caused by Oil/Gas price and recession ? Thanks