Investment Q&A

Q: What is your suggestion for bonds or a bond fund in this market climate? Thanks

Q: I have some XSB. Could recommend a similar short term corporate bond

Roy

Q: I have the following bond ETF's: HFR,VSC, ZAG and XHY. They total 22% of my portfolio. My question is do I move out, reduce or shift into different bond investments. I am 70 and they are split evenly in registered and non registered accounts.
Cheers and thanks for your great work. Bob

Q: I currently own half my bond holdings in ZAG. I put the other half in ZST as I was looking for something that wouldn't go down as much as interest rates go up. But ZST is a mix of govt and corporate short term bonds and Ive been reading that short term corporate will be less affected by interest rates than govt bonds. Would you recommend another ETF for very short duration corporate bonds that I could replace ZST with?

Q: Your opinion on using FSB ETF to park cash. Looks to have better returns than any high interest savings or GIC with minimal risk.

Any better ideas for returns from cash are appreciated.

Q: I intend to increase the "very safe part" of my portfolios with fixed income ETFs, is a mix of corporate and government bond ETF a good choice with this objective or any other suggestion ? I suppose that longer term bond ETF would be more risky if rates do increase ?

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?

Q: I sold my business and started investing last year. I am trying to build balanced portfolio and struggling with the bond portion. I don't want to buy individual bonds and was looking into something like HBB for unregistered portfolio and VAB and XSB for registered. Yet, I am very uneasy about buying bond ETFs in the near-zero interest rate environment - the rates can only go up (unless we end-up with negative rates here) and, obviously, bond ETFs will be going in the opposite direction. I was thinking about VSC but almost 35% of it are junk bonds, so no comfort there. With PSA now paying only 0.65%, I am really out of choices for the fixed income portion of my portfolio. Any suggestions (both for CDN and USD positions)? My time horizon is 10 years and I want something safe and tax efficient.

Q: I like the Vanguard family of ETFs and am looking for safe income in these uncertain times. I am aware of VBAL and VGRO, but could you suggest other Vanguard offerings that focus on earning investors relatively safe distributions. If there are other companies that offer superior ETFs for income I would appreciate your suggestions.

Q: I hold 7% of my portfolio in CBO. It's performance over the last 5 years has been less than I thought it would been. I was wondering if you could suggest an alternative. I was considering switching 3% to something else with similar considerations. What about VSC?

Q: I start withdrawing from my RIF next year. At this point I have just under 6% in VSC, 5% in XBB, 2% in XHY and was thinking of adding some CBH for the longer term corporate bonds.

If you feel my thinking is correct what % limit would you set for CBH? I know there is more to my investments than what is listed here with BCE and ENB et al also held for their income stream but I want to get your thoughts.

Thank you,
Ron

Q: A recent article in The Economist ("Why everybody is concerned about corporate-bond liquidity - Investors expect to find sellers at all times, but dealers lack capacity to buy") predicted that the corporate bond market may be headed for trouble and a lot of BBB rated bonds may become junk. I own VSC ETF which contains about 33% BBB.
Looking at the daily VSC quotes I notice that "bid lots" have been vastly outnumbered by "ask lots" every time I have checked for the last few weeks. Is this a sign that the prices of corporate bonds (and corporate bond ETFs) are due for a drop?

Q: it seems to me that a good place to have bond ETF is in an RRSP. do you agree? currently I have about have of my wife's RRSP in VSC and the rest is in cash right now. i was thinking that I would place the remainder in another bond ETF with low management fee and with perhaps a more aggressive posture. Does this make sense and what other bond ETF would you recommend? thanks.

Q: Thank you for your Portfolio Analytics feature, I am finding it a useful tool for helping with overall perspective.

Here is a sounding board fixed income ETF allocation question.

In registered accounts I currently have 1% XBB and another 4'ish% spread generally evenly between VSC, CLF and CBO.

For general simplification purposes would it be a better idea to only hold a couple of ETFs or maybe even just a single bond fund?

Possibly keep XBB and choose one of shorter-termed VSC/CLF/CBO products? Would you suggest different ETF(s) instead? Thanks for any ideas and I recognize you are not giving individual advice.

Q: For the above I have the following percentages:
VSC - 2.5%
XBB - 3.3%
XHY - 2.0%
CPD - 1.0%

Next year I must convert to a RIF and was going to work toward lessening my equity portion and increase the portion paying reliable dividends.

What would you increase these holdings up to? Are there others I should consider? I currently have 24% in utilities and a small position of 2.8% in CDZ.

Thank you

Q: Of my bond holdings representing 5% of my portfolio and want to increase to 10%; I'm wondering if anyone listed that I should eliminate/increase in this market environment. Would appreciate any other suggestions. 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: Dear 5i,

I am aiming to configure a fixed-income allocation that is an equal compromise between safety/security and long-term total return potential. I would like to choose ETFs that are versatile enough that they may continue to be reasonably held irrespective of changes in market, interest rate, inflation, and economic conditions. Which configuration do you think would be most appropriate for fulfilling this mandate:

1. 100% VAB
2. 50% VAB, 50% VCB or ZCM
3. 25% VAB, 25% VSB, 50% VCB or ZCM
4. 50% VCB or ZCM, 50% intermediate-duration (~5 years) Canadian government bond ETF (does one exist?)
5. another configuration (please suggest)?

I would prefer to avoid the higher risk XHY and CPD. Why does 5i prefer CLF (VSG is cheaper and similar) and CBO (VSC is cheaper and similar)? VCB is relatively new and has only $12.7M in net assets at this time, is this a problem? Or should I opt for the costlier but similar ZCM?

I realize there are actually many embedded questions in this 'question', so please deduct as many credits as appropriate. I am sure your answer will be well worth it.

Thank you.

Q: Hello,
I recently subscribed to your ETF/MF newsletter. I have looked over the site but I didn't find a section there for asking questions (might have missed it). In viewing some of the ETF performance tables I did not see a column to indicate whether the income is paid out on a regular basis or reinvested in ETF units. My fee for service investment planner has advised me to use more fixed income vehicles to reduce income slightly caused by the gross up of Cdn. dividends in my equity portfolio but I would still like to get the income on a regular basis.
In regards to this perhaps you could comment on VSC or suggest a similar short term laddered bond ETF and a similar emerging market income ETF(with adequate liquidity).

Thanks in advance ..... Larry

Q: I am supposed to increase my fixed income exposure via one or more ETFs. I see you usually recommend CBO, but what about VSC. VSC seems to be a better performer over the last 1, 3 and 5 year periods. Which is better in your opinion and why?

I have about $21K in cash in an RRSP to invest in fixed income products. Should I buy two or 3 ETFs, or all in CBO or VSC is sufficient?

Should I buy now, or wait until after the US election, or even after FED meeting in December to see if they increase interest rates? Does it really matter at this time?

p.s. I have been invested in over 90% equities for the last 25 years (now 53 years old) so I am struggling to get myself to buy fixed income products. I am reluctantly buying fixed income products only because I know I am supposed to have better asset allocation and not be so heavily equity focused, but today the returns are so small I wonder if I would just be better off buying stocks like BCE, T, SLF, FTS, IPL, PPL that pay around 4% dividend.