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Markets. He has been uncomfortable with what is happening in the Canadian markets, so has cut back about a third on his iShares TSX 60 (XIU-T). Then the market dropped down so he switched to the US side. He is very positive on the US and sees continuing growth. What concerns him about the Canadian market is that we are gold, energy, financials and telcos. Doesn’t see any recovery with the golds, and expects $45 oil will continue. Still likes Canadian banks, but is not quite as enthusiastic as he had been. He is using option strategies and covered calls on financials. When you have a rising market, a Covered Call will underperform it.

1 or 2 ETF’s in healthcare? A lot of the big Pharmas are coming under pressure because there is a question of price gouging by a number of Pharmas, and that is being investigated in the US. He tends to look for the ETF’s that are not just big Pharmas, but more into biotech, healthcare, hospital management, insurance, etc. This is the one that he prefers and it is Cdn$ hedged.

The issue with utilities is always interest rates. He doesn’t see the rates going up significantly in the next little while, and this is a very nice overlay on top of the utilities, which are generally pretty sluggish. Likes the 5.5% yield on this.

With this all of your gains during the last year, have basically been from currency. Although it trades in Canada, it is essentially US$, and isn’t hedged. He likes this.

Which sectors should be included in a balanced ETF portfolio? The most diversification you could buy would be the iShares S&P/TSX Capped Comp (XIC-T), which is diversified, iShares S&P 500 (CAD Hedged) (XSP-T) or the Vanguard S&P 500 (CAD Hedged) (VSP-T). He would have about 20% Canadian, and would also have a combination HAP Floating Rate Bond (HFR-T) as a place to park some cash and maybe one of the laddered ETF’s.

There are basically 2 types of preferred shares. Perpetuals and resets. One goes on with the same yield forever and on the other the rates are reset periodically. In January they all got clobbered because Bank of Canada cut the rates and the companies reset at a lower rate. Actually this is a pretty good time to be buying these. This one yields about 5.25%. He likes this.

For a long-term investment, iShares Core S&P US Total Market (XUU-T) or iShares S&P 500 Index (XUS-T)? This has largely been a large cap recovery. He also likes the mid-caps. As the US recovery continues, that benefit is going to spread to the smaller caps. Right now he likes the US version. Just coming out of their recovery, he would be more going into the large caps as he has done in the past. However, he is fine with these.

(A Top Pick Oct 31/14. Up 2.66%.) He likes this product because it is around 630 stocks. Has now switched and has been buying more of the iShares S&P 500 CAD-Hedged (XSP-T) because it is hedged.

(A Top Pick Oct 31/14. Down 10.39%.) He likes this because they chopped the price from 45 basis points down to 20 basis points. This was beaten up last year because it is about 30% oil, 30% financials and 10% telcos. Paying a good yield of about 5.2%.

(A Top Pick Oct 31/14. Down 21.64%.)This got tanked because of the oil prices and he is just sitting on it.

Generally doesn’t like just high-yield, because high-yield means junk bonds. If you are relying on this for income, your money would be better off someplace else. He wouldn’t have this in his portfolios.

An ETF that would follow the oil stocks? This is the one that he would look at. If you want one that follows oil prices, you could look at U.S. Oil Fund (USO-N).

Largely a lot of companies that you haven’t heard of. He is not thrilled with this and would rather do one of the dividend plays that have more large caps such as iShares S&P/TSX Equity Income (XEI-T) or iShares Cdn Div (XDV-T).

Really doesn’t like this. If he is going to be writing a covered call position on gold, which he doesn’t like to begin with, he doesn’t want to be messing around with a yield component. He wants to get the full benefit of the rise in the price of the commodity, rather than hedging it off.

On the return on high-yield bonds, which he doesn’t like very much, you have to evaluate them as you would an equity as opposed to a bond. This is because of the default risks.