Investment Q&A

Q: I’m considering whether I should invest in TLT, HPYT, or a combination of both. I understand that HPYT has a much higher yield, but I’m struggling to fully understand why. TLT, which makes up around 70% of HPYT’s holdings, only has a yield of about 4.3%, which makes me wonder how HPYT can achieve such a significantly higher yield. I understand the basics of covered call ETFs, but what kind of options are they trading to generate this yield? There seems to be something I’m missing here—could you also explain the additional risks that come with HPYT's elevated yield?

Q: With the lowering of interest rates, what bond funds to invest in? Bond ETF’s?

Q: Everyone seems to dislike bonds these days, especially long-term bonds. I was considering TLT for a portion of my portfolio, but I noticed a very poor return this year (4.7% one-year return), even though the Fed has clearly signaled rate cuts at the upcoming meetings. One explanation for the poor performance of treasuries is the oversupply of bonds. With U.S. debt ballooning, there seems to be fewer buyers. While, in theory, TLT's price should increase as rates go lower, I was reading that it may, in fact, remain flat and stuck in the sub-$100 range due to the oversupply. What are your thoughts on this?

Q: Your thoughts on TLT, is it likely there more up side in the next year?

Thanks.

Q: I’m looking to diversify the fixed income portion of my portfolio. I don’t have any bonds/treasuries so was looking at TLT and XLB. Can I get your thoughts on these and others you could recommend?

Q: I hold some TLT, at a loss.
Do you think I should add to it or or buy IEF?
This is not for a long -term hold, I just hope, if rates go down, there may be some capital gain.

Q: The fixed income portion of my portfolio is fairly low. Would now be a good time switch from equities into fixed income in bonds, or has the horse left the barn? What would be, in your opinion, some suggestions for fixed income?
Much appreciated.

Q: I was watching an interview with David Rosenberg and Ed Devland. They were stating that the Canadian interest rates are going to have to be cut several times due to economic conditions. Can you recommend investment strategies to benefit from this . For example bonds going up in value because of the inverse relationship of interest rates and bond values. What bond etf's ect. Can you give US recommendations also, as it sounds like the Us will be later than Canada.

Thanks

Q: Bloomberg article today summarized:

Forget the stock market or private credit. Fixed income will outstrip other asset classes after “a generational reset higher in bond yields,” according to Pacific Investment Management. “Active fixed income is positioned to perform well if there are no recessions over our secular horizon and to perform even better if there are,” Pimco’s Richard Clarida, Andrew Balls and Daniel Ivascyn wrote in an outlook released Tuesday. As prices climb and inflation recedes, they expect bonds will be even more attractive than cash.

Can you offer some guidance/thoughts on this? I’m a growth investor primarily in stocks, and not familiar with bonds.

Can we benefit from some torque? What would be your top ETF plays in this?

Q: If interest rates drop would short term bonds be better than longer term ,which ever is better do you have any suggestions on bonds .

Q: Given the weaker Canadian economy (and outlook), how does the long Cda bond (xlb) compare to the long US bond (tlt)?
Thanks.

Q: With the up coming US election in November and the pressure on the fed to cut rates. What are your thoughts on where the TLT will be in the latter part of this year and would that likely be the high for the TLT for the next 12 months?

Thanks.

Q: If interest rates are poised to come down, do you see an opportunity for some short to medium term gains with bonds? If so, would the sweet spot be with short, medium, or long term bonds? Are there any bond ETFs that you could suggest?

Q: Hi, can you provide your current thoughts on Long term US treasuries. TLT is down 2.5% so far today. Thanks
Mike

Q: Hi,
I'd like to follow-up on my last question, from Jan. 15th, which wasn't completely answered.
I also asked for recommended US$ Bond ETFs.
Thanks,
CG

Q: On Dec 28 you responded to a question from Cal about covered call bond funds, and made a recommendation as he requested. However, in your comments I got the impression that you felt now may not be the right time to buy this type of fund due to the potential for higher bond prices and lower yields over the coming months. Looking at the 2 noted above, and assuming rates do start to slide down a bit, what would you expect to happen to the ETF price and the distribution? Would you be a buyer today?
Thank-you

Q: Hello 5i,

Our portfolios initiated positions of TLT, VCLT, IEF, VCIT, and VAB ~2 months ago. TLT and VCLT are each at 2% of the portfolio. VAB, IEF, VCIT combined are 3%.

We will add additional funding to the ETF's. Would you recommend an increase across the board or should we focus our increase on TLT, VCLT, and VAB based on the latest talk about lowering rates?

Note: We are treating the ETF's as a stock as we have GIC's through to 2028 as our fixed income (15%). What are the triggers to indicate that the ETF's are reaching the end of the runway and a switch to individual stocks is recommended?

Thank you for your great service and Merry Christmas.

D&J

Q: Which of these fixed income holdings is best suited as the 25% fixed income in a retirement portfolio? Alternatively, is a 30/30/40 mix (for a portfolio total of 25%) better? Thanks!

Q: Hello 5i,

Is there a downside (15% tax) of owning US bonds such as VCIT, VCLT, TLT, AGG, in an RRSP. If so, can we apply for an exemption for an RRSP? If not, would you switch to XTLH instead of TLT? Are there can-hedged ETF's for VCIT, VCLT, AGG?

Thank you

Debbie and Jerry

Q: Good morning 5i
I am getting older and not sure i want to endure too many more stock market roller coaster rides. I am therefore thinking of moving into a higher bond allocation. You have mentioned yourself that even something like tlt could be a roller coaster. I am not adverse to getting some but I would like to know from you, what bond etfs you would recommend if one wanted , for instance, a 40/60 split between bonds and stocks. I am open to Canadian, too, but my intention is to keep fixed income in our rif, therefore, i would concentrate more on us bond etfs
Thanks as always