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  1. #11
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    For Capital Gains or 'couch potato'
    Continuing to invest in Montrusco Bolton Cdn Small Cap fund, hoping past performance is indicative of future performance...
    TD e-series for Can/US/International diversification

    For specific Dividend income
    One of my goals is dividend income for retirement (or not working) as thus targeting more of EMA/FTS/RY/TD/T/SJR/ENB/TRP/PWF/SLF/SU. No BMO/CIBC yet but maybe. First I have to figure out why I'm uncomfortable about these two and do I really need more finance stocks.

    For my US stocks, just CL/ED/GE right now. I believe the CDN to the US is medium-term unsustainable (target is 0.8ish) and thus trying to figure out what to purchase given the tax treatment of dividends outside the RRSP. Perhaps just go with more ALGN.

    I don't understand the implications of the Trust conversions nor Trusts in general I suppose so I have no plans to purchase these. While I do somewhat understand options/warrants, I just don't have the guts to invest with these.

    For Fixed
    No new bonds, no new GICs, just 1 year emergency fund in cash. I'm pretty much 80% equities and plan to increase that through normal purchases.

  2. #12
    Administrator CanadianCapitalist's Avatar
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    With stocks rocketing upwards since last March, my bond component is below target. So that's where new savings are heading. I use short-term bonds mostly through XSB. The 2.3% yield looks measly but the whole point of an asset-allocation driven investment policy is not to speculate on future direction of interest rates.

    As an aside, I'm planning a post on this but thought I'd throw the idea out here as well. Anyone notice how REITs have bounced back and now seem fully valued? RioCan, for instance, is trading at $20 compared to a NAV estimate of $16.30 (according to TD Securities).
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  3. #13
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    Quote Originally Posted by CanadianCapitalist View Post
    As an aside, I'm planning a post on this but thought I'd throw the idea out here as well. Anyone notice how REITs have bounced back and now seem fully valued? RioCan, for instance, is trading at $20 compared to a NAV estimate of $16.30 (according to TD Securities).
    I did notice this.

    We upped our exposure earlier in the year, but not the full position, only 50% of what we needed to add for our allocation. What happened to the pending crash/correction in commercial real estate?

    Seems not as many companies (non-RE) went under as we first thought. Access to capital for small-caps is much improved and no longer a serious, serious threat - maybe we did get over this thing after all?

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  5. #14
    Senior Member HaroldCrump's Avatar
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    Quote Originally Posted by Sampson View Post
    Seems not as many companies (non-RE) went under as we first thought. Access to capital for small-caps is much improved and no longer a serious, serious threat - maybe we did get over this thing after all?
    My guess is yield-chasing by retail and and perhaps institutional investors.
    Since financial institutions have tradionally been the cornerstone of dividends and yields, but now in the aftermath of financial crisis, investors are turning to REITs for yields.
    10, 15 and 20 year bond yields are low as well.

  6. #15
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    Quote Originally Posted by HaroldCrump View Post
    My guess is yield-chasing by retail ... investors.
    I think this is a big part of it. It is incredible; look at what D.UN has done in the last week alone, up up and away. Does this mean it will last; not sure about that one.

  7. #16
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    Quote Originally Posted by CanadianCapitalist View Post
    my bond component is below target. So that's where new savings are heading. I use short-term bonds mostly through XSB.
    Is there a reason you prefer XSB vs say CLF and CBO? Is is because XSB is a mix of gov and corp, and you would need to hold both claymore etfs to get the same thing?

    Just wondering if you have a preference for one over the other and if so why, or if it is more a matter of just picking XSB vs other short term bond etf options?

    What your thought on CAB given the claimed tax advantages it could have if these funds are outside RSP or TFSA?

    Thanks!

  8. #17
    Senior Member HaroldCrump's Avatar
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    Quote Originally Posted by ssimps View Post
    Is there a reason you prefer XSB vs say CLF and CBO? Is is because XSB is a mix of gov and corp, and you would need to hold both claymore etfs to get the same thing?

    Just wondering if you have a preference for one over the other and if so why, or if it is more a matter of just picking XSB vs other short term bond etf options?
    I know you asked CC and I'm not answering on his behalf....
    To me, those are different beasts.
    You can't compare XSB with CLF+CBO
    They represent different investment goals/strategies/philosophies.
    CBO and CLF are bond ETFs that have built in laddering.
    OTOH, XSB is purely a short term bond index (representing the DEX Short Term Bond Index).
    The type of bonds and more importantly the durations of the types of bonds being held are different.

    Someone buying XSB is most likely betting on an increasing interest rate environment where it pays to stay short (not a bad assumption these days anyway).
    The risk level of XSB is also way lower than CBO.
    What your thought on CAB given the claimed tax advantages it could have if these funds are outside RSP or TFSA?
    Can you explain to my novice mind how exactly CBO works by using the futures contracts?
    Are they holding futures contracts for bonds not yet issued?
    How are they achieving capital gains for those bonds?

  9. #18
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    Quote Originally Posted by HaroldCrump View Post
    You can't compare XSB with CLF+CBO
    They represent different investment goals/strategies/philosophies.
    CBO and CLF are bond ETFs that have built in laddering.
    OTOH, XSB is purely a short term bond index (representing the DEX Short Term Bond Index).
    The type of bonds and more importantly the durations of the types of bonds being held are different.
    OK, I see that now. XSB holds bonds that are 1 - 5 years in length, so does the ones I mentioned.

    Before reading more, please let me be clear that I am not saying the claymore stuff ios beeter than the ishares stuff; I am asking for objective input on which is better, if either, and if so why.

    Quote Originally Posted by HaroldCrump View Post
    Someone buying XSB is most likely betting on an increasing interest rate environment where it pays to stay short (not a bad assumption these days anyway).
    Is not that also the idea behind a laddered 1 - 5 year bong ETF like CBO or CLF too? XSB also holds 98% bonds 1-5 years and average bond duration is almost the same.

    Quote Originally Posted by HaroldCrump View Post
    The risk level of XSB is also way lower than CBO.
    Why is that? Is it because CBO holds only corp bonds but XSB holds both gov and corp? If so, that is why I asked about CLF and CBO. If there are other reasons why XSB is way lower risk, can you please explain.

    4% or so of bonds in XSB are rated BBB, is that not risk?

    Quote Originally Posted by HaroldCrump View Post
    Can you explain to my novice mind how exactly CBO works by using the futures contracts?
    Are they holding futures contracts for bonds not yet issued?
    How are they achieving capital gains for those bonds?
    Do you mean how CAB works by using the futures contracts, or does CBO also?

    Regardless, no I can not, thus why I am asking for input to my 'novice mind' too.
    Last edited by ssimps; 2010-01-12 at 08:26 PM.

  10. #19
    Senior Member HaroldCrump's Avatar
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    Quote Originally Posted by ssimps View Post
    OK, I see that now. XSB holds bonds that are 1 - 5 years in length, so does the ones I mentioned.
    Yes, but XSB doesn't have laddering built into it like CLB and CBO do.
    Before reading more, please let me be clear that I am not saying the claymore stuff ios beeter than the ishares stuff; I am asking for objective input on which is better, if either, and if so why.
    Right, I understand your question.
    I believe they serve different purposes.
    CLB & CBO are automatically laddered. XSB is not.
    With XSB, the investor is always going short term.
    IOW, the investor is either minimizing interest rate risk and/or expecting interest rates to rise in the near future.

    Is not that also the idea behind a laddered 1 - 5 year bong ETF like CBO or CLF too? XSB also holds 98% bonds 1-5 years and average bond duration is almost the same.
    But XSB is not automatically laddered.
    What I don't understand about CLB and CBO is why they are not using zero coupon bonds for the laddering, but that's a different issue.
    Why is that? Is it because CBO holds only corp bonds but XSB holds both gov and corp? If so, that is why I asked about CLF and CBO. If there are other reasons why XSB is way lower risk, can you please explain.
    4% or so of bonds in XSB are rated BBB, is that not risk?
    4% is a very low number and BBB is not junk bond status.
    I don't know the % split of bond rating for CBO - do you know the split?
    I couldn't find it on the Claymore site.

    The other question about CBO and CLB is whether they are always buying 5 year term bonds and holding them to maturity or simply rolling over maturing bonds and buying bonds where the TTM is 5 years.
    That makes a difference.
    Again, no clear answer on the fund page - do you know?
    Or maybe the answer is buried on page 154 of the prospectus ;o)

    Do you mean how CAB works by using the futures contracts, or does CBO also?
    I meant CAB.
    I understand futures contracts, but what I don't understand is how CAB is using the futures contract for bonds to return you capital gains instead of distributions.
    Are they buying and selling bond contracts for bonds that haven't yet been issued?
    Or are they put options for bonds?
    What happens when interest rates rise and the prices of their futures contracts fall?
    Regardless, no I can not, thus why I am asking for input to my 'novice mind' too.
    I would like to know as well.
    XSB I understand, CLB and CBO to some degree (except for their roll over strategy) but CAB I don't.

  11. #20
    Administrator CanadianCapitalist's Avatar
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    Quote Originally Posted by HaroldCrump View Post
    I know you asked CC and I'm not answering on his behalf....
    To me, those are different beasts.
    You can't compare XSB with CLF+CBO
    They represent different investment goals/strategies/philosophies.
    CBO and CLF are bond ETFs that have built in laddering.
    OTOH, XSB is purely a short term bond index (representing the DEX Short Term Bond Index).
    The type of bonds and more importantly the durations of the types of bonds being held are different.

    Someone buying XSB is most likely betting on an increasing interest rate environment where it pays to stay short (not a bad assumption these days anyway).
    The risk level of XSB is also way lower than CBO.
    Can you explain to my novice mind how exactly CBO works by using the futures contracts?
    Are they holding futures contracts for bonds not yet issued?
    How are they achieving capital gains for those bonds?
    I don't understand why XSB is different just because it tracks a bond index. Actually XSB does not hold all the bonds in the index anyway. I uses a sampling to replicate the index as much as possible. XSB is roughly equivalent to 2/3rd CLF and 1/3rd CBO. A bond ladder is no different from a bond fund of the same duration and since CLF and CBO are rolling over their bonds, they are roughly the same as XSB.

    I've been holding XSB long before Claymore introduced the ETFs. I haven't seen a compelling reason to switch from XSB considering you'll have to buy CLF and CBO. The risk-reward profile compares like this: CLF < XSB < CBO.

    The reason I chose XSB instead of XBB has nothing to do with interest rate direction. Instead, I subscribe to the theory that investors do not earn enough returns to compensate them for the extra risk in going from a short-term to an intermediate-term bond fund. Instead, you can take the same risk in equities and expect higher returns than you could in longer-term bonds.
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