ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.
Exchange traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management ETF fees. They are also very liquid.
Investors use ETFs in a variety of ways, and some investors work only with ETFs and no other type of investment in portfolio creation.
An amazing aspect of ETFs is their diversity. Some investors may create an entire portfolio solely from a few well-diversified ETFs.
ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading.
Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds.
As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains taxes generated by the yearly distributions most conventional mutual funds pay out to unitholders.
ETFs have a place in every investor’s portfolio, at TSI Network we also recommend using our three-part Successful Investor strategy:
Invest mainly in well-established companies;
Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
Downplay or avoid stocks in the broker/media limelight.
We recommend that Canadian investors have as much as 20% to 30% of their portfolios in U.S. stocks in order to improve the diversification and growth potential of their investments. One convenient way to achieve this is through low-fee ETFs.
Each of these three ETFs hold mostly high-quality stocks traded on Canadian exchanges. Each fund mirrors the performance of a major stock index or sub-index. That sets them apart from ETFs that focus on narrower indexes or themes such as social media or solar power.
Recent gains by the Canadian dollar have a number of investors looking at hedged ETFs like the iShares CORE S&P 500 Index ETF. But the extra costs limit their appeal.
If you want to buy U.S. stocks and hedge against currency movements, you could buy a.. Read More
The successful conclusion of NAFTA renegotiations—and the creation of the new United States-Mexico-Canada Agreement, or USMCA—should boost Mexico’s economic prospects. Combined with lower inflation and a boost to exports… Read More
Generally, Canadians are blocked from buying mutual funds registered in the U.S. At the same time, some Canadian funds are available in a limited number of provinces. However, Canadians can buy Vanguard exchange-traded funds listed on stock exchanges.
The concept of low-free index investing originated… Read More
A high dividend ETF can offer lower-risk, higher-return opportunities—but only if the high yield is not a danger sign
The dividend yield is the percentage you get when you divide the current yearly dividend payment by the share or unit price of an investment. It’s an… Read More
Pat McKeough recently replied to a member of the Inner Circle looking for an ETF that offers protection from down markets. The BMO Low Volatility Canadian Equity ETF selects stock holdings based on their beta score. That’s a commonly used, but often misleading, measure of… Read More
The top hedge fund managers may have lengthy streaks of success over time, but that success usually ends eventually
When one of the top hedge fund managers goes into a performance slump, media and investor reactions often leave us with an odd feeling. They make us… Read More
ETF investing is one of the best financial innovations of our time but themed ETF investing—including the Dogs of the Dow—is a poor investing strategy. It’s not alone, however, with the number of those themed ETFs expected to grow in 2018 and beyond
Inner Circle members… Read More
If you already have U.S. stocks—and we suggest Canadian investors have 20% or more in their portfolios—you can also diversify beyond North America without the risk of buying individual stocks. Foreign-sector ETFs give you broad exposure to international markets with tax-efficient portfolios and low management… Read More
Several factors contributed to Brazil’s 2015-2016 recession, one of its worst: political turmoil, corruption at one of the country’s major corporations, volatile commodity prices, and high inflation. However, starting… Read More
More and more, exchange-traded funds (ETFs) are finding their way into the portfolios of investors.
That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them… Read More
Pat McKeough recently responded to an Inner Circle Member interested in his opinion of an ETF that covers big U.S. tech stocks, uses covered call options to raise income and hedges against movements in the U.S. dollar. Pat explains the complexities of the ETF and… Read More
We believe all Canadian investors should have 20% to 30% of their portfolios in U.S. stocks. However, you can also diversify by adding foreign ETFs in reasonable quantities, perhaps 10% of your holdings if you’re a conservative investor. The best ETFs offer low management fees and… Read More
To create a balanced ETF portfolio, focus on funds that hold the kind of stocks we recommend
The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management fees.
ETFs, with their relatively low management fees (MERs), have in large part eclipsed interest in mutual funds… Read More
At the heart of the ETF vs mutual funds pros and cons discussion is the fact that ETFs have much lower fees
You might say we specialize in “plain vanilla” stocks, bonds, ETFs—the ordinary kind, in other words, without lots of added features and fees. But… Read More
The best ETF selection strategies will focus on well-diversified funds holding top-quality stocks
In general, we like ETFs better than mutual funds. Their MERs (Management Expense Ratios) are typically much lower than those of mutual funds. That’s because most ETFs take a simpler approach to investing… Read More
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
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The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
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