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

Let mid-cap stocks boost your returns

Medium-sized companies are a bit like the proverbial middle child—they tend not to get as much attention from investors as the smallest or the biggest. But this creates opportunities for investors who are prepared to add the best of those stocks—or the ETFs that hold… Read More

Here’s what characterizes high-quality stocks

Investors have different descriptions for high-quality companies. For some it is the quality of management, products and customer service; for others, it is high levels of profitability or financial strength.
TSI Network’s 10-point checklist of factors that define high-quality, attractive companies continues to guide our subscribers.
That… Read More

New ETFs launched for Canadian investors

This month we look at two new ETFs from Bank of Montral. Both are focused on companies involved in “megatrends”—specifically, genomics and fintech.
The bank launched a range of ETFs in January 2021 that focus on megatrends. It argues that megatrends are “future drivers of market… Read More

Colombia’s coffee trade is a plus

Colombian coffee is often regarded as among the highest quality in the world. The country has traditionally grown Arabica beans and its unique geography makes it perfectly suited for producing a delicious, high-quality brew.
Colombia’s excellent growing conditions have been paired with an aggressive marketing campaign… Read More

Colombia’s future holds promise but also risks

Despite its decades-long image as a violent, drug-cartel-controlled country, Colombia entered a new phase of stability in 2016 when the government signed a peace accord with the FARC guerilla group.
Since then, the Colombian economy has fared relatively well compared to its peers in South America. The… Read More

What to know about trading liquidity

High levels of trading between buyers and sellers of ETF units is normally enough to ensure that the bid-offer spreads remain small and that the market price of the units trade close to the value of the underlying assets. However, there is more to ETF… Read More

Mid-cap ETFs can lift your portfolio gains

Many investors overlook mid-cap stocks, thinking that a combination of large- and small-cap stocks will provide their portfolios with all the diversification they really need. However, as a group, U.S. mid-cap stocks have often performed better than large caps and are generally less risky than… Read More

Fund providers are applying AI to a rising number of ETFs

Active ETF portfolio managers have developed a wide range of tools to improve their chances of beating the market. In some cases, the managers have decided that computers have a better chance of integrating information to consistently make good investment decisions. Computer-driven investment decision-making has… Read More

Pass on this ETF

GLOBAL X SUPERDIVIDEND ETF $13.24 (New York symbol SDIV) invests in 100 of the highest-yielding stocks worldwide.
Stocks in the portfolio are equally weighted to reduce the risk associated with a high exposure to individual companies. The stocks must also meet market cap and liquidity criteria.
With 29.0%… Read More

These ETFs aim for top-quality holdings

One of the best methods of building wealth over time is to zero in on the shares of quality companies with a consistent history of sales and earnings (or the ETFs that hold them). Solid balance sheets and a strong hold on a growing clientele… Read More

Taiwan is a timely buy

ISHARES MSCI TAIWAN INDEX FUND, $61.84, is a buy for aggressive investors. The ETF (New York symbol EWT; buy or sell through brokers) gives you direct exposure to some of the top public companies of this East Asian powerhouse economy.
The fund’s largest holding is… Read More

We recommend just five of these six ETFs

The major Canadian and U.S. stock markets have moved back up since their initial COVID-19 drop. Nonetheless, we think that if you can afford to stay in the market for several years or longer, now is still a good time for new buying. We see… Read More

Profit from Vietnam’s rise

VANECK VECTORS VIETNAM ETF, $19.07, is a buy for aggressive investors. This emerging-markets ETF (New York symbol VNM) lets you tap leading Vietnamese companies and foreign firms that get a significant share of their revenue from this Southeast Asian nation. The fund started up in… Read More

Outlook for semiconductors remains bright

The global Covid-19 pandemic has created significant supply/demand imbalances in the global semiconductor industry. However, the current disruption should not obscure the strong underlying growth trend as demand for technologically advanced products such as self-driving technology, 5G mobile applications, the Internet of things (IoT), and… Read More

Top healthcare stocks hold lots of appeal

The Covid-19 pandemic has once again demonstrated the importance of healthcare services. But meantime, the demand for healthcare products and services has been growing for decades.
The aging of the population
A combination of declining fertility rates and increasing life expectancy is resulting in a rapidly… Read More

New ETFs launched for Canadian investors

This month we consider a new ETF from CI Asset Management that uses leverage to invest in North American growth stocks. We also look at a recently launched ETF from Franklin Asset Management that focuses on companies in compliance with ESG criteria.
CI Global Asset… Read More

India’s growth potential remains powerful

High economic growth rates have helped swell India’s middle class over the past two decades. However, the country still comes in well below its main emerging market rival China in global competitiveness rankings.
Apart from the immediate challenges caused by the COVID-19 pandemic, the country… Read More

ETFs are catching up with mutual funds

Exchange-traded funds are well suited to index-tracking investment strategies. And compared to mutual funds, they generally offer investors much lower fees and higher liquidity.
It is therefore not surprising that the total amount of assets held in index ETFs globally are rapidly catching up with… Read More

Computer chip outlook remains very positive

The current supply shortfall in the global semiconductor industry is creating major problems for many manufacturers of vehicles, computers, and other connected devices. While the imbalance will resolve itself as the supply chains return to normal and demand stabilizes, the longer-term demand trend for computer… Read More