diversification

MONSANTO CO. (New York symbol MON; www.monsanto.com) sells technology-based agricultural products, such as genetically modified seeds, to farmers, grain processors and food producers. The company’s seeds make crops more resistant to pests, diseases and bad weather. Monsanto gets about 70% of its revenue from genetically modified seeds for corn, soybeans and other crops. The remaining 30% comes from selling herbicides, mainly under the Roundup brand....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks. Here a look at six global ETFs:...

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you advice on stock market trading and other investment topics that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “The saying ‘Sell in May and go away’ is based on an approach to the stock market that works only sporadically and could actually cost you money if you go along with it.”...

Flaherty & Crumrine Investment Grade Fixed Income Fund, $12.36, symbol FFI.UN on Toronto (Units outstanding: 9.1 million; Market cap: $112.5 million; www.bromptongroup.com), mainly holds preferred shares of U.S. companies. Firms in the banking, insurance, utilities and financial services industries make up a combined 87.7% of the fund’s portfolio. Corporate bonds comprise 6.9%, and the remaining 5.4% is cash. The fund’s MER is 1.0%. The fund is hedged against movements of the U.S. dollar against the Canadian dollar. Its value rises and falls solely with the stocks in its portfolio, so it would not give you U.S. dollar exposure. However, hedging costs money, and we feel these outlays are wasted. They can cut the fund’s volatility from one year to the next, but they won’t add to its performance. In addition, we see U.S. dollar exposure as a plus—a valuable form of diversification....

CANADIAN REIT $44.60 (Toronto symbol REF.UN; Units outstanding: 69.0 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; www.creit.ca) owns 198 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain over 24.0 million square feet of leasable area. The trust’s occupancy rate is 95.5%.

In the three months ended December 31, 2013, Canadian REIT’s revenue rose 8.6%, to $106.7 million from $98.2 million a year earlier. Cash flow per unit gained 7.5%, to $0.72 from $0.67.

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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $34.29 (Toronto symbol AP.UN; Units outstanding: 68.7 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.1%; www.alliedpropertiesreit.com) owns 133 office buildings, mostly in major Canadian cities....

If you feel an urge to take advantage of the recent gains and sell your U.S. stocks, my advice is to lie down until that urge goes away. The U.S. dollar has gained around 15% from its mid-2011 low near $0.95 Canadian. This gain comes on top of a far superior performance by U.S. stocks in the past three years, compared to Canadian stocks. The Canadian market is just getting back to its peak of three years ago. Meanwhile, the S&P 500 U.S. index has gained nearly 50%. This difference in performance partly reflects two different political and economic environments. Three years ago, President Obama was forging ahead with a lot of policies that rattled investors and business. This depressed U.S. stock prices. In contrast, Prime Minister Harper seemed economically astute and downright business-friendly. In addition, the Resources sector was on a business upswing three years ago. That’s a much bigger economic plus for Canada than for the U.S. So the Canadian stock market was buoyant....

Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients: “Many investors today feel uneasy about the future value of the U.S. dollar. The dollar is the key to the world monetary system. But its value is at the mercy of U.S. politicians, who can spend as many U.S. dollars as they wish. If they spend more than they collect in taxes, the U.S. can simply borrow or print the difference. It has been this way since President Nixon cut the link between gold and the dollar in the early 1970s. However, the vast U.S. budget deficits since 2008 have frayed investor nerves....

iShares MSCI World Index Fund ETF, $34.01, symbol XWD on Toronto (Units outstanding: 5.8 million; Market cap: $197.3 million; ca.ishares.com), holds large- and mid-cap stocks across 23 developed countries, including Australia, Canada, France, Germany, Hong Kong, Ireland, Japan, Singapore, the U.K. and the U.S. The ETF holds 1,507 stocks covering about 85% of the market in each nation. It does this by holding units of the iShares Core S&P 500 ETF (54.3% of assets), the iShares MSCI EAFE ETF (41.6%) and the iShares MSCI Canada ETF (4.0%). iShares MSCI World Index Fund ETF has an MER of 0.47% and yields 1.6%....

iShares Silver Bullion ETF, $12.27, symbol SVR on Toronto (Units outstanding: 5.0 million; Market cap: $61.4 million; ca.ishares.com), is an example of an ETF with the kinds of “bells & whistles” mentioned above. iShares Silver Bullion ETF aims to replicate the performance of the price of silver bullion, less the fund’s fees and expenses. Unlike stocks, commodity investments like silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance and so on....