Investment Q&A

Q: I am currently trying to put together a fixed income allocation for our portfolio. I am using your balanced portfolio as a model. I have a few questions regarding this, though and would appreciate your commentary and suggestions.

Looking at your portfolio I see that you have a mixture of 1. Canadian Preferred Index (CPD) 2. the Convertible Bond Index (CVD) and 3. I shares US Hy Bond (XHY).

You mention that this would be a good model portfolio for dividend investor, which I suppose I am.

But, I was struck (rightly or wrongly I don't know) by the fact that some of the bond funds that are often mentionned on your site are not included. Clf and VSC, for instance.

Would the actual portfolio do the job, or would it be wise to add these two etf's?

Second question. I would like to have a large part of my bond allocation in US dollars. Can you suggest some US equivalents for a bond portfolio? Would an emerging market bond fund such as ZEF be worth looking at? If so, would you know of an equivalent in US dollars?

I know that you concentrate on Canadian stocks, but since you also offer model portfolios which include fixed income etf's, this question might be legitimate.
thanks

Q: Hi & thank you for continued sound advise.

I'm a Balance/Growth Investor with ~ 30% Fixed Income.

- Current Fixed Income: XBB (30%), CBO (40%), CPD (15%), XHY (15%).
- Planned Fixed Income: MMF659 (70%), CPD (15%), XHY (15%).

Reasons for change:
- Tired of poor returns of CBO, XBB.
- Want more diversifies (USA, INT) fixed income securities.
- The ~ 1% MMF659 MER seems worth it based on 6.23% compound return since inception [2005-11-25].

Haven't held a Mutual Fund in 8 years, but... Yours thoughts would be welcomed here. Thank you!

Paul

Q: Hello Peter, Ryan and crew.

I am retired and rely on investment income of about 4% dividends/interest. Because I no longer wish to take the time necessary to monitor 50 stocks and 10 bonds, I have been looking for some good income funds or ETFs to replace the individual stocks and bonds that I currently own. The ones I have found have distributions that meet my needs, but do not appear to have the underlying earnings yield to justify the distribution yield, so they appear to be paying me back some of my own money every month. Can you recommend some income funds or ETFs that pay out at least 4% and actually earn what they distribute? Like 5i, I am also sensitive to fees.

I have been a 5i member since the beginning and I continue to be impressed by your knowledge and insight as well as the continuous improvements in the service.

I wish everyone at 5i all the best in the New Year.

Thanks

Q: I am looking to move some cash after a year end portfolio clean up. I am considering 25% in each of VSC and VSB, 25% in PMIF, 25% in XHY. Would you recommend different ETFs and/or % allocations?

Thanks for you dedication
Merry Christmas to all.

Q: Hello Peter and team,
What do you think about these fixed income ETFs to make up twenty percent of my portfolio?
CBO 5%
CLF 5%
XHY 5%
XEB 2.5%
VBG 2.5%
Should I also add a real return bond ETF?
Thank you.
Pamela

Q: All of my RRSP bond holdings (25% of portfolio) are invested in two PHN funds, about 2/3 in the core government bond fund RBF1110 and 1/3 in the High Yield Bond fund RBF1280. Is there any value in diversifying a bit more using either XHY or CVD? The rest of the portfolio (75%) is equally split between Canadian equity (modelled from the Balanced Portfolio) and US/International Equity Funds and ETFs. I have about 15 years ahead of me before transferring to a RRIF and don't expect to have to rely much on this money because of my employer defined benefit pension plan. Thanks.

Q: given current markets, what percentage of the above etf's would you hold for fixed income...thanks.

Q: Hello, I would like to put some money into an ETF or mutual fund. Would be in for the long term +5 years.
Would these three be acceptable for dividend, stability and small growth? I’am retired and need income, but not interested in U.S. tax filing.
Would you invest in all three? Or do you have a better suggestion with one or two ETF’s ?
Thanks

Q: You are still holding XHY in the Income Portfolio. With credit spreads near record lows and the Fed forecast for three rate hikes over the next year are you looking at a higher quality and shorter duration alternative, and if so, what choices are you considering for both $CDN and $US holdings?

Q: Some noise about high yield bond, reason to sell ?

Q: Hi everyone at 5i! I need a clarification about bonds. I have heard that bonds are facing head winds with the anticipated increase in interest rates. I have a portfolio of 60% stocks and 40% fixed. My fixed component consists of GICs, bonds, some preferreds and ETFs of XHY, CBO and CPD. These ETFs pay me a nice dividend monthly. My strategy is to invest my monthly dividend into the ETF that is lagging to get the greatest value for my dollar. Considering that the value of these ETFs may fall ( hopefully just in the short term) would you consider this an ok strategy or would you refrain from putting more money in bonds and preferreds. Cheers, Tamara

Q: From your answer to Milan :
A diversifed portfolio of bond issuers (corps, gov, prefs, high yield) will earn a better yield and is more appropriate from a higher income need aspect. Bonds can actually see capital appreciation if rates were to decline, or even hold steady. Cash/GICs would not benefit in this case. Overall, we remain on the side of diversification. Hold a bond portfolio with various issuer types and add in some GICs and/or cash. How you weight these reflects your views and tolerance.
Could you suggest a diversified bond portfolio with various issuer types that should produce more than the 2.75% offered by Tangerine?

Q: Follow up question: as a guideline, with a "rock solid" defined benefit pension, what percentage, overall, of a $200,000 RRSP portfolio should be allocated to fixed income? Of the 4 funds you suggested, as a guideline, what percentage of the overall allocation go into each fund? Retirement 2-3 years away.

Q: I am 53 years old. I have worked 31 years in my Federal Government job, making $100,000 + a year. I will have a defined benefit pension. Currently, I have a $200,000 in an RRSP, self directed,with 100% in equity divided 60/40 between CANADIAN AND US dollar investment. I am planning to retire in 2-3 years.

With this in mind, I want to rebalance my portfolio to make it more conservative. What ETF funds/percent allocations do you recommend to build the fixed income/bond portion of my portfolio both on the Canadian and US side of the house? What funds should I buy (Canadian and US) and how much should I buy of each?

Thanks in advance.

Q: Just sold my house and not planning to buy one within half a year. I am using part of the proceeds investing in 5i stocks. I want to park the rest of the money somewhere relatively safe for a quarter or half a year. Looking at XHY.to, CVD.to, CPD.to, even KWH_u.to, ALAr.to. A bank is giving you nothing. Please advice

Q: Hi, In your opinion, which would be a safer investment over a five year time frame, xhy, U.S. high yield bond index fund or Bam.a Brookfield asset management "A" stock, thanks?

Q: I hold these 4 stocks in my LIRA account and do hold some of your other income stock recommended in my RRSP account. I just wonder if these 4 stocks are okay in holding in a LIRA account or would you prefer a different mix of stocks in a LIRA account as both KWH.UN and VNR are utility stocks?If so what do you consider the best 4 stocks inside a LIRA account?

Q: I've recently sold my ZRE position and am looking for some suggestions on what to consider purchasing with the extra funds on the fixed income side of my portfolio. My equity portfolio is balanced; I am about 8 years from retirement, and am conservative in my approach. I am about 30% in laddered GICs, 5% individual bonds, 3% CPD and 5% in cash. I don't have any bond ETFs (and am concerned about the principal in a rising interest rate environment). What to do with the extra cash? More CPD? Or an international REIT? Or a bond ETF, Canadian or International? Or something else?

Q: Is there any merit in considering a buy of these two stock in my TFSA, or would XHY as an ETF be better as I am a 77 year old senior?? Thanks.

Q: Hi 5i Team
We have approximately $80,000.00 US cash to invest. Thinking of buying XHY for income to cover some of our expenses for property we have in US. Would like your opinion. It would be approximately a 5% position of our portfolio. In the event you think it would be a good idea, do we deploy the funds gradually or take the full position at once, obviously it would be based on what is available for purchase. We would probably us our TFSA account. What would you suggest. Thank you. Heather