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It’s time again to check the email box and see what’s on your minds these days.

Here are some of your most recent questions.

Recession-resistant stocks

Q – Please suggest some ETFs or conservative stocks that will help to resist to an eventual recession. Is it a good idea to put more of our savings into utilities, telecoms, and infrastructure and real assets? What about REITs? I am retired and just wish to preserve my capital and have some modest capital gains for the next five or 10 years. – Co P.

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A – For starters, let me be very clear. In a recession, all stocks and equity-based funds are vulnerable, even the bluest of the blue chips. It’s a matter of degree.

For example, stocks with an unusually high p/e ratio (some of the tech stocks of companies like Inc.) are more likely to get hit than those with a low p/e. Regulated utilities, like Fortis Inc., would normally suffer less because much of their revenue is guaranteed, and the dividend acts as a floor under the share price.

Apartment REITs would tend to be less exposed to a shrinking economy than office or mall REITs because people always need a place to live. Consumer staples stocks, which have been out of favour recently, also tend to hold up better when the economy tanks.

Bonds are always a safe haven in a recession. For example, in 2008 a portfolio that was divided 60 per cent stocks, 40 per cent bonds would have lost 15.2 per cent, according to an interactive chart on the Steadyhand website. But one that was only 20 per cent in stocks and 80 per cent bonds would have lost only 0.9 per cent.

So, my advice if you are fearful of a recession is to increase your bond holdings and weight your stocks towards utilities, telecoms, apartment REITs, and consumer staples companies like Costco Wholesale Corp.

Cambridge fund

Q – I purchased CI Cambridge Global High Income Fund several months ago. The price of has not moved much during this time. I note the yield is about 3.41 per cent. I am wondering why this equity is called “high” income when the results I’ve seen are so modest. Do you still recommend this equity? Please note I have some very good returns on a number of your recommendations. I look forward to your comments. – Ian B.

A – I recommended this fund in one of my newsletters in April 2013 when it was priced at $13.29. At the time, it was named the Cambridge High Income Fund and invested mainly in Canadian securities. The annual payout was 72 cents per unit, for a yield of 5.4 per cent.

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Since then the word “Global” has been added to the title and the fund now holds over 40 per cent of its assets outside Canada. The NAV (net asset value) at the time of writing was $11.60, and the fund continues to pay out 6 cents per month, or 72 cents per year. At the current price, the yield is 6.2 per cent.

The higher yield looks attractive, but the problem is that the fund has not been able to generate enough profit to sustain it. As a result, we’ve seen a gradual erosion of the NAV in recent years in order to maintain the 6-cent monthly payout. Three years ago at this time, the NAV was $12.53.

As a result, total returns are less than the current yield because of the gradual decline in NAV. The five-year average annual compounded rate of return to the end of August was only 3.4 per cent.

This is a case in which the yield can be deceiving. We need to focus on total return, and it is underwhelming. My advice is to consult with your financial adviser about other options. .

Back to work?

Q – My husband is 63 and I am 53. At age 60 he retired and started withdrawing CPP payments. If he were to now go back to work for a small part time job or as a consultant, how does this affect his CPP? Going back to work is not essential for us in terms of income. Totally optional.

My belief is that it will have a negative impact and we would not be any further ahead, but I don’t have any facts to back up my belief. Thank you. – Suzanne B., Vernon BC

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A – Your husband’s pension would not be affected by returning to work but until age 65 he would be required to contribute to the CPP’s post-retirement benefits plan (PRB). His contributions, and those of his employer, would provide an extra amount to his CPP when he stops work. Between age 65 and 70, participation in the PRB is optional.

TFSA gains

Q – We have investments in TFSAs that pay a monthly income. At the end of the year you get the breakdown of the income, i.e. dividends, interest, return of capital (ROC), etc. As the funds are inside a TFSA, should ROC be of concern? As I understand it, ROC effects capital gains but wouldn’t these be non-taxable inside the TFSA? – Mike T.

A - You are correct. Any profit earned inside a TFSA is tax-free, with the exception of foreign dividends, which are subject to a withholding tax. It’s 15 per cent on U.S. source dividends. – G.P.

Into the fire?

Q - A year or so ago, I purchased the Horizons Enhanced Energy ETF (HEE-T) to stay in the oil game. I thought it was a little bit better than being in an individual stock, however it has been a source of frustration. Now, other than shooting my foot off, should I hold on, or opt out now in favor of Tesla shares. I realize a loss is a loss, but this thing is deadly to watch. – Brian R.

A – This is not a fund that I have recommended and not one I am actively considering because of the current weakness in the energy market. But the performance this year hasn’t been terrible – it’s off about 3.1 per cent year to date, as of Sept. 27. As for Tesla, it seems like you want to jump from the frying pan into the fire. The stock is down about 27 per cent this year.

If you have a money question for me, send it to and write Globe Question on the subject line. I can’t promise a personal response, but I’ll answer as many as possible in this space.

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Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters.

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