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Time to check the Q&A inbox and see what’s on readers’ minds.

Harvest funds

I am 86 years old, and I need help. Are Harvest ETFs a safe place to invest? I’m referring especially to HPF, HDIF, and HHL.

It depends on what you define as “safe.” If you mean zero risk to capital, the answer is no. Stick with guaranteed investment certificates and high-interest savings accounts. Here’s a closer look at the funds you mention.

HPF is the trading symbol for the Harvest Energy Leaders Plus Income ETF. It invests in a portfolio of 20 global energy companies, so you’re buying big oil and gas stocks – a market sector that is doing well right now but is historically volatile. For example, this fund was up 38.5 per cent in the first 10 months of 2022 and gained 34.6 per cent in 2021. But it was down 38.1 per cent in 2020 and 18.3 per cent in 2018. The average annual compound rate of return since inception is negative 1.8 per cent. Harvest rates the fund as high risk.

HDIF is the Harvest Diversified Monthly Income ETF. It is a fund of funds that is designed to provide steady monthly income through a portfolio of equally weighted Harvest ETFs. These provide exposure to large global companies diversified across key sectors such as health care, global brands, technology, utilities, and U.S. banks. This ETF was launched in February of this year, so we have no history by which to judge long-term performance. Since its startup, the units are down about 17 per cent. Harvest rates it as medium risk.

HHL is the symbol for the Harvest Healthcare Leaders ETF. As you might guess from the name, it invests in a portfolio of 20 leading global health care stocks such as Boston Scientific Corp., Eli Lilly and Co., and Merck & Co. Inc. It is a more consistent performer than HPF, with an average annual return since inception of 6.8 per cent. To Oct. 31, it was down a modest 1.5 per cent for 2022. Harvest rates it as medium risk.

Based on portfolio composition, HDIF is probably the “safest” of these three ETFs, but the fact it has lost ground since its launch suggests caution.

Stocks in a TFSA

In your TFSA book, you suggested buying blue-chip stocks to boost the value of an account. As Canadians, can we buy U.S. equities or big U.S. dividend stocks without penalties?

There’s one problem. Dividends paid into a TFSA by a U.S. company are taxed at a 15 per cent rate, and that money is not recoverable. So, the net benefit of U.S. dividends is reduced by that amount. The reason is that the U.S. does not recognize TFSAs as “retirement accounts.” Dividends paid to a registered retirement savings plan or registered retirement income fund are not subject to this withholding tax.

Buy XBB?

It appears either inflation is peaking and declining somewhat and/or the economy is weakening. This seems to be a good time to start buying XBB. Would you agree?

XBB is the symbol for the iShares Core Canadian Universe Bond Index ETF. It’s had a dreadful year so far, down 11.7 per cent year-to-date as of Nov. 17. But after touching a five-year low of $26.21 in mid-October, the units have rallied. They finished on Nov. 18 at $27.40, up 4.5 per cent from the October low.

Was that the bottom? It’s too soon to know. More interest rate hikes are coming, and they could push down XBB again. But if we haven’t seen the bottom yet, we’re getting close. Starting to slowly accumulate a position now is a viable strategy.

Purpose Longevity Fund

I am thinking of investing about $100,000 in the Longevity Pension Fund from Purpose Investments within my RRIF to subsidize my monthly pension income. I only have CPP and OAS as pension income besides my RRSPs. Would you recommend this fund?

Purpose Investments describes this as “the world’s first income for life mutual fund.” An explanatory video on their website says it combines the features of a defined benefit pension plan with the flexibility of a mutual fund.

The money in the fund is invested “conservatively” and will “grow slowly” over time. Investors receive income from the fund each month for as long as they live. The amount of the payments may rise or fall, depending on how well the invested assets perform, the number of participants in a specific cohort who die, etc. There is no way to predict how much the payments will be at any given point in the future, unlike a life annuity. However, Purpose expects that a 65-year-old should receive 6.15 per cent of the original investment annually.

If a participant dies after he/she has received more income than the amount of the original investment, no money is payable to the heirs. In that way, the fund is similar to an annuity.

If an investor withdraws money, the amount previously received in income is deducted first. If the fund has lost money, that’s taken into account in the calculation.

The fund has received endorsements from organizations like the Canadian Association for Retired Persons (CARP) and Purpose is a sound and well-respected money management firm. But investors should be aware we have no history to provide insight into how well the fund will perform over the years and if distribution targets will be met.

Consider this. Prior to this year, investing “conservatively” would have almost certainly have included bonds. Given the crash in the bond market – the worst in 40 years – the impact on the fund would have been severe. The fund has a well-qualified advisory committee, but no one can guarantee success, especially in today’s market.

The bottom line is to be sure you understand both the pluses and the minuses before you decide to invest.

The right time to buy

I have a small portfolio. Currently I own Horizons Active Canadian Dividend ETF (HAL-T) and GICs. I’m waiting to buy bond ETFs when appropriate. I want to hold an equity index or ETF for a small position in equities at some point when it’s favourable. Thoughts?

My thoughts are that you are trying to time the market with your equity index purchase. It never works. No one has been consistently able to pinpoint a market bottom, which would obviously be the most favourable time to invest in stocks.

Right now, stock markets are lower than they were a year ago, so it’s a favourable time to buy. Perhaps it will be more favourable a month from now, but who knows? If you have enough money to invest, you might consider dollar-cost averaging your purchases over the next several months.

The same advice applies to your plan to buy bond ETFs “when appropriate.”

If you have a money question you’d like me to answer, send it to and write Globe Question on the subject line. Sorry, but I can’t guarantee a personal response.