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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: My question is about allocation of Canadian Banks in 5i Portfolios and what would be a reasonable weighting in a broad portfolio of 30-35 holdings which looks 80% like a Balanced with 20% Growth. BNS is the only Canadian Bank held in 5i Balanced Portfolio (4%) and Income Portfolio (6%). Historically, Canadian Banks have provided substantial returns through dividends and capital appreciation. But, I like 5i approach of finding companies with value/growth potential in small/mid cap universe and structuring portfolios. By association, my portfolio weight in Canadian Banks has grown to about 15%, CM,TD and RY, in order of 10.5%. 3% and 1.5%, respectively.
Would it make sense to reduce these holdings to align more along the line of 5i approach ?

Thanks.
Read Answer Asked by rajeev on May 28, 2018
Q: I am looking for some guidance regarding a retirement plan for someone who is mid 40's; doesn't work for various reasons and has been using an expensive investment advisor. She doesn't know or want to learn about investing for herself. She requires Canadian monthly income and what I think makes sense is to invest her funds in a CDN hedged fund that tracks the S&P 500 such as VSP. The average annual return for this fund is 13.9% since its inception date of Nov 2012 and it pays total dividends of 1.5% annually. I guess I could look at the US website to see the longer term investment returns for the S&P 500. I was thinking of suggesting an ETF REIT for monthly cash flow but the investment returns are much less than the S&P 500. So my thoughts are to invest fully in the S&P 500 and take out money when needed either on a monthly, quarterly or annual basis. Its a simple plan to understand and should work. Of course the S&P 500 will go down at some point in time in the future but with 40 years to be invested I don't think this should be a problem as long as the funds stay invested in the ETF. Your comments would be greatly appreciated.
Read Answer Asked by stephen on May 28, 2018
Q: I have a sizeable position in the Mawer balanced fund in my non-registered account from the sale of house a couple years ago. I have treated this as a standalone portfolio so that should I decide to use the funds for a large purchase such as another house, I do not need to make a larger number of trades to rebalance my main portfolio.

As I do not anticipate using the funds for a number of years, I have been considering replacing MAW104 with Horizon's swap based ETFs to defer any taxable income and create a balanced portfolio from the 5 funds. My thought is that over a number of years the tax savings and reduced MER may outweigh the potential returns of the actively managed fund.

My main reservations in proceeding are the liquidity of these ETFs through an economic downturn or major market sell off, and with the solid long term returns of the MAW104 fund, is there really much upside in making the switch?

Appreciate your thoughts.
Read Answer Asked by Jeffrey on May 28, 2018
Q: Dear 5i,
I am frustrated with BUS! We are down 55% in our TFSA's and it shows no sign of recovery even after a fairly positive quarter. My feeling is that buyers are moving over to NFI with their MCI division they produce everything that BUS does. I think BUS has lost its niche market. What are your thoughts? I hate to sell with these losses in my TFSA. Is their any hope for a recovery?
Read Answer Asked by Richard on May 28, 2018
Q: Just a quick comment.
Congratulations to Ryan on his BNN Past Picks. I think that is the best results I have seen, certainly for a while.
Ian
Read Answer Asked by Ian on May 27, 2018
Q: Regarding the question on transferring rrifs between carriers

The relinquishing institution MUST make the total annual payment prior to transfer

Assets can be transferred in kind or cash or combo
Read Answer Asked by Robert on May 27, 2018
Q: Hi team,
Just a quick note to say nice to see Ryan on Market Call yesterday. Too bad he was Trumped and had less time for questions. I guess the big guy didn’t realize who he was pre-empting.
dave
Read Answer Asked by Dave on May 27, 2018
Q: Thanks for the great service. I have a general question I hope you can answer for me. My understanding is that when a person passes away, their investments are deemed to be sold on the date of their death for tax purposes. However, can these investments, (stocks, mutual funds, ETFs, etc.) be transferred directly to the beneficiary (not a spouse) without being sold? And would this be true no matter what type of account? (Cash, RRIF, or TFSA)
Thanks for your help.
KEN
Read Answer Asked by KEN on May 25, 2018
Q: Comments in a Globe article this morning:

The valuation retreated to 7.3 before the government issued its final decision and has since fallen even more with Thursday’s selloff. But some analysts believe that if Aecon’s EV/EBITDA multiple, based on estimates for 2019 earnings, stays in line with its peers in the construction sector, the shares should be worth considerably more.

The logic of the company being worth $20+ if the Chinese were willing to pay it then and the backlog has improved makes sense to me. Do you agree and is it an attractive buy given the huge drop?
Read Answer Asked by Tim on May 25, 2018
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