Investment Q&A

Q: ETF portfolio question: I'm looking at the iShares 2014 Annual Report for global ETF and see some very impressive returns for 1 year (as of Mar. 31,2014.) Further, I checked the iShares web site to see the performance for each calendar year since 2008.


So here is my question: Would it make sense to invest, say, 50% of one's portfolio in international ETFs such as the following 4: IXJ (Healthcare...a top performer, RXI (Cons. Discretionary...another top performer), and then XI (Industrials), IXN (Tech.). The weightings are to be determined but I'm considering: 20, 20, 5, 5 percent. What are the risks? Can the whole world crash? And, if this is such a smart idea, how come I haven't seen anyone else propose this?


The balance would be invested in Can. and US stocks and/or etf's. If I could grow my portfolio by 25% per year for the next 5 years, I would be vey happy. (I realize, no one knows when there may be another 2008/2009 type of melt-down). Thank you.

Q: I went to the annual meeting of Alliance Grain Traders. They had an analyst tour of their new facility at Minot this week, and apparently 24 analysts showed up, at their (not the company's) expense. The thrust of the meeting is AGT will emphasize their new facilities in Minot and Quebec, and will be less vulnerable cyclically. The stock has been going up recently.
Your thoughts?
John

Q: Hi Peter (and Crew),

I am totally pleased with the service you offer.

I rarely ask questions as I find accessing the questions database almost always provides the information I need.

I am looking to add a retirement holding to my TSFA. The time frame is a minimum of a 10 year hold. I am looking for cap gain and yield and am considering Chartwell (CSH.UN). Would you recommend it and if not, could you recommend 1 or 2 names that you prefer in this space.

Thanks for the wonderful service.

Q: With about a 7 year time frame before my grandchildren may need to start drawing money out of the RESP that I have for them, could you please suggest 4 or 5 stocks that don't necessarily need to "shoot the lights" out in performance but that are relatively safe and will provide an average plus return for this time period. Dividend payers/growers are fine with some added capital gains would be ideal.
Thank you.

Q: Team,

I've read a couple of recent articles and continue to hear BNN talking heads talk about inflation / inflation risks to the economy, hoping to get a 5i opinion on the matter, specifically:

1. What industries would be hurt the most by inflation?

2. What is the best way to protect your portfolio if one feels inflation will start to creep back into the market? Do we just buy more gold / gold companies? Are there other industries that can benefit from inflation?

3. Based on recent reports (CDN and US) what are your thoughts on inflation risks over the next 6-12 months?

Thank you for your insight.

Q: I agree with your comments yesterday re BBRY in answer to my question......turning around nicely......one more question if I may.....would you see the stock as a "possible" takeover candidate for ??? now that they are on steadier ground?

Q: As a bit of beer snob(oxymoron?) I am disappointed with Big Rock's direction. For example, they introduced a new can for their IPA, but the quality sank. It's awful. I, for one, will not be buying Big Rock again.

Q: Greetings Peter and co.
BNN and other financial/investment type programs have a constant stream of guests, some frequent and some new, offering market commentary, advice, newsletters, etc. At some level they are promoting their book of business which I understand fully. Other than checking 'BNN's past picks' is their any way to monitor their portfolio performance? Not all offer a model portfolio as 5i does to simplify this.
Regards
Tim

Q: In this world of exceptionally controlled markets (stocks, bonds, precious metals..) it is a constant challenge to separate the propaganda shaft from the wheat reality.
So for those who consider that Macro awareness is still worth spending time on (I do!), I would like to suggest 2 sites (American unfortunately, as I have yet to find a Canadian blogger.. suggestions welcomed) that do a a decent job talking about it: Fact set Insight already mentioned who have expanded their posts lately and Sober look.
I like also Doug Short but it is much more technical and impose much more attention.
On the geopolitical front which may become the elephant in the room,I have yet to find one site or one blog so I am following many sites, also suggestions welcome.
On the economic front I like Investing.com which have a very neat calendar of daily world economic events extremely well presented and very useful.
Publish at your own choice.
CDJ

Q: Hi Team,

I can't help but complement you on how you handled a recent question by Paul. To me it exemplifies your service and value to all retail investors. It's a "poster child" of how client-focused you are.

I just want to say thanks again so much for your great service. I don't think I (and many, many other members judging by their posts) have experienced such great service in any field, let alone in the investment realm. Feel free to publish if you wish.

Here is the question and your answer for your reference:

June 19, 2014 (asked by Paul)

Question: Good Day 5i Team,

I am a new investor who is starting late in the game, I am 49. I will be investing $700/month into my wife's TFSA and $700/month into my own TFSA. I have trading authority on hers. I have reviewed the Model Equity Portfolio and am fine taking risk in order to grow my investments over the next 15 years, not much time I understand but better late than never right?. My questions are:
1. Do I buy 1 stock at a time each month with the $700 ($1400 total between the 2 TFSA's) or should I wait and buy every 2 months so I have a larger dollar amount to make a larger purchase and also reduce my trading fee?
2. Is it better to spread the $700 ($1400 total) every month equally between 10 stocks and just purchase the same 10 monthly?
3. Do I limit myself to only 5 stocks in different sectors with one of the above scenarios?

Or do you suggest something else?

Thank you very much. I know that these questions might seem remedial but I would sure appreciate some guidance.

Paul

5i Research Answer:

We take all questions :)

In this situation, even with low trading fees, we would wait two months and buy a larger amount of one stock. Spreading the amount amongst many stocks would be quite expensive on a fee basis. It takes away from diversification in the short term, but because you will investing on a regular basis your diversification will improve each month (buy a new stock every two months). In addition, volatility will be your friend: if the market declines, even better for your situation.

You may want to start with a market ETF such as XIU in the short term for 'instant' diversification. Then, your portfolio will not be just 1 (2,3,4,5) stocks. Adding stocks after an initial ETF purchase may serve you well. We would go beyond 5 stocks, but there is no need for 20 under this scenario.

If you stay disciplines, 15 years is still a very good time frame. With regular investments and growth you may still do very well.

Q: Please provide a list of what you consider to be the best in class name in each of the following broad sectors: Financial,Consumer, Utility, Telecom, Industrial Energy and Tech. I intend to buy and hold and want good management and steady growth over at least the next 3-5 years. Thank you so much.

Q: Greetings Peter and Team,

Looks like CCL.B is off a bit these last couple of trading sessions. i only have a half weighting in my portfolio so was planning on topping ti up. Is there any news or other 'issues' that you see requires waiting?

Thanks again for all the great advice.

Q: Thanks for the report on BPF.UN. Is the distribution treated like dividend income income? (i.e. does it qualify for the dividend tax credit?

Q: I have been using your model portfolio as a template for my RRSP investments. I have a large cap portfolio run by an investment company - it already contains BNS, SLF and MG. Can you suggest some alternate stocks in these sectors that would be appropriate for the model portfolio? Thanks!

Q: Based on the price appreciation of Amaya this month the Model Portfolio weighting has likely gone from 5-6% to 10-11%, unless there's been a reallocation, as there was in May. I get the philosophy of not wanting a position to get too large in a portfolio but surely this idea might be counterbalanced sometimes by the idea of letting your profits run (and not adding to your losers) particularly on a stock that has such a great promise. If profits were taken on AYA on the way up, at what point was the decision made to do so, and what was the rationale behind it? Thanks, J.

Q: Hi, For Boyd Income Group (BYD.un) should recent insider selling by CEO and another director be of concern? Thanks

Q: Do you have any thoughts on Orca Gold Inc.(ORG). They have a huge land holding with the old Red Back Mining Team running things?

Q: Highliner (HLF) had a 13% increase this past week. Are there takeover rumours or anything else going on at the company to explain this?

Q: I recently bought VIG in CDN dollars as I was uncertain if I could do it in USD. Before proceeding with any additional US Stock/ETF purchases ,I would like to better understand what approach you would recommend . Firstly, I am new with managing my own investments, I recognize the exchange rate will be a factor and then I am wondering when I do sell in the future, do I have a choice in which currency to receive the funds in? Thank you for your assistance.Elizabeth

Q: Please advise your current opinion on GXI, thank you.