ETFs

What are ETFs?

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:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

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ETFs Library Archives

Global travel and cargo spur airlines

Globally, commercial airlines have benefited from increased air travel over the past five years, with passenger volumes growing an average 7.3% each year. But, investors in the industry have also benefited from rising cargo volumes, rising 5.0% annually. Asia-Pacific experienced the highest passenger growth with… Read More

Trucking and technology are a great match

The transport of goods generally takes place through four identifiable channels: Air and express services take care of time-sensitive, high-value items; Rail carries mainly high volume goods such as commodities, agricultural products, and manufactured goods; Maritime transport plays a major role in the export and… Read More

Be aware of these Momentum hazards

Nowadays, many investors dream about getting rich by uncovering the ultimate stock-market indicator, or what you might call a “magic key to market profit.” This mythical device not only tells you what stocks to buy, but how to buy them at the bottom and sell… Read More

Stock market’s gains top bonds

Stock market volatility sometimes appears when least expected. However, volatility as measured by the BetaPro S&P 500 VIX Futures ETF (Toronto symbol HUV), has substantially subsided in the months following a big spike in December 2018. As a result, this ETF, which gains in value… Read More

New ETFs target Space and Dividends

ETF providers in Canada and the U.S. continue to launch new funds to sustain investor interest. This month, we highlight one fund holding companies involved in space-related activities. Another ETF offers its own take on dividends.
An ETF investing in space-related companies launched in early April… Read More

Brexit is the biggest challenge for this ETF

The United Kingdom has one of the largest economies in Europe and is among the world’s top 10. However, over the near term, it faces major challenges. This includes Brexit and the prospect of leaving the European Union without clear arrangements to protect its vital… Read More

These ETFs focus on top transport stocks

Despite their strategic importance, major components of the transport industry, particularly shipping, trucking, and airlines, remain cyclical. For some companies, this means considerable swings in their profitability. Still, the best stocks in this area—and the ETFs that hold them—adapt well to the ever-changing industry landscape… Read More

Investors are cautious of Momentum ETFs

Momentum ETFs invest in a range of asset classes, including stocks, fixed income, commodities, and currencies.

There are now about 48 momentum ETFs trading on U.S. markets. Together, they claim $15.7 billion in assets under management. Still, that makes up just a portion of the almost… Read More

Momentum ETFs have unique risks

Momentum-based investing generally involves buying growth stocks with rising earnings and stock prices. It’s largely unconcerned with the absence of value markers like moderate p/e ratios or high dividend yields.
Top stock selections are oftentime momentum favourites—but they’re really only good buys if their profit… Read More

Tap Japan’s top companies

ISHARES MSCI JAPAN INDEX FUND $54.35 (New York symbol EWJ; buy or sell through brokers; us.ishares.com) is an ETF that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan Index.
The fund’s top holdings include Toyota, 4.5%; Softbank, 2.6%; Sony Corp., 2.1%; Mitsubishi UFJ… Read More

China still rich in potential

ISHARES CHINA LARGE-CAP ETF $41.10 (New York symbol FXI; buy or sell through brokers) tracks the 50 largest, most-liquid Chinese stocks. The ETF started up October 4, 2004, and has a high MER of 0.74%. It yields 2.1%.
Top holdings for the $5.3 billion fund are Tencent (Internet services),… Read More

China hurts copper prices

GLOBAL X COPPER MINERS ETF $19.02 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) aims to track the Solactive Global Copper Miners Index, which includes 30 global mining and exploration firms. The ETF started up in April 2010.
Canadian firms make up 31.6% of the fund’s… Read More

Here are six funds for overseas investing

We think foreign stocks can safely make up 10% of a conservative investor’s portfolio. One way is through exchange-traded funds (ETFs) with an overseas focus.
The best of those ETFs continue to offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks.
Here’s a look… Read More

These ETFs offer top precious-metal stocks

Gold recently jumped to a six-year high on anticipation of the U.S. Federal Reserve’s recent interest rate cut. A slowing global economy prompted the move.
Rate cuts typically lower the U.S. dollar and spur inflation. Both of those factors are generally needed to significantly boost demand… Read More

International stocks seem inexpensive

The U.S. equity markets and the U.S. dollar have been star performers for the past decade. However, there are signs that their dominance may be ending.
The U.S. economy makes up about 25% of the global economy, while its equity markets represent 56% of the global… Read More

Holding cash can hurt your returns

Cash can be a useful asset in a balanced portfolio, although the very low-interest rates of the last decade greatly diminished the attractiveness of that strategy. Nevertheless, many investors will hold a portion of their portfolios in cash to cover emergency expenses or to take… Read More

Emerging markets rebound

Emerging markets staged a welcome recovery in June. That recovery was widespread, with the iShares MSCI Turkey ETF (Nasdaq symbol TUR) gaining 13.8%, the iShares MSCI Brazil ETF (EWZ) up 11.4% while the iShares MSCI Russia ETF (ERUS) added 9.1%. South Korean equities, as well as Chinese equities, also gained substantially. The… Read More

These three ETFs rely on asset allocation

Fund providers in Canada and the U.S. continue to actively introduce new ETFs. This month we highlight three recent additions.
Bank of Montreal (BMO) recently launched three asset allocation ETFs that invest in other BMO ETFs.
Each of the three ETFs acts as “fund of funds,” with its… Read More

Malaysian stocks primed for future growth

Malaysia has an steady track record of economic growth and ranks as one of the most competitive nations among the emerging markets. Its stock market performance remains weak. However, greater political certainty following the the country’s 2018 election should help drive stock market growth. The… Read More