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.

NEW! The real secrets of successful investing

Successful investors have good habits. Investors who let their emotions rule can face tremendous losses. Pat McKeough’s new report “How to invest in stocks” shows you how to stay in control so that you can make the right decisions even in the worst markets.

 

Read this FREE report >>

 


Read More

ETFs Library Archives

These ETFs offer top-quality REITs

Traditionally, REITs are said to suffer when interest rates rise. That’s in part because their units, which typically offer high yields, compete with fixed-income instruments for investor interest. However, higher interest rates are usually accompanied by increased economic activity and growth. That higher growth is… Read More

Pass on this ETF

BMO COVERED CALL CANADIAN BANKS ETF $18.43 (Toronto symbol ZWB; TSINetwork ETF Rating: Conservative; Market cap: $1.9 billion) holds shares of Canada’s six largest banks (CIBC, TD Bank, Bank of Montreal, Bank of Nova Scotia, Royal Bank and National Bank) either directly or through units of the BMO Equal… Read More

Luxury retail rents hold up against e-commerce

The rapid growth of online shopping continues to make headlines, but high-end, bricks-and-mortar retailers have fared better at protecting their instore sales than lower-end retailers. Nevertheless, those operators still face extremely high operating costs.
The real estate consulting firm Cushman and Wakefield recently identified the Causeway… Read More

Their high yields come with steady gains

While they sometimes lack high-growth potential, utilities are generally stable, profitable businesses with limited competition—and they offer investors high yields. As a result, as a group, they have a better long-term stock market performance than the overall market and come with less volatility and risk.
The… Read More

Utilities face growing cyber threats

Cyber warfare has become another method of attacking nation-states, beyond the traditional air, land and sea routes of conflict. This approach has the added benefit of being secretive, destructive and highly disruptive—all at a much lower cost than conventional warfare. Beyond power grids, hackers could… Read More

Turkey has huge potential but risk to match

The Republic of Turkey has a large economy that’s grown by an average of 4.7% per year for the past two decades. However, recent political turmoil has wreaked havoc on the currency, which has in turn pushed interest rates to punishing heights. Investing in Turkey… Read More

Risk makes Turkish stocks cheap

Measured by the stocks held in the iShares Turkey ETF, the forward distribution yield on the portfolio is a high 4.1%, with a p/e ratio of 7.0. This makes the ETF one of the cheapest among emerging markets.
If investors consider the profitability of some of the… Read More

Bond holdings limit these Vanguard ETFs

Earlier this year, Vanguard Canada added a fourth balanced fund (a mix of stock ETFs and bond ETFs) to three others that it launched in January 2018.
Here’s a look at all four of these ETFs:
VANGUARD CONSERVATIVE INCOME ETF PORTFOLIO $25.81 (Toronto symbol VCIP), holds roughly 20% of… Read More

ETF Performances for March

The dramatic downward movement in U.S. government bond yields in March reverberated through the markets, with interest rate-sensitive groups, such as real estate and utilities, benefitting strongly from renewed expectations for lower, or at least steady, interest rates.
The iShares 20+ Year Treasury Bond ETF (TLT.O) tracks long-term… Read More

ETFs in brief

Exchange-traded funds 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 of that index or sub-index and will allow the fund to “track” its performance.
The MER (Management… Read More

How We Assess an ETF’s Risk

To help you decide if certain ETFs are suitable for your portfolio and investment temperament, we classify them into three easy-to-understand categories: Conservative, Aggressive and Income. To determine how an ETF fits into one of those three classifications, we examine a number of factors. They include
Stock holdings. We look carefully… Read More

Here are five key ways to value REITs

Real estate investment trusts (“REITs”) have different valuation measures than, say, industrial companies or banks. Here we look at five popular methods to compare the valuations of REITs.
The net asset value (NAV) approach
Most REITs regularly value their real estate portfolios, either internally or by appointing… Read More

Utilities: Stable growth adds to their appeal

As a group, higher-yielding stocks, such as utilities, have lagged the broader indexes over the past decade. Part of that was due a preference by many investors for faster growing tech stocks such as Netflix, Apple, Alphabet, Facebook and so on.
Moreover, utilities and other other… Read More

Buy the best of Vietnam

VANECK VECTORS VIETNAM ETF $16.96 (New York symbol VNM; buy or sell through brokers) holds Vietnamese companies and foreign firms that get a significant share of their revenue from the Southeast Asian nation.

The ETF’s top holdings are Vingroup (conglomerate), 8.5%; Vietnam Dairy, 8.0%; Vinhomes (real estate), 7.3%;… Read More

Five of these North American ETFs are buys

The six ETFs we update below mainly hold high-quality stocks that are widely traded on Canadian and U.S. exchanges. Each fund tracks the performance of a major stock market index. That’s different from ETFs focused on narrower indexes or themes such as cryptocurrencies or biotechnology.
Of… Read More

… but may have a place in many portfolios

As mentioned on the previous page, many investors have moved out of emerging markets, given their poor performance over the past decade. However, emerging market fundamentals are improving, and we think that most investors could include a small portion of emerging market ETFs in a.. Read More

Emerging markets have above-average risks

Emerging market stocks have lagged the performance of developed markets over the better part of the past decade. But they may now offer better investment value and better growth prospects than some of their developed-market counterparts. That’s still only for a small part of your… Read More

ETF Performance: China rises

After a rough final quarter for 2018, most asset classes saw significant gains in early January 2019. They now continue that recovery but at a much slower pace.
Investors are seemingly less concerned about stock valuations, while the U.S. Federal Reserve continuesd to play down… Read More

These new ETFs cater to investor hopes

The best ETFs generally provide cheap, well-diversified investment vehicles for long-term investors. However, to capitalize on short-term investor fads or perceptions, many ETF providers continue to launch “innovative” new funds.
DIREXION MSCI EMERGING OVER DEVELOPED MARKET ETF $52.30 (New York symbol RWED) lets investors bet… Read More

The Swiss watch industry stays on top

The Swiss watch industry has enjoyed uncontested domination of the global market for more than two decades. Despite higher costs and high wages, Switzerland is the home of most of the largest companies in this industry. That makes it the largest exporter of watches in… Read More