Investment Q&A

Q: I would like to purchase a US broad market ETF similar to SPY in US dollars. The purchase would be for my TFSA so there would be a withholding tax on dividends. I know that there are some ETFs structured in a way so rather than paying out any dividends the fund would instead see a gain in capital. Can you recommend such a fund (in US dollars) that tracks the S&P 500? Does this strategy make sense for a TFSA or would such a fund incur higher costs or fees that would negate the savings from avoiding the 15% dividend withholding tax?

Q: Could you please suggest a replacement for these mutual funds. I have been told these funds have a high MER and I should investigate other options. A switch to ETF's may be an option too.

Q: As part of my shift from managed products to ETFs I need to top up all or a combination of ve, spy and xef. This will be a rather large transaction so I am leaning towards 25% of the amount in each ETF and keeping 25% in cash counting on covid related market dips over the next few months.

Q: Regarding VFV and SPY, yesterday there was a large disparity between these two around 1%. Today VFV is -0.31% and SPY is +0.30%. I know there is currency involved, but this seems like quite a difference on a higher volume ETF. Any thoughts?

Also, VUN seems to outperform VFV over the longer term. It is not much more in MER - would you choose VUN over VFV for a 10 year hold?

Q: Hi team
I have about 40,000 in US dollars to invest
aim is to put 30% in US equity (SPY which I have a current position)
and put 70% to generate dividends and some growth (VIG which I have a current position)

it is going to be in a non-registered account, so I know that tax withholding taxes
is going to lessen the return (no intention of filing a US return)
can you give me 2 Cdn ETF (investing in US div stocks and
general market) equivalent to VIG and SPY ?
of similar returns and risks

Many thanks
Michael

Q: Can you comment on these ETF's I presently hold in a corporate unregistered acct. I have a large amount in DVY.US - not sure why (previously with a FI ) Looking to update this portfolio based on present times. In At least a 5 year hold. Please take as many credits as needed.
Thanks so much.

Q: IF and that is a big IF we have all missed the bottom on American larger caps should I be now focusing on US small caps and International markets? When I look at SPY and VIG all th money has jumped into American large caps and more or less erased the huge loss and pairs back some of my gains from 2019...so huge collapse gone...for now. I've topped up some VIG but missed on SPY. When I look at US small caps they are lagging and I assume this is due to the higher risk and lower volume, Same story for Europe, International and emerging markets. So my question is should I be shifting to adding IWO, XEF, and VE. I need to add some international content to my portfolio anyways as I am a bit light at 12% international ( developed) and 10% emerging markets. If you agree or don't strongly disagree what ETFs do you recommend right now ( I already hold the one mentioned). I am leaning toward a bit of IWO and larger positions in VE and XEF.

5 year window, high but slowly lowering risk tolerance, Balanced portfolio follower ( shifting slowly to income follower), overweight canada (40%) and US(40%) ,

Q: Hello,
I am currently waiting out this deep downturn in the market. At some point the market will start recovering. I have followed your recommendations in the Portfolio Tracking and Analysis tool.

If you had $500,000 sitting in cash which you want to deploy once the market turns around, which sectors would you look towards investing in for the eventual upward trend? Would you be able to provide your favourite stocks /ETFS which you would use to cover the sectors you think will be first to recover?

Thanks for all your help.

Q: Looks like the markets are liking the financial aid packages approved in the last day or two but do you think that this bounce is warranted? Would you start deploying cash here in both the Canadian and US markets or wait for less volatility? What does your experience tell you? Thanks.

Q: Thank You for continuing to be the voice of reason for the amateur like me!!

What ETF's are best for 5-10 year hold for the following markets
US S&P, UK, Germany, China, Russia, Asia (general), South America (general), Africa (general). Looking to take advantage of weakness and average in.

Q: Building up my ETF portfolio and have some cash to deploy. Of XEF VE and SPY which is the best one to add right now. Crystal ball yes...balanced follower, 5 year time horizon. I am currently over allocated to Canada and on target for emerging markets a little light USA and international. Likely to buy a bit of each if not strong case for one in particular.

Q: Have $20,000.00 sitting in a LIRA account. Please recommend 3-4 ETFs that I can hold for the next twenty years. and drip (no bonds) would like to double every 10 years. Would Dividend Growth ETFs a good choice over that time frame or just growth stock ETFs?
Thanks Cec

Q: My ETF portfolio is 30% SPY, 20% VIG, 10 IWO ( 50% USA exposure), 20 VE and 20% VEE. You seem to have switched to recommending VSP and VUN as your USA ETF. What are the advantages of VSP/VUN over SPY. VSP and SPY have similar mers, VUN is a bit higher at 0,16. I assume I started buying SPY on 5i recommendation at some point in the past... Balanced portfolio follower, nearing retirement so shifting more towards income/div aristocrats over pure growth plays.

Q: Hi Peter & Team
Love your service. I have good pension income and a balanced portfolio of Cdn & US stocks in my TFSA's and non registered accounts.
I also have $300,000 in my RRIF accounts and would like to rebalance with a few conservative stock ETF's (3-4 ..?) to achieve US & Global coverage. What do you suggest ...
Bill

Q: Hello, Sent a question earlier and your reply is as follows;

PA recommends to reduce my technology exposure which is at 38%. Only problem is I am unsure which tickers to get rid of, like them all.

In my RRSP; OTEX at 4% and XAW at 21% not a direct tech exposure but does hold plenty of tech, just not sure how much.

LIRA: SHOP at 6.5%( recently chopped it from 9% to 5%), LSPD 5%, KXS 3%, QST 2.2%,

TSFA: CUSat 5%

Which one would you pull the plug on?

Tks

Asked by Rino on August 22, 2019
5i Research Answer:

XAW is currently about 22% technology. We like all the names here, and there is nothing stopping you from selling some of each if you want to lower exposure. XAW at 21% is a large position and could also be moved to 15% or so in our view. It has not performed so well either. If you want to sell just one we would lean to QST as the smallest and riskiest.

I should have also mentioned that PA also suggest to reduce my canadian exposure which is above 60%. That is the reason why my XAW exposure is at 21%. Having said that if I were to sell roughly 6% of XAW, can you suggest another non canadian etf to invest in? Seeing that XAW covers basically everything for my international exposure.

Thanks again!

Q: I would appreciate your recommendations for the most tax-efficient ETF's for US equities in non-registered , RSP & TFSA accounts .
Thank you.

Q: Hi All at 5i! Any advantage to holding one ETF over the other. Which one do you favour? Cheers, Tamara

Q: I recently read your article "Cap-Weight vs Equal
Weighted Indices" in etf-mutual fund letter which generally concluded that equal weighted etf's out performed cap weighted etf's. However, I'm wondering if this is still true if higher MRE's and higher taxes (due to higher turnover) are taken into account. In other words what's the after tax comparison, say if you were in the 40-50% tax bracket? Do you have some idea or do you know some studies on this?

Thanks

Q: Hi 5i team,
I am wondering if you can compare VOO to SPY. Which is better to add to my portfolio? Are them similar? Are them both tax efficient in RRSP and TFSA accounts?

Thanks,
Alice Liu

Q: We have( for me) a quite large sum of money invested in managed products. Any new money is going into Canadian equities ( 30%) following your portfolios and a mix of ETF roughly
30% USA at 10% SPY, 10% VIG, 10%IWO
30% International currently VE
10% emerging currently VEE
( I know "where is your fixed income" you ask, my spouse has a federal government pension which I count as our fixed income)
To date these sums are relatively small. As I start to shift large sums from our managed products to my self managed portfolio ( following the above ratios) I am ok with the mix in the USA spread to 3 etfs run by 3 different companies. With the international and emerging I am a bit concerned about putting all that cash with one fund (and company). Is this concern silly or should I have some diversification within my ETF holdings ( both in terms of funds and companies). For example instead of having 30% of my holdings in VE I would split it 15% VE and 15% XEF. So I guess the short questions are:

1. What is the max an investor should have in any one ETF( %)
2. What is the max an investor should have with any one company ( $ or %)