Category archives: ETFs

Preferred Shares Are Not As Attractive As They Seem

Last update on June 4, 2015.

 

In recent years, many people have been drawn to the idea of investing in preferred shares.

Preferred shares are "hybrid" investments that behave like stocks in some ways and behave like bonds in others. Like bonds, preferred shares offer regular payments, but like stocks, those payments are in the form of dividends which are taxed at lower rates. When you combine these features with the fact that preferred shares generally yield higher than bonds, it's not hard to see why many people like them.

However, Canadian preferred shares have some pitfalls that investors should know about, especially in ...

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Is XEG The Best Way To Play The Oil Price Recovery?

Last update on March 2, 2015.

Fracking

 

Over the last few months, several people have asked me whether it’s a good time to buy 'XEG'. XEG is the trading symbol for the iShares S&P/TSX Capped Energy Index ETF, an Exchange Traded Fund (ETF) that holds stocks of the largest Canadian oil and gas companies. (For an explanation of ETFs, please read our free book).

I understand why people are interested in XEG. They believe, as I do, that oil prices will eventually recover. When prices do recover, many if not most of the beaten down oil companies will regain their former share prices. If an ...

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Reasons To Avoid Momentum Based ETFs (WXM)

Last update on Jan. 13, 2015.

 

Over the last few years, we've seen a big increase in the number of ETFs in the market. Some of these new ETFs focus on specific sectors of the economy or countries, while others give us the opportunity to invest according to specific investment strategies. (If you want to learn more about ETFs, please read our free book).

One of the new ETFs that employs a specific strategy is the First Asset Morningstar Canada Momentum Index ETF (Ticker: WXM.TO). As the name suggests, this ETF selects stocks that have momentum. WXM.TO has performed very well since its ...

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Why XSB.TO Is In The Regular Portfolio

Last update on Feb. 21, 2015.

 

Currently, the biggest component of every regular portfolio apart from Portfolio 5 is the iShares Canadian Short Term Bond Index ETF (Ticker: XSB.TO). As the name suggests, XSB.TO contains hundreds of different bonds, the majority of which are owed by the various Canadian governments. That means when you buy shares of XSB.TO, you're really buying tiny slices of hundreds of very safe bonds.

Some members have emailed to ask me whether they should hold bonds at all. These members say that they don't need the money for at least a decade, so they can ...

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Why Regular Portfolios Don't Contain Canadian Stocks - Part 2: Valuation

Last update on Sept. 1, 2014.

In the last article published exclusively for our members, I explained the various risks associated with Canadian stocks to partly explain why regular portfolios don't hold Canadian stocks today. However, even risky stocks can deserve our money if the prices are cheap enough.
 
In this article, I'll explain the valuation level of Canadian stocks.
 
 

What CAPE Tells Us About U.S. And Canadian Stocks 

There are several ways that we can measure the valuation level of the stock market overall. As I've explained in the past, one good way is to use the Cyclically ...

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What's Happening To Canadian Bonds? (XBB)

Last update on March 3, 2015.

Buy National War Bonds

 

A little over a year ago, I published an article in which I argued that holding mid to long term bonds were a bad idea. In the article, I also criticized the Canadian Couch Potato for incorporating an ETF that holds such bonds in their portfolio.

In this article, I will give an update on what has happened to the bond market since then, as well as what I see happening going forward.

 

XBB Performance

For those of you who don't know, the Canadian Couch Potato is a popular blog dedicated to index investing. While they generally ...

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The Perils Of Investing In High Yield Bond ETFs

Last update on June 4, 2015.

 

Suppose you're nearing retirement, and you're looking at some investment options. Because the memory of 2008 is still fresh in your mind, you feel nervous about investing in stocks. You look at Canadian government bond yields, and you shake your head - long term bonds barely yield 2.5%.

Can't you do better?

So you look around, and you come across ETFs that invest in high yield bonds. The interest on these ETFs is significantly higher than on government bonds, often offering above 4.5%. With these ETFs, you can finally enjoy the dual benefit of safety ...

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