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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: I'm thinking it might be a good idea to buy some inflation linked government bonds especially long dated either US or Canadian via an ETF Would appreciate your suggestions on specific ETFs and thoughts re short term vs long. My thinking is if inflation is here for longer than we expect and I have inflation linked bonds it's probably the best way to protect myself.
Read Answer Asked by Nigel on October 16, 2023
Q: I read an article in the Globe and Mail this morning where inflation-linked bonds were touted as a good investment at this time. Would you agree with that strategy?
Whether you agree or not could you please give the reasons why. If you do agree where can we buy these bonds and which would you recommend?
Read Answer Asked by shirley on December 07, 2022
Q: As STIP and TIP have ceased to pay their previously excellent distributions, I have been looking for alternatives with similar distribution, diversification and volatility characteristics. XHY seems a valid choice; however, can you comment/provide alternatives? Thanks.
Read Answer Asked by David on November 23, 2022
Q: I notice that STIP and TIP have each stopped paying their previously excellent dividends. The prospect of their payouts returning, their low volatility and their low correlation with the remainder of my portfolio keep them somewhat attractive. However, can you recommend preferred stock or bond etfs (preferably with available option series) that can provide low volatility, low equity correlation and some yield?
Read Answer Asked by David on November 10, 2022
Q: These two "inflation-protected" bond ETFs turned out to be extremely disappointing investments. I don't know whether it's poor investment strategy or some other factors, but these two ETFs didn't provide any intended inflation protection, they behaved just like all other bond ETFs dropping like a cannonball when FED raises the rates. In response to my question on Sept 23, you mentioned that increased distributions may provide some comfort here, but both ETFs decided to cancel October dividend, so stated yields are completely meaningless now. I hold these two in taxable account, do you suggest to continue holding them hoping for a recovery or just to sell them both for tax loss and replace with some other bond ETFs that have better recovery potential? If it's the latter, what replacement would you suggest for STIP and for TIP. Thanks.
Read Answer Asked by Michael on October 31, 2022
Q: After reading your answer to a question on TIP and STIP on March 29, I invested in these two inflation-protected bond ETFs, however, their performance to date was extremely poor and I am down about 10%. Can you please explain why these "inflation protected" securities behave so poorly in the current high inflation environment? Aren't they specifically designed for situations like we have these days?
Read Answer Asked by Michael on September 23, 2022
Q: Hi,

For fixed income, from your Q&A, it still make sense to have some holdings in inflation protected bond funds. In your opinion, would it be a good idea to shift most bond holdings into funds like these until inflation abates? What are your favourite inflation protected funds in the US and Canada?

Thank you, Michael
Read Answer Asked by Michael on March 29, 2022
Q: According to a G&M article on treat of stagflation, XSB is not a good choice of invest re 40-60 portfolio.
Assuming you agree with this article what would be your top 3 or 4 investment to replace XSB ?
Read Answer Asked by Roy on March 21, 2022
Q: I'm entering retirement and won't be adding much more new capital to savings and so capital preservation is paramount as I look at drawing down phase in the next 6 months. Right now I am still heavily exposed to the markets with about 85% equity exposure. I want to increase the amount of safety but am concerned with the loss of purchasing power and feel the old 60/40 rule isn't adequate anymore. The big dilemma in today's environment is that there really aren't a lot of alternatives to stocks for keeping up with inflation, but this involves capital risk. What balance do you think is more appropriate in this environment? I'm thinking around 75/25 while trying to keep around 12-18 months of expenses in high interest savings so one doesn't have to sell into a down market.

Are you aware of products offered in the market that may provide returns of 5-8% while being "fairly" safe for the capital invested?

Any suggestions on perhaps bond funds that offer returns that will at least keep pace with inflation after fees without undue manageable risk for capital safety?

Looking for any ideas..preferred shares ETF's? (know there is still some capital risk here). Thank you for your help and input.
Read Answer Asked by Andrew on January 13, 2022
Q: I am trying to understand bond diversification better. I have a long term portfolio of mostly equity exposures and some XBB. Do you generally recommend further diversifying bond holdings? Eg to an inflation protected fund or more global exposure or specific maturity profile (eg shorter maturities)? If so could you recommend ETFs for diversification purposes?

I don’t want to over complicate things but also want diversification to different market scenarios in the spirit of an « all weather » portfolio. In particular real return bonds seem useful for this compared to XBB. I would be grateful for your thoughts. Thank you very much.
Read Answer Asked by Chris on January 11, 2022
Q: I own 100 shares of STIP in my RRSP. It's expected interest is listed as slightly over 4 percent. But in my TD Waterhouse account, under expected income it shows me getting $739 dollars per year in interest or 61.60 per month. That works out to 7% in interest. Is this right? I've owned the ETF for three months and sure enough I have received the 61.60 for each of those months. If so, it is a really good return for fixed income. I'm just not sure what accounts for the discrepancy.
Read Answer Asked by Carla on January 11, 2022
Q: Hello 5i,
I’m helping a conservative investor with a tfsa. Vbal makes up half of the account.
In trying to boost monthly income I’ve come up with the above etfs.
Based on 2020 distributions,how would each of the above etfs be taxed if held in a tfsa?
Also, can you please verify the sector exposure of zup (similar to pff - usd) I thought the financial % was underweight.
Read Answer Asked by Kat on November 04, 2021
Q: My question is more about safety and minimizing some risk. Hypothetically, if there was a market correction of say 20%, which of the above would be the safest in terms of net change (dividends and share price) say 6 months and 1 year later? I realize there are many issues with this question (they are all different, the need for crystal ball or time machine, etc) but I really value your thoughts. Thanks again!
Read Answer Asked by Dan on October 26, 2021
Q: What are some of your top value stock and ETF picks to protect against inflation during the next 1-3 years. Thanks as always.
Read Answer Asked by Curtis on April 29, 2021
Q: I'm trying to keep a decent weighting of fixed income, and started buying the TIPS etf a couple years ago for better-than-GIC returns, and its worked out well. Now, I'm thinking of shorter duration TIPS (STIP) in case the fed has to move on rates sooner than anticipated. I'd appreciate your comments.
Read Answer Asked by Mike on January 25, 2021