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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 25 years old son is starting a portfolio by buying all equity ETFs XSP (30%), TEC (30%), and XWD (40%) in Canadian dollars, which he intends to hold for a long time. 1. Is the selection of ETFs OK ? 2. Are there better alternatives in performance and fees? 3. Is the allocation OK? 4. Do you have any suggestion? Thanks.

Read Answer Asked by Dev on January 04, 2022

Q: Dear 5i,
Is TEC ETF CAD hedged?
Does TEC ETF hold all stocks directly?
The MER for TEC is 0.39 and the MER for QQC.F is 0.26.
If one already owned 8% VFV and 10% VVL in an RRSP and wanted to increase technology exposure by 2% which one would you choose?

thanks

Read Answer Asked by Ian on January 03, 2022

Q: Do Canadian ETFs that track US tech firms underperform? I was looking at these and a few others on the G&W and the Canadian ETFs with the exception of HTA and HTA.B (up 35%ytd) seem to have significantly lower returns. And I think HTA uses covered calls.

XLK is up 32% ytd, IYW 35%, IGN 31%. The most popular Canadian ETFS seem to be ZQQ(ZQN) 26%, XQQ and HQQ 26% and TEC 25%. Some of this is due to currency moves, but the hedging costs of the hedged ETFs surely aren't that large. Is it better to just buy XLK or are HTA/HTA.B a better alternative?

Read Answer Asked by John on December 08, 2021

Q: My 28yr old son is looking to build a diversified ETF portfolio with 100% equity exposure with a bent towards growth given his long investment horizon. These will be spread across his TFSA, RRSP and Non-Registered accounts. Since he will be contributing smaller amountson a regular basis a zero commission platform such as Wealthsimple is appealing. However, they charge 1.5% fee for all currency conversions making it only practical to hold Canadian traded ETF's. As a resulthe is considering the following:

ZSP 40%
XIC 25%
TEC 20%
VIU 10%
VEE 5%

ZSP+ XIC+ VIU+ VEE together create a mix of ETFs that are globally diversified and very similar to the structure of XEQT/VEQT. Versus XEQT/VEQT This portfolio has a slightly lower weighted-average MER at 0.16% and also has 20% in TEC (in place of something like QQQ) which is more growth oriented. Here are how the sectors would be weighted with this portfolio:

Info 31%
Financial 15%
Cons Disc 11%
Industrial 9%
Healthcare 8%
Communica 7%
Cons Staples 5%
Energy 5%
Materials 4%
Utilities 2%
Real Estate 2%

These would be the top 10 holdings with this portfolioand these top 10 would account for 24% of holdings in this portfolio:

AAPL5.1% MSFT4.9% AMZN3.2% GOOGL1.8% FB1.7% GOOG1.7% TSLA1.5% SHOP1.4% RY1.2% NVDA1.2%

If this was you at 28, can you please comment on
- are the 5 ETFs he has chosen ones you would go with given his objectives, if not, what changes/substitutes would you make along with recommended% allocations?
- is his % allocation across the 5 appropriate or would you make changes? For example I thought there might be too much overlap between ZSP and TEC as they are both highly invested in AAPL, MSFT, AMZ and FB and he is looking at 60% going into these 2 ETF's. That may well be what you want at his age but I wonder if he is better served by reducing ZSP to 25% -30% and TEC to 15% and add the remaining 15-20% to CDZ or VGG (or something else?)
- given he will be making contributions to his TFSA, RRSP and Non-registered, which ETF would be best in which account and why?

Thanks for all your help,
Scott

Read Answer Asked by Scott on October 22, 2021

Q: What technology stocks or ETF would you suggest for a TFSA? It can be either Canadian or USA.
Thank you.

Read Answer Asked by Donna on August 06, 2021

Q: I am beginning to shift out of specific technology stocks and into technology ETFs simply out of personal preference from a diversification and risk allocation perspective. I presently own EARK and read with great interest the Morningstar article you posted last week (No Room for ARK) which presented some other perspectives on the ARK funds in general (going forward) including some of the challenges very successful actively managed technology funds eventually face when they become so large. Which brings me to a few questions. 1. Do some of the go forward challenges the US ARK funds may encounter also apply to the much smaller Canadian versions offered through Emerge, such as EARK? 2. Can you comment generally on technology ETF alternatives such as ZQQ or TEC? I am interested in particular about understanding the comparison of a more actively managed technology focused ETF vs. a more passive index tracking ETF or one (like TEC) that seems to be a hybrid in that it tracks an index but periodically rebalances. This can all be a bit confusing so any general explanations of pros/cons would help immensely. Thanks.

Read Answer Asked by Brad on March 26, 2021

Q: Good morning,

Could you please suggest a couple ideas for tech and health care exposure within a TFSA. I hear there are advantages/disadvantages of different type of ETFs.
Thanks

Read Answer Asked by Steven on March 18, 2021

Q: I recently borrowed from my HELOC to top up our TFSAs. I'm thinking of potentially keeping it simple and going TEC + XAW (40/60 split). This would give me quite a bit of US exposure but thought of bumping up US exposure. Would it make sense to instead buy VUN + VIU + VEE in a 70/23/7 split instead of XAW which has a lower US allocation? Do you think US equities will continue to outperform world over 10+ year horizon?

Also thinking instead of the 40% allocation in TEC, should I take a small position in ARKK or other ARK funds? Maybe 30% TEC, 10% ARKK? I feel like many of the names in ARKK fund are priced to perfection. Thanks

Read Answer Asked by Perry on February 25, 2021

Q: My Grandson is 10 month old. Looking for a tech ETF for his RESP. Would you list your number 1 - 4 picks.

Read Answer Asked by David on January 06, 2021

Q: Greetings and perpetual thanks 5i - TEC is approximately 40% concentrated in the FAANGs and trades in Cdn dollars. Is there another Cdn dollar ETF that has an even higher concentration than TEC?

Read Answer Asked by Ken on December 20, 2020

Q: Hi 5i,
I am looking for the best options for gaining CAD-denominated exposure to the major companies in the chips/semis space. What might be the best ETF options and what would be their proportion of exposure to that sub-sector? If not ETFs, might there be a more effective way of obtaining the desired exposure while staying in CAD? Ill mention that I already have positions in PHO and STC, although obviously they are not quite the order of companies Id be targeting with this question. Thanks!

Read Answer Asked by Lance on December 09, 2020

Q: Hi 5i
Based on my recent review of Portfolio Analytics information, I need to increase my US and International exposure significantly and, also, Consumer Cyclical, Consumer Defensive, Industrials and Tech.
With the thought of killing a number of birds with just a few stones, could you recommend a few ETFs that trade on the TSX that will increase my US and International exposure along with my investment in the listed sectors, while also having the prospect of some reasonable return in the form of either capital appreciation or dividends, or both.
Thanks!
Peter

Read Answer Asked by Peter on November 12, 2020

Q: After scanning 5I questions for the best fit for my daughters LIRA which she will not need for 20 years and will not be contributing to it, we settled on VFV,VEE,and VUN. That leaves room for a tech ETF for the remaining. Considering:
XIT.TO but the MER is high at 0.61% vs. TEC.TO which is a TD ETF
product with an MER 0.35%. Are there any others to consider or which
would you choose and why?

Read Answer Asked by Don on October 30, 2020

Q: I am thinking of purchases of these 6 ETFs (or some of them). Would you see ZPAY, FCIQ, and FCUQ as being defensive? And back to the "where should I hold" issue: where would these 6 best be held for tax or other efficiencies: Cash account? RRSP? TFSA? Corporate account? Many thanks.

Read Answer Asked by Leonard on July 13, 2020