Exchange-traded funds (ETFs) are one of the more benign financial innovations to come along in the past few years.

ETFs are set up to mirror the performance of a stock-market index or sub-index. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index.

ETFs trade on stock exchanges, just …read more »

We think the long-term outlook for China — and Chinese stocks — is strong. That’s because the country’s huge population is generally younger than North Americans, and large numbers of Chinese have the potential to advance from poverty into the middle class.

(One of the best ways for investors to tap into Chinese growth is through low-fee exchange-traded funds. The iShares …read more »

When you join my Inner Circle service, you get to ask me your own personal investment questions, plus you get to see what other Inner Circle members have asked, along with our answers.

So you can see how the service works, and get a sense of how you could benefit from it, I’d like to share a recent member question …read more »

TRIMARK CANADIAN RESOURCES FUND $16.22 (CWA Rating: Aggressive) (AIM Funds Management Inc., 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. Tel: 1-800-631-7008; Web site: www.invescotrimark.com. Buy or sell through brokers) includes firms with Successful Investor Ratings of “Speculative” in its top picks. However, we like Trimark Canadian Resources Fund’s value-seeking, conservative approach to picking stocks in the volatile resource …read more »

TD RESOURCE FUND $27.63 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank) invests in companies that its managers see as having strong asset bases, proven management and the ability to internally finance growth.

The $195.0-million TD Resource Fund’s top stock holdings mostly have …read more »

Although they are still below their 2007/2008 peaks (with the exception of gold, which is now at record highs), resource prices have steadily risen since the start of this year. Most resource companies still need a continued economic recovery to show further growth. But we think the long-term outlook for global resource demand is bright.

Meanwhile, we think you should cut …read more »

HARBOUR FUND $19.67 (CWA Rating: Conservative) (C.I. Mutual Funds, 151 Yonge St., 7th Floor, Toronto, ON, M5C 2W7. 1-800-268-9374; Web site: www.cifunds.com. Load fund: available from brokers.) invests in only 25 to 40 high-quality, mostly Canadian stocks. It may hold stocks for four or five years to realize their value.

The $5.5-billion Harbour Fund’s top holdings include Canadian National Railway, Goldcorp …read more »

BMO DIVIDEND FUND $41.10 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, Tel: 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) holds about 48.5% of its portfolio in the Finance sector.

The fund’s next-largest sectors are Energy (23.4%), Consumer Discretionary (5.9%) and Materials (5.0%).

The $3.9-billion BMO …read more »

NASDAQ-100 TRUST SHARES $41.33 (Nasdaq symbol QQQQ; buy or sell through brokers), or “Qubes,” hold the stocks that represent the Nasdaq 100 Index, which is made up of the 100 largest, most heavily traded stocks on the Nasdaq exchange.

The Nasdaq 100 Index contains firms from a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. …read more »

ISHARES CDN LARGECAP 60 INDEX FUND $16.46 (Toronto symbol XIU; buy or sell through a broker) (units split 4-for-1 in August 2008) is a good, low-fee way to buy the top stocks and income trusts on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded …read more »

DIAMONDS TRUST SHARES $98.27 (New York Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average.

The fund’s top 10 holdings are IBM, Exxon Mobil, Chevron Corp., 3M, Procter & Gamble, McDonald’s Corp., Johnson & Johnson, Caterpillar Inc., United Technologies and Coca-Cola. The fund’s expenses are about 0.18% of its assets.

Diamonds …read more »

ISHARES MCSI CANADA INDEX FUND $24.64 (New York symbol EWC; buy or sell through brokers) is like a market-cap-based index fund, but its managers tinker with the index-fund formula in order to try and improve performance. They do this using their proprietary Morgan Stanley Capital International Canada Index. The fund has an MER of 0.52%.

If you want to own a …read more »

S&P DEPOSITORY RECEIPTS $104.92 (New York symbol SPY; buy or sell through brokers) are commonly called “Spiders.” The fund holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market share, liquidity and industry group.

The index’s 10 highest-weighted stocks are Exxon Mobil, Microsoft, Procter & Gamble, Apple, JP Morgan …read more »

ISHARES DIVIDEND INDEX FUND $17.74 (Toronto symbol XDV; buy or sell through a broker) holds the 30 highest-yielding Canadian stocks based on dividend growth, yield and average payout ratio. The weight of any one stock is limited to 10% of assets. The fund’s MER is 0.50%. iShares Dividend Index Fund has a yield of 4.0%.

Top holdings are National Bank, 8.9%; …read more »

While ETFs won’t protect you from the three costliest mistakes an investor can make, they may have a worthwhile place in your portfolio.

Unlike many other innovations, ETFs don’t load you up with heavy management fees, or tie you down with heavy redemption charges if you decide to get out of them. Instead, they give you a lower-cost and more flexible …read more »

FIDELITY TRUE NORTH FUND $24.80 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests in companies that the managers see as undervalued. They base their judgments on fundamentals, such as earnings, dividend yield, book value, cash flow and debt level.

Fidelity True North Fund …read more »

Here are 4 rules we stick to when we’re researching mutual funds to include in our newsletters and investment services. While there is never any guarantee of a mutual fund’s performance, following these rules should help you avoid making poor choices.

(For more on our fund-picking strategy, including our top ten fund picks, be sure to download our new special …read more »

RENAISSANCE GLOBAL HEALTH CARE FUND $15.19 (CWA Rating: Speculative) (CIBC Asset Management, 1500 University Street, Suite 800, Montreal, Quebec. Web site: www.renaissanceinvestments.ca. Available from brokers) invests in companies from across the health-care industry. These may include pharmaceutical and biotechnology firms, and companies that design and make medical equipment.

The $565.6-million fund’s managers look at a firm’s financial strength, the quality of …read more »

TD HEALTH SCIENCES FUND $15.19 (CWA Rating: Speculative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) mainly invests in large-capitalization health-care stocks and earlier-stage biotechnology shares in the U.S. The fund’s managers believe these firms will benefit from increased health spending spurred by an …read more »

VANGUARD GROWTH ETF $49.28 (New York symbol VUG; buy or sell through brokers) aims to track the MSCI U.S. Prime Market Growth Index, a broadly diversified index that mainly consists of stocks of large U.S. companies. The fund has an MER of just 0.15%.

The $14.0-billion fund’s top holdings are Microsoft, IBM, Apple Inc., Cisco Systems, Wal-Mart Stores, Google Inc., Hewlett-Packard, …read more »

VANGUARD EMERGING MARKETS ETF $38.53 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of 0.27%.

The funds’s top holdings are China Mobile (China: wireless), Gazprom (Russia: gas utility), Samsung Electronics (South …read more »

Pennsylvania-based Vanguard Group is one of the world’s largest investment-management companies. It manages over $1 trillion U.S. in 150 mutual funds.

Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S. because they aren’t registered with provincial securities commissions. For that matter, some Canadian …read more »

FIDELITY CANADIAN LARGE CAP FUND $24.05 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) mainly invests in large firms, like those on the S&P/TSX 60 index, although it may also invest in mid-cap stocks.

The $304.8-million Fidelity Canadian Large Cap Fund’s top holdings include …read more »

Sector, or “theme” funds are not without risk, but they are much safer than investing in one or two companies in more volatile fields, such as health care and biotechnology.

If you choose to invest in sector funds, you should limit your investment to modest amounts. Above all, only invest in those with proven management and high-quality holdings. Here are updates …read more »

TRIMARK FUND $23.25 (CWA Rating: Conservative) (AIM Funds Management Inc., 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.invescotrimark.com. Buy or sell through brokers) buys high-quality investments and holds them for the long term, an approach its manager believes cuts risk.

The $3.0-billion fund’s top holdings are Nestle SA (Switzerland: food and beverages), Microsoft, Nokia (Finland: mobile phones), …read more »

When investing in mutual funds, all too many amateur and professional investors and advisors try to take the easy way out. Instead of looking at the hard stuff — company fundamentals, industry trends, business plans and so on — they try to profit with a strategy called “momentum investing.”

You might think of momentum investing as a mutation of growth-stock investing. …read more »

Canadian index funds are among the better financial innovations to come along in the past few decades. These are specialized mutual funds that aim to equal the performance of a market index, such as the S&P/TSX 60.

Index funds do show better long-run performance than more than half of actively managed mutual funds with long-term track records. That’s partly because …read more »

SCOTIA CANADIAN GROWTH FUND $47.00 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9269; Web site: www.scotiabank.com. No load — deal directly with the bank) attempts to use an investment’s fundamentals to determine whether it has the potential for above-average growth.

The $394.5-million Scotia Canadian Growth Fund’s largest stock holdings include Royal Bank, TD …read more »

CIBC CANADIAN EQUITY FUND $19.69 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Web site: www.cibc.com. No load — deal directly with the bank) looks at fundamentals like earnings, cash flow and debt level to identify companies that the managers see as having above-average growth potential.

The $399.3-million fund’s top holdings are: Royal Bank …read more »

RBC CANADIAN EQUITY FUND $21.21 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) mainly invests in larger-capitalization stocks, but may also buy small- and mid-cap stocks.

The $4.2-billion fund’s largest holdings are Royal Bank, Manulife, EnCana, TD Bank, Goldcorp, Bank of Nova Scotia, …read more »

TD CANADIAN EQUITY FUND $21.81 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-866-222-3456; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach to pick stocks. The fund’s managers look at fundamentals, like earnings, cash flow and debt level, to identify what they see as undervalued companies.

TD …read more »

These five large mutual funds — one from each of Canada’s big-five banks — suffered last year and early this year. That’s because they were heavily weighted toward financial services and resource stocks. However, many shares in those sectors have moved up since March. We think they have room to go higher.

We still feel that the best way to profit …read more »

AIC DIVERSIFIED CANADA FUND $34.89 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds some U.S. stocks.

The $1.0-billion fund’s 10 largest holdings are TD Bank, Shoppers Drug Mart, Power Financial, Canadian Oil Sands Trust, First Capital Realty, Thomson Reuters Corporation, Brookfield Asset Management, Royal Bank of Canada, C.I. Financial Corp. and EnCana …read more »

AIC AMERICAN ADVANTAGE FUND $4.04 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks. It holds 99% of its assets in the financial-services area.

The fund’s financial holdings break down as follows: wealth management, 26.8%; life and health insurance, 20.9%; investment banking …read more »

These two AIC funds hold much of their portfolios in finance stocks. This sector has risen lately on better-than-expected profits and an improved outlook for the economy as a whole.

We prefer diversified funds. But if you must focus on a particular sector, finance still offers sound long-term prospects. If you invest in these funds, be sure to adjust the rest …read more »

UNIVERSAL CANADIAN GROWTH FUND $17.65 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ontario, M5S 3B5. Web site: www.mackenziefinancial.com. Tel: 1-800-387-0780; Load fund: available from brokers) holds companies that its managers believe have strong management and sound business prospects. The fund holds fewer than 40 stocks.

Universal Canadian’s top holdings include Thomson Reuters, Rogers Communications, Becton Dickinson, ShawCor, …read more »

Recently, we’ve heard from some investors who sold most or all of their stocks and mutual funds during the recent downturn.

Now, a number of these investors want to get back in, and many are considering Canadian mutual funds. But they wonder whether they should buy now or wait to see if the TSX, which has climbed over 40% from its …read more »

A number of months ago, a friend’s son was considering joining his employer’s group RRSP, and his father asked us to glance through the list of mutual funds the son had to choose from.

We went through the list and treated it the same way we do when we consider new mutual funds to follow in our Canadian Wealth Advisor …read more »

TRIMARK CANADIAN RESOURCES FUND $13.58 (CWA Rating: Aggressive) (Invesco Trimark, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. Tel: 1-800-631-7008; Web site: www.invescotrimark.com. Buy or sell through brokers.) includes firms with Successful Investor Ratings of “Speculative” in its top picks. However, we like Trimark Canadian Resources Fund’s value-seeking, conservative approach to picking stocks in the volatile resource sector.

The $428.9-million …read more »

TD RESOURCE FUND $22.44 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank.) invests in companies which it sees as having strong asset bases, proven management and the ability to internally finance growth.

The $173.1-million TD Resource Fund’s top stock holdings mostly have Successful …read more »

Although they are still well below their 2007-2008 highs, resource prices have begun to rise lately. Most resource companies still need an economic recovery to show significant growth. Nonetheless, we think the long-term outlook for global resource demand is still bright. Meanwhile, we think you should cut your risk in this volatile sector by sticking with profitable, well-established companies that …read more »

HARBOUR FUND $17.42 (CWA Rating: Conservative) (C.I. Mutual Funds, 151 Yonge St., 7th Floor, Toronto, ON, M5C 2W7. 1-800-268-9374; Web site: www.cifunds.com. Load fund: available from brokers.) invests in only 25 to 40 high-quality mostly Canadian stocks, and it may hold stocks for four or five years to realize their value.

The $5.3-billion Harbour Fund’s top holdings include Canadian National Railway, …read more »

BMO DIVIDEND FUND $37.58 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 43.3% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 23.1%.

The $3.7 billion BMO Dividend Fund’s largest …read more »

TEMPLETON GROWTH FUND $8.42 (CWA Rating: Conservative) (Franklin Templeton Management Limited, 1 Adelaide Street East, Suite 2101, Toronto, ON. M5C 3B8. 1-800-387-0830; Web site: www.templeton.ca. Buy or sell through brokers) follows the approach that paid off so well for so long under its founder and long-time manager, John Templeton. His successors aim to look for bargains, avoid fads and pay …read more »

Given their attractiveness, it’s a wonder why brokers so rarely recommend closed end mutual funds. However, there’s a simple reason for this: while closed ends benefit individual investors, brokers benefit more by putting their clients in conventional, open-ended funds.

Closed end funds are a lot like conventional, open-ended funds. They hold a diversified portfolio of stocks, chosen by a fund manager …read more »

IVY GROWTH AND INCOME FUND $17.86 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor Street West, Toronto, Ontario M5S 3B5. 1-800-387-0780; Web site: www.mackenziefinancial.com. Load fund — available from brokers) is a balanced fund. As such, it holds a mix of stocks, bonds and cash. Ivy Growth and Income Fund has returned 2.9% annually for the 10 years ended April …read more »

IVY FOREIGN EQUITY FUND $25.26 (CWA Rating: Conservative) gained 2.1% over the past 10 years, which was better than 3.1% loss posted by the Morgan Stanley benchmark international index. Over the last year, Ivy Foreign Equity Fund lost 10.7%. The fund invests in companies based outside of Canada, but cuts its risk by avoiding direct investment in emerging markets.

The $1.9-billion …read more »

IVY EUROPEAN FUND $11.87 (CWA Rating: Aggressive) holds mostly good-quality stocks. The fund has outperformed the longer-term benchmark Morgan Stanley index.

Even so, we don’t see any reason to hold a mutual fund that focuses on Europe. If you want European exposure, consider the Ivy Foreign Equity Fund (see above), or the closed-end EUROPEAN EQUITY FUND $5.59. The European Equity Fund …read more »

IVY CANADIAN FUND $20.80 (CWA Rating: Conservative) invests in high-quality, large-capitalization stocks.

The $1.8-billion fund’s top holdings include: Thomson Reuters, Shoppers Drug Mart, Imperial Oil, Tim Hortons, Becton Dickinson & Co., McDonald’s, Colgate-Palmolive, Nestle SA, Bank of Nova Scotia and Reckitt Benckiser Group plc.

Ivy Canadian’s breakdown by industry includes: consumer staples, 35.4%; consumer discretionary, 18.9%; energy, 9.2%; financials, 8.6%; health care, …read more »

IVY ENTERPRISE FUND $3.73 invests in small-and medium-sized companies. The $108.5-million fund’s MER is 2.39%.

The fund’s overall choice of stocks doesn’t inspire our confidence. Its top holdings are: Richie Brothers Auctioneers, National Instruments, CH Robinson Worldwide, Idexx Labs, Resources Connection, Astral Media, Daktronics, Henry Schein and Meridian Bioscience. The fund has lost 8.6% over the last year.

We think investors can …read more »