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

Enhance your returns while cutting risk

One key factor in successful investing—apart from picking good stocks (or ETFs that invest in those stocks)—is to diversify your portfolio.
Our main suggestion would be to make sure that your holdings are always well-balanced among most if not all of the five economic sectors—Manufacturing, Consumer,… Read More

How ETF managers define growth & value

Among the wide variety of investing styles, growth and value are among the most popular.
Growth investors focus on companies that are expected to grow their revenues and profits faster than the rest. Bargain or value stocks will typically trade lower than their financial fundamentals suggest… Read More

Most ETFs fell in October

The month of October saw declines in most asset classes, especially during the last trading week. That came after very strong gains for most assets starting in April.
Representing the broad global, U.S. and Canadian markets, the Vanguard Total World Stocks ETF (VT) lost 2.0%… Read More

Two new ETFs for Canadian investors

This month we look at two new “sustainable investment” ETFs launched by Wealthsimple. Toronto-based Wealthsimple is primarily a robo-advisor—an online, low-fee financial planner providing investors with portfolios of ETFs.
WEALTHSIMPLE NORTH AMERICAN SOCIALLY RESPONSIBLE ETF $28.09 (Toronto symbol WSRI) invests in North American companies that… Read More

Warren Buffett buys into Japan

On the day of his 90th birthday—August 30, 2020—Warren Buffett announced that his Berkshire Hathaway holding company (symbol BRK.B on New York) had acquired just over a 5% stake in of each of Japan’s five trading companies, or “Sogo Shosha.” The companies are Itochu Corp.,… Read More

Japan: Poised for a post-COVID-19 recovery

The Japanese economy ranks among the top 5 in the world and hosts some of the most-profitable global corporations. The economy is, however, hamstrung by a declining and rapidly aging population. Still, an older population also presents opportunities, and Japanese companies are already coming up… Read More

Small caps offer investors pros and cons

Smaller firms can sometimes generate higher returns than their larger counterparts, but they can be riskier, less liquid, and may underperform for long periods. One way to offset some of the risk is to focus on ETFs that hold top-quality small-capitalization companies (such as the… Read More

Three ETFs offer international diversification

We think that most Canadian investors should have high-quality, dividend-paying Canadian stocks (or ETFs that hold those stocks) make up the bulk of their portfolios. We also feel that virtually all Canadian investors should have, say, 20% to 30% of their portfolios in U.S. stocks… Read More

Pass on this ETF

ProShares UltraPro Short QQQ ETF $19.64 (Nasdaq symbol SQQQ) aims to deliver 3 times the inverse of the daily performance of the Nasdaq 100 Index.
The Nasdaq 100 Index is comprised of shares of companies in a number of major industries, including telecommunications, computer hardware… Read More

Growth stocks can boost your gains

Growth stocks can be riskier than well-established firms, but the best of them often make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute: they grow at a faster-than-average rate within their industry, or within the… Read More

Wait and see with China

ISHARES CHINA LARGE-CAP ETF, $46.96, is a hold for safety-conscious investors. The ETF (New York symbol FXI; buy or sell through brokers) tracks the 50 largest, most-liquid Chinese stocks. Investors are charged a high 0.74% MER. The units yield 2.4%.
Top holdings for the $3.4 billion… Read More

Six top international ETFs for future gains

All of the major global stock markets fell in the wake of COVID-19’s spread. But many top markets have since rebounded. We think the outlook remains positive for quality stocks, and one way to profit, while cutting your risk, is to invest in quality ETFs… Read More

Here are good and bad ways to cut risk

Diversification is a key way to reduce portfolio risk and volatility, but there are other strategies aimed at cutting portfolio risk and volatility. Those other methods include moving investments into risky assets at regular intervals and buying stocks gradually over time. And then there’s market… Read More

Stocks pulled back in September

The month of September saw declines in equity markets after significant gains over the previous six months. At the broad market level, the Vanguard Total World Stocks ETF (VT) lost 4.0% month over month, the Vanguard S&P 500 ETF (VOO), 4.5%, and the iShares MSCI Canada Equity ETF (EWC), 5.3%. Emerging markets also struggled,… Read More

These ETFs use a ‘black box’ to pick stocks

Some ETF managers were quick to establish ETFs that benefit from changes in consumer behaviour during the COVID-19 pandemic. Here’s a look at two of them:
The DIREXION WORK FROM HOME ETF $56.36 (New York symbol WFH) aims to provide investors with diversified exposure to firms involved in cloud technologies, cybersecurity, online… Read More

Canada’s stock market has great potential

The Canadian economy ranks among the top 10 globally and has performed better than most of its large, developed peers over the past decade. The country is also among the top 15 most-competitive economies in the world; to date, it has fared relatively well at… Read More

These ETFs could help you beat inflation

While inflation remains very low, conditions for an eventual uptick may well be building. Those factors include today’s very low interest rates, massive government spending and borrowing to inject money into the economy, growing import barriers, and the higher cost of doing business in a.. Read More