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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: Hello. My parents are elderly, and we have taken over managing their financial affairs. Although difficult to predict, I expect my mother will still be alive for another 3-4 years, so that is the time horizon we are working with. They have total savings of about $2.5 million, which we are amalgamating from various mutual funds and from the sale of their house, etc. We are considering using the wealth management services of BMO. We have told them that we are primarily interested in capital preservation. My father has a pension, so their monthly income needs are met. The representative recommended the PIMCO Monthly Income Fund (Canada). I'm not sure if it the same one as has been discussed here before. The identifier on the sheet is "Series F fund code PMO205", described as a Global Fixed Income fund. In any event, they were recommending 65-70% in the above fund, and 30-35% in a "Dividend and Income Guided Portfolio" which consists of 25 blue chip Canadian and US stocks (I won't bother you with their stock selection; it looked okay to me). They said they would gradually move money from the income fund to the stock fund during market drawdowns.

My question is, what do you think of this PIMCO fund? One of my concerns is protecting their money in a market correction. Would this fund be okay? Also, are the bonds in general of high enough quality that they would not be downgraded into the high yield category if things really get ugly? Has it had any negative years?

Thanks for your help.
Read Answer Asked by Donald on July 24, 2018
Q: Hi Peter, Can you advise your 5-6 best candidates for covered call strategy, Thanks
Read Answer Asked by RUPINDER on July 24, 2018
Q: Hi 5i research team,
What could be the impacts of this news « Canadian banks at risk of losing access to key European currency exchange platform »  in monday’s Globe and Mail on CXI? Could you also comment on their recent acquisition from Laurentian bank? Is it good diversification of operations or are they speading their activities (because growth is lacking?)? Thank you for your collaboration, Eric
Read Answer Asked by Eric on July 24, 2018
Q: Hello team,

I have been wanting to ask you this question about the relationship between share price, dividend, and yield. I am going to use KWH-UN whose current SP, annual dividend, and yield are $6.01, $0.82, and 13.56%, respectively.

Suppose I buy 1000 shares of KWH. I understand my purchase will cost me $6010.00 and I shall earn $820 in dividend after a year on this investment which amounts to 13.65% of my purchase price. Now let's say that in the second year share price increases to $8.00 and the company continues to pay $0.82/share in which case my investment yield is still at 13.65% but that of a new investor will be 10.25%. Is my understanding correct?

If I am correct then, it is no-brainer that one should buy a company like KWH or ENB when they are in some sort of predicaments but have proven reliable in maintaining their dividend over time. The reward will be higher yield for the contrarian/patient investor if the company continues to pay the same amount of dividend per share.

Hope I am getting it but I am sure you let me know wherever I am going wrong on this....Thanks as always!

Now back to reading more of the questions/answers on 5i site...

Read Answer Asked by Saeed on July 24, 2018
Q: With GC having the momentum down and GH and TSGI on a positive trend which would you prefer to hold I currently hold GC and thinking with the bad press on money laundering in BC it might be time to switch.
Read Answer Asked by dennis on July 24, 2018
Q: Airborne Wireless Network (ABWN.US) has an interesting technology / concept but recently ran into financial problems. As a result it issued Convertible Notes and other instruments that has led to a "Weimar-Republic"-like share dilution. The company is still very much active.

I recently bought 250,000 shares at $0.0004 (=$100). Today I was looking at their financial statements and noticed that the "par value" of their shares is $0.001, more than twice the market value of my shares. (I have never previously bought shares at less than the par value.)
Does this mean that, in principle, I can demand the par value from the company, making a quick 150% profit? Of course, if everyone demands par value the company will go broke, so I would need to be the first :-)

I would appreciate your comments on this unusual (for me) situation.
Read Answer Asked by Gregory on July 23, 2018
Q: Hi,
As a follow up to Loretta's question today (the 23) about your 3 favorite canadian utility stocks. You listed Enbridge, Brookfield Renewable, and Algonquin. Your referral of those makes me happy since they are the 3 I already own. To me they all seem to be in different parts of the sector though. Would you be concerned if the total weighting got to 10 or 12 percent combined for all 3? I use all DRIPS I can and have a long time to wait (I'm only 32). What would be your max total weighting between for the 3? I have no plans for adding other utilities anytime soon. Do you have a order of favorites for these 3 where you would allow one to gain more weight over another?

Thanks
Read Answer Asked by david on July 23, 2018
Q: Do you know if it is possible to purchase U.S. T-bills via a self directed (TD Waterhouse) US$ margin account? If not, how would a Canadian resident go about purchasing a U.S. T-bill?
Read Answer Asked by DAVE on July 23, 2018
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