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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 question is portfolio construction strategies for a RIF. Assume the value allows for sufficient diversification to total 20 positions, as long as a max 5% (say $5,000.00 per investment) weighting is respected in each. Also assume one wants foreign exposure and uses ETFs for that portion with a goal of maintain a minimum 25% (say 5 positions) exposure.

Based on the above, that would mean +/- 15 individual CAD stocks can be purchased. I like the fact individual stocks can provide greater returns and outperform the index and/or its sector. But they can also produce far more portfolio carnage for a variety of reasons? Capital preservation is an important consideration but low volatility is acceptable. Other investments can be drawn on to avoid selling in a market downturn and I am still a few years away from reaching 71. I am assuming the value of the portfolio is stable and the strategy would change if the withdrawals started reducing the portfolio value below an amount where a reasonable diversification could be maintained. I believe it is a useful exercise to have an objective yearend review. It helps to understands risks and plan/structure investments going forward with a vision.

In your opinion, what factors might be prime considerations to simply move the funds entirely into ETFs?

Given some recent questions, I would like your insight into FOREX and Covered Call options on ETFs for my foreign exposure. Other than travel, our living expenses are CAD. Consider foreign bank ETFs ZUB and ZBK as a good example since you have provided responses on them . Would buying a block of each which add up to my desired individual investment weight also give some FOREX exposure but a defensive position thanks to the hedge? Similarly, would a strategy of picking two ETFs one with a covered call and the other full market exposure increase capital appreciation potential while enhancing monthly returns?

Thank you for your insights. Season's greetings!

Mike
Read Answer Asked by Michael on December 15, 2017
Q: Hi 5i,
I’m continuing to hold some Callidus (CBL) shares reasonably patiently. But I’d be interested in any further thoughts on the insider activity on CBL over the past few months. The INK report shows predominantly two buyers: Braslyn Ltd and Callidus itself. (You noted previously that Lewis controls Braslyn) The shares repurchased by Callidus are consistently cancelled at the end of each month. The Braslyn purchases are small lots (a few as big as 10-15,000 but smaller most recently), certainly relative to the size of Braslyn’s total holding (over 7.1M shares). Small lots obviously won’t move the price significantly on a given day. But is this buying too incremental to be significant or might something be going on? Obviously if there is to be a go-private takeover at a premium, continuing to accumulate near $10 might work out well for Braslyn. But is it likely that Braslyn is angling to orchestrate a takeover itself? The trading share float seems relatively small on this already (around $100M and less than 20% of the market cap). I don’t know if I have seen a situation quite like this one before. It seems like if the float erodes enough the current insiders could just have it go private by agreement. Thanks.
Read Answer Asked by Lance on December 15, 2017
Q: All of my RRSP bond holdings (25% of portfolio) are invested in two PHN funds, about 2/3 in the core government bond fund RBF1110 and 1/3 in the High Yield Bond fund RBF1280. Is there any value in diversifying a bit more using either XHY or CVD? The rest of the portfolio (75%) is equally split between Canadian equity (modelled from the Balanced Portfolio) and US/International Equity Funds and ETFs. I have about 15 years ahead of me before transferring to a RRIF and don't expect to have to rely much on this money because of my employer defined benefit pension plan. Thanks.
Read Answer Asked by Christian on December 15, 2017
Q: Hello 5i team,
Could you remind me of your rationale for having GUD and KXS in both Balanced and Growth portfolios; whereas Element and Open Text were in the Balanced portfolio, why have you shifted ECN and OTEX to the Growth portfolio?
Looking forward to watch Peter on BNN on Friday.
Thanks,
Antoine
Read Answer Asked by Antoine on December 15, 2017
Q: My 20 year old contributed $21k to his TFSA in July, purchasing roughly equal amounts of KXS, PHO, SIS, TOY and PUR. He just sold his PUR shares and now has about 26% of his now $27.6k portfolio in cash. KXS represents about 14% of his portfolio (down approx. 8% from July), PHO 20%/+33%; SIS 17%/+14% and TOY 23%/+43%. Are there one or two names you could suggest to add to his portfolio? Or would he better off maybe topping up a couple of his current holdings (KXS? SIS?). This is for a long term hold. Love your service. Thanks.
Read Answer Asked by Bruce on December 15, 2017
Q: Could you please comment on earnings. There was about a 4% drop to the share price before the release?? I hold this in my income portfolio and have never had to worry about this company. 2017 looks like there wasn't much growth but does 2018 look better? Would you continue to hold this?
Thanks as always for your advice.
Read Answer Asked by Rudy on December 15, 2017
Q: Following your debate on Bitcoin stocks, I've done quite well and doubling on a few that I would NOT have known off except for following your esteemed Q & A. Now I'm trying to decide on GBTC, which I had bought @ $925 and sold half @ 1,826. I still have a few and am debating whether to sell before the CME Futures open on Sunday or wait. Nothing much happened when the CBOT did the same last Sunday. I'll make my own decision, but much value your insights.
Thanks as always!
Read Answer Asked by Austin on December 15, 2017
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