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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: The above ETFs represent my current holdings for Intn’l Equity exposure and are held in my RRSP. I am able to add to my Intn’l exposure in my RRSP and would like your recommendation for a C$ ETF that might fill in any gaps that my current holdings don’t cover or alternatively I could just add to my current holdings.
I do not need to RIF for 8 more years but some dividend yield would be preferable as I do draw out my div/int earnings annually.

Read Answer Asked by Bruce on October 14, 2021

Q: Thank-you for your great service. The improvements to the site are excellent.

My wife and I are value/income investors, currently focussed primarily on the Canadian Market. We had started our portfolio in early 2020 - and felt that the exchange rate was prohibitive to buy US stocks. Also, with the “Covid Crash” and trying to “learn the market” (more like drinking from a fire hose) we thought it best to focus on companies we knew (Country bias). We have done very well, in a very large part to the 5i community, and have built up a diversified portfolio of 36 holdings (including 2 ETF’s); paying six figures in dividends.

We are about a year from retirement and we have started to diversify more geographically and are looking primarily at ETF’s to achieve this. While the exchange rate is much better, the US now looks expensive to us, so we are looking to focus on the developed International markets. While ETF’s are lower risk, the broad array of options makes our heads spin. If this question is too long, please feel free to edit/omit the above paragraphs.

We have a few questions around ETF’s. Please deduct as necessary. We have read all the 5i Questions and viewed the “Fact Sheets” with the ETF’s mentioned below, as homework, and would appreciate your advice.

1. I like the idea of utilizing covered call EFT’s to help offset some of the lower yields (and potentially underperformance during a market turndown) in some of our growthier positions. For example we have a 1.5% position in LIFE (Evolve Global Healthcare CC Hedged), to help balance out SIS’s lower dividend. What percentage of a portfolio should be covered calls before it starts adversely impacting portfolio returns?

2. We also hold a 2.25% position in ZWE (BMO Europe High Dividend CC Hedged) and are looking to add either a 2.25% in PID (Purpose International Dividend) or ZDI (BMO International Dividend) which offer a decent dividend, and potentially more growth. PID currently pays a higher dividend, and we like that no one company has no more than a 2% weighting. Which of the two would you recommend, or are there other ETF’s you would suggest?

We have considered the impact to our sector weights with the above (as best we can) and will be upgrading to Portfolio Analytics to better allocate these. As we move to increase our weightings in ETF’s this will be extremely helpful.

Thank-you!

Read Answer Asked by Cory on June 25, 2021

Q: Good morning,

I am considering increasing my international exposure as per portfolio analytics and am stumped between ZDI and PID. Both hold a lot of the same investments. In fact 31 of the ZDI stocks are the same as PID holdings are the same, although not in equal proportion (roughly 44% ZDI to 34% PID - mostly due to fact that the PID strategy is close to equal weight investments). My current positions in both funds are 5% and 3.75%. I am looking at increasing either or combining. I also have a 4.75 % position in QEF which I feel is sufficient since I am not yet convinces ESG is the way to go.

Can I have your thoughts on PID vs ZDI ? Thank you for your valuable input.

Read Answer Asked by Roger on May 26, 2021

Q: Greetings once again and my continued thanks for your steady hand. Can you please suggest an array of balanced fund or high grade dividend fund etfs which can give me exposure to Canada, USA and the rest of the world, in roughly equal portions. KIndest regards, Al

Read Answer Asked by alex on May 20, 2021

Q: Hi 5i Team. Question relates to trading volume on PID. I'm trying to establish a 2 - 4% position in PID for international exposure for both growth and dividends. The 2 - 4% position equates to 5,000 - 10,000 shares. I tried to place an order yesterday for 5,000 shares and only half the position was taken. If I look back at the past 30 days, average trading volume is typically ~<10,000 shares. The one exception was mid December when trading volume was ~75 - 100,000 shares. Should one be worried or concerned about this when trying to establish a position in an ETF with a AUM of ~$140M. Many thanks. Steve

Read Answer Asked by Steve on January 28, 2021

Q: My International exposure has been identified as deficient. After reading the Q&A the above ETF's have been identified. My question is would the above as a50/50 split provide good international diversification or would adding another ETF help. If another is needed what would be your choice, and how would you divide the positions eg. 1/3's
Thank you,
Mike

Read Answer Asked by Mike on November 04, 2020

Q: Need more foreign exposure ex-Canada and ex-USA. I already own VEE and ZDI, should I just add to these or does 5i have additional suggestions? Looking to cover all bases here. Thanks Ron

Read Answer Asked by Ronald on November 03, 2020

Q: Hello 5i,
As always, a huge thank you for all you do!!!
Income-focused investor.
My question is in response to a previous question, in which answer to, you seemed to favour PID over ZDI. I hold ZDI and have previously discounted PID as an option for two specific reasons: 1) ZDI is almost 3x larger in market cap (328 million versus 124 million (from Globeinvest)) and also the average volume is many times greater (today's volume notwithstanding - PID seems relatively illiquid). I have seen previous answers re: ETF's in general where you are less keen on what are almost micro-cap ETF's for other than the most niche of offerings. I have occasionally had concerns about ZDI's relatively small market cap as it is. The yields between these two are only about 1% with ZDI being marginally higher. So, given the foregoing, do you see the growth profile of PID so much of an advantage that you would still endorse it over ZDI? I would have no problem switching, but my previous concerns would need to be allayed somewhat before considering the move.
In general, what would be the "line" for an ETF market cap below which you would not endorse?
Your thoughts??
Many thanks - be well and stay safe!!
Cheers,
Mike

Read Answer Asked by Mike on October 20, 2020

Q: Looking for some feedback on my International holdings in my RRSP. Currently have zwp; zem; and Zdi.
I am interested in PID to compliment my existing holdings. I would split my current zdi holding to make 4 equal positions.
Pid has had better performance over the last 5 yrs, covers the same geography as zdi however with different country and industry weighting’s. Pid’s MER is higher than Zdi with a lower dividend.
Is it worthwhile to split my zdi position, convert entirely to Pid or leave well enough alone.
I do not have to Rif for another 9 years

Read Answer Asked by Bruce on October 19, 2020

Q: Hope everyone at 5i is doing well in these times!

I have been sitting on mostly cash in my RRSP/LIRA and would like your recommendations on the best ETFs to consider for my full US and International exposure. All of these would need to be listed on the TSX as I am purchasing in CAD $. While I know you prefer non-hedged, I’d greatly appreciate if you could explain benefits/workings of hedged vs. non-hedged considering the current environment. And provide ETF recommendations for each.

I am looking to achieve a balance of diversification, reasonable MER, minimizing any withholding tax while optimizing the potential in market recovery. For US, I would like to have a technology ETF, health care ETF and a broader spectrum ETF – but also open to ideas. Also, looking for recommendations on International – one broad ETF or perhaps that and a mix of ETFs. I recognize there can be overlap (e.g. between a tech and broad sector fund), so if you can give me a sense of the degree of duplication that may be present in your recommendations. Perhaps going heavier on tech right now could be a good thing.

While I started off thinking ETF selections would be relatively simple, in reading various Q&A there seem to be many important considerations - your assistance is appreciated. Again, all of these are being purchased in RRSP/LIRA accounts with the goal of optimizing my returns over a 10 year window.

Read Answer Asked by Loretta on March 30, 2020

Q: I’m investing for a parent who is currently 100% in cash, is nearing retirement and has never invested. They will not actually need income for another 3-5 years, but I would like to generate some dividends, so they can see actual cash coming off their investments (this may be reinvested). I think dividends will help psychologically if the equity portion declines as they will at least “be paid to wait” while the market recovers.

I am considering constructing the portfolio as follows:
30% Cash – PSA
50% Bonds – ZAG
10% Equity – International Dividend – PID
10% Equity – International Broad Index – XAW
10% Equity – Canada Growth – 5i

Can you provide 5i’s 2 or 3 highest conviction calls right now. I’m looking for growth at a reasonable price. Not looking for yield, but would like it to at least pay a modest dividend.

I would also be interested in any views you have about the suitability of the portfolio and any alternative / additional suggestions you may have.
If there is a correction in the equity markets in next few years or one of 5i’s A companies slips on a banana peel, I may look to put some of the cash to work and increase the equity potion.

My tactical views are: interest rates will rise with the US leading the way, the US broad equity markets are looking very expensive, Bonds are generally not a good investment and at low rates they will get killed by inflation over the long run (but they reduce volatility).

Also, in terms of allocating these investments between non-registered and TFSA, how should I generally be thinking about this? International stocks and bonds into the TFSA until it’s full and cash and Canadian stocks in the non-registered account? I don’t think they will be making any new contribution so perhaps there is no way to use the RRSP.

I look forward to your thoughts and apologise for asking a multi-part questions. If you start to run out of steam, don’t worry about the tax questions.

Thanks

Read Answer Asked by Will on July 04, 2018

Q: Hi 5i,

Can you recommend a Dividend Appreciation/Growers ETF for each of the following regions: CAD, US, Europe, Asia? I would prefer to have all CAD Hedged.

Thx

Read Answer Asked by Christopher on April 02, 2018