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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: Good morning. Many Canadian ETFs covering the US market are CAD-hedged e.g., XSU. Can you please help me understand what hedging means to the retail consumer at the present time when the Canadian dollar is worth less than 80 cents US? Does it de-risk currency exchange so that, for example, an index ETF like ZSP gets the full benefit of an increase in the S&P 500?

Thanks as always.
Read Answer Asked by Thomas on March 23, 2015
Q: Hello, I have a question about the fixed income part of my portfolio. I have a total of 5 bond etf`s each at 5% for a 25% allotment of fixed income.

ZHY + 1.78%
ZCM + 4.01%
ZIC + 10.12%
ZEF + 2.06%
PSB + 1.65%

This works out to an average gain of 3.93% since January 1st 2015

Would I be better off to simplify my holdings by holding only VAB which is up 4.18% or a combination of the above?

I am also thinking ahead when interest rates may rise and that is why I have PSB.

Thanks, Mike
Read Answer Asked by Michael on March 23, 2015
Q: Hello, when you come out with your new and updated portfolios could you formulate a best balanced model. This including something like 20 selections or whatever is appropriate from your 3 portfolios. I hope this reasonable.
Read Answer Asked by dale on March 23, 2015
Q: Hi Peter and 5i team, what are the catalysts driving Canadian/Global health-care/pharma sector at present. What s your near and mid term outlook for the sector and what headwinds do you foresee for the sector
Read Answer Asked by RAJITH on March 23, 2015
Q: I would appreciate your thoughts on the gold sector and Yamana in particular. Thanks again, Bob.
Read Answer Asked by Bob on March 23, 2015
Q: Hi guys, I have both ipl and su but don't have any enb. Your thoughts on selling both and buying enbridge.
Thanks
Jim
Read Answer Asked by jim on March 23, 2015
Q: Hello Peter & Co,
Does it make sense to invest in US$ when one does not have any US$?
It would have been OK if I had converted a portion of my RRSP/RRIF in US$ when the CAD$ was at par. If I do so now, I would lose 25% or so right off the bat; mind you, I would regain my F/X loss when I sell the security +/- the exchange rate at that time.
But...Would I get a better return from US investments?
The 5i Model Portfolio had a return of 80 to 90% since its inception; ditto for Jason Donville’s Capital Ideas Trust, adjusted to the same start date. These 100% Canadian portfolios have inspired me a great deal and, consequently, my RRIF Portfolio of 40 diversified holdings generated around 60% over the same time period, which I believe is quite respectable.
Is any additional return from US investments worth the additional F/X risk?
Thanks,
Antoine
Read Answer Asked by Antoine on March 23, 2015
Q: Peter and team:
Could you please recommend a couple of options for"Dividend Aristocrat/Growers" style ETFs for US Companies. My preference is one that trades on the TSX, and unhegeded vs. hedged, though open to both at this stage.
Second part (perhaps unfair) how do these products compare with the "low volatility" products offered by BMO and iShares?

Thank you as always for a great service.

Phil

Read Answer Asked by Phil on March 23, 2015
Q: Hello,
I'd like to check out my understanding of capital losses/gains in various types of accounts. Like everyone else, I feel I pay my fair share of taxes and don't want to pay more than I have to....
TFSA - very clear, no taxes... but when you have an unrealized capital loss (for example, due to an out of favor sector) isn't there incentive to "hang in there" unless you KNOW your money will gain better returns in something else in the short term?
RDSP/RESP - are contributions and grants/bonds recorded as absolute amounts??? If so, that would mean everything else is "earnings", taxed upon withdrawal, and this results in an offset off capital losses to capital gains... true? or am I missing something?
RSP - a tax break is granted for the year of contribution, at whatever tax rate you are at... upon withdrawal, if you have overall capital losses (which no one wants) you pay tax (presumably at a lower rate because your overall earnings are less) on the lower amount, so you are getting a tax break... if you have net capital gains, you are paying tax on 100% of these gains, which obviously is less advantageous than if you held them in a non-registered account.
So, in a RSP account, isn't the same effect (as long as you have more capital gains than losses) equivalent to offsetting capital losses to capital gains, with the exception that you have to pay 100% tax on net capital gains (versus 50% according to current rules)???
I realize you aren't tax professionals but I think these are pretty fundamental questions for which you have the answers.
As always, thank you tremendously for offering this service.

PS. I was reading the previous Q&A, as usual, and want to know whether you are looking at no longer allowing new members as of a certain time...
Also, please clarify what is or is not happening with these "new portfolios/ETFs" I'm seeing on the Q&A. Thanks!!!
Read Answer Asked by Brenda on March 23, 2015
Q: I'd like to know your philosophy regarding taking gains. Recently I've heard from "knowledgeable" (I think it's true) people who believe in selling half of your stock when it doubles, as a rule. What are your thoughts on that?
Also, that leaves me pondering what to do with my losers... I've heard not to hang on, hoping for a turnabout... just take your losses like a big girl and move on. Your thoughts generally?
And in particular, I'm holding onto AHF, CHW, AVO BAD, SGY, BXE, MCR, ACQ with this hope... which ones should I dump???

Always grateful,
Brenda
Read Answer Asked by Brenda on March 23, 2015
Q: Dear Peter and team.

I am switching a $25,000 family plan RESP (for 2 kids ages 6 and 4) to a self-directed account and would like to create a diversified and safe portfolio. I plan on maximizing annual contributions and expect the government top up as well, so will add $6,000 per year. The funds will not be needed for 12 years and I am willing to weather some volatility. Do you think an 8-10 stock portfolio is a good starting point, with the annual lump sum contributions used to add 1 or 2 new positions each year? If so, could you recommend 8-10 stocks to be acquired over the next month or so?

Many thanks for an amazing service!
Read Answer Asked by Arvind on March 23, 2015
Q: I have no energy exposure at all at present and have 41% of my portfolio in cash. I have begun to compile a list of energy stocks to purchase on an expected major pullback in the next few weeks as oil storage capacity fills. ARC Resources, Baytex Energy, Crescent Point, Enerplus, Vermillion, and Whitecap are my preferred choices at this point as I am retired and their dividends are distributed on a monthly basis. They are also all mid-to-large-cap companies and, therefore "safer" in my view. Are there any in this group that you would avoid? Are their dividends safe? Are there any additions I should consider? My criteria is mid-to-large energy companies, with "outperform" Royal Bank ratings, paying decent monthly dividends, and well-down from their projected targets (which all of the above meet). Many thanks, as always.
Read Answer Asked by Paul W on March 23, 2015
Q: Hi Peter,

Thank you for your great subscription service. I have a pretty balanced portfolio and want to add some good dividend yield stocks. What do you think of CTY, Calian Technologies, Russel Metals, Wajax, Precision Drilling and Chemtrade Logistics. Some of these have stock prices that have gone down due to their exposure to oil and gas, but it might be a good time to buy low cost companies that pay good dividends.

thank you
Anne
Read Answer Asked by Anne on March 23, 2015
Q: I am down $4.00 on 1000 shares of Corus since the CRTC announcement. The dividend is 5 per cent. Since Shaw owns most of Corus woukd it not make sense for Shaw to buy out the rest of the shareholders? Consolidation makes sense to me only one dividend from Shaw after a takeover and possible synergies. Or would you sell and move on maybe to lions gate in the US which has momentum.
Read Answer Asked by Helen on March 23, 2015
Q: From a technical point of view, Lumenpulse seems to have reversed it's slide at major support with high volume. Without knowing what may have prompted it would it be a good entry point?
As always, your insight is greatly appreciated, Peter
Read Answer Asked by Peter on March 23, 2015
Q: Keeping in mind the often-heard advice to sell your losers, what is a good way to define a loser; is it just being underwater on your position, or are industry and macro developments important considerations as well? The reason I ask is that I am currently under water on Corus, but I'm not sure if that alone makes it a loser given it's position and relative strength in the industry. However, when considering the challenges that the broadcasting industry will continue to face going forward, maybe I should categorize it as a loser and move on. How would you approach a decision like this? Thanks for any insight you can provide.
Read Answer Asked by Alan on March 23, 2015
Q: Hi taeam:
Since the pull-back in the crude oil prices last fall, I wonder how much it has affected the revenue of the pipeline companies like TRP, ENB, PPL and IPL. I am looking for opportunities to add more for dividend income with a small growth potential. Secondly, from Ottawa's transportation watchdog, the worry about transporting oil by tankers' safety, it would suggest the coming of a new generation of stronger tanker wagons, I wonder if you could educate us to see what companies manufacture and do research on the above topic.
Many thanks,
Read Answer Asked by Michael on March 23, 2015
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