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

Tap Vietnam’s bright future

VANECK VECTORS VIETNAM ETF, $13.76, is a buy for aggressive investors. This emerging market ETF (New York symbol VNM) lets you tap leading Vietnamese companies and foreign firms that get a significant share of their revenue from the Southeast Asian nation.
Your top holdings through this ETF are Vinhomes (real… Read More

Own all of the top REITs

ISHARES S&P/TSX REIT INDEX ETF, $14.93, is a hold. The ETF (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) lets you tap all 21 Canadian real estate investment trusts in the S&P/TSX REIT Index. Investors pay a MER of 0.61%, and the REIT fund gives you a.. Read More

These ETFs offer you low-fee bond exposure

The Bank of Canada cut its benchmark interest rate to 0.25% from 1.75% in March. The move was meant to spur the economy after COVID-19 hit. Whether the bank holds that rate steady, or cuts it even further, depends on the country’s economic growth and… Read More

We think now is a great time for gold stocks

The price of gold has been on an upwards trajectory since it dropped to $1,050 U.S. an ounce in December 2015. It’s now 62% higher at $1,699. Still, that’s below the previous peak of $1,897 per ounce reached in September 2011. Meantime, gold stocks have… Read More

Most markets rebounded in May

The post-COVID-19 recovery in most assets continued in May and also broadened to include commodities, U.S. homebuilders, and even marijuana stocks. The extraordinary level of stimulus spending already provided by central banks and governments likely encouraged investors to buy early on in the recovery.
At the… Read More

Government debt can be a plus for stocks

The COVID-19 pandemic has prompted governments and central banks worldwide to take extraordinary actions to stabilize their financial systems and economies. These actions included massive increases in government spending and drastic actions to lower interest rates. While this may be necessary in the context of… Read More

China remains a key factor in Australia’s economy

The overall relationship between China and Australia has grown considerably over the years to the mutual benefit of both countries.
As China’s economy developed rapidly, it needed large quantities of natural resources for its infrastructure development and manufacturing expansion. Australia was a ready supplier. This relationship… Read More

New ETFs that help investors cut their tax bill

This month, we look at three tax-efficient ETFs launched by Horizons earlier this year.
The ETFs don’t hold actual stocks or other investments, but rather financial instruments called “total return swaps” that replicate the returns of indexes.
Instead of paying dividends or interest that is taxable each… Read More

Low interest rates hurt savers

Central banks have reduced their primary lending rates over the past few months in an effort to help borrowers, including governments, corporations and individuals, cope with the economic fallout from the COVID-19 pandemic.
In addition, central banks have also commenced large-scale purchases of government and corporate… Read More

Australia fund lets you tap regional growth

Australia was a major beneficiary of the boom in the Chinese economy over the past three decades. In the process, China became the largest buyer of Australia’s natural resources, and an important participant in the Australian tourism and education industries. However, the COVID-19 pandemic—and the… Read More

COVID-19 boosts the appeal of Utilities ETFs

Central banks are keeping interest rates down in order to counter the negative effects of the COVID-19 pandemic. (The Supplement on page 69 offers you more info on how high deficits and low interest rates in the wake of the coronavirus will affect governments going… Read More

Good time for you to buy gold

For many investors, gold represents a “safe harbour” amid COVID-19 turbulence. That’s reflected in the sharp price jumps we continue to see.
We expect gold-loving markets in Asia and other emerging markets to rebound after the coronavirus. That should further spur gold purchases, taking gold stocks… Read More

Copper needs a China rally

GLOBAL X COPPER MINERS ETF $16.78, is a hold. The ETF (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) lets you track the Solactive Global Copper Miners Index, which includes 27 global mining and exploration firms. It started up in April 2010.
Canadian firms make up 31.5% of… Read More

These ETFs aim to provide a ‘safe harbour’

Most precious-metal stocks dropped, along with stock markets, in March 2020. They then quickly reversed that trend to soar for investors.
The extra burst reflects investor fears about many things, including stock market volatility because of COVID-19 and the length and depth of the resulting economic… Read More

These ETFs let you invest beyond Canada

If you’re looking for an ETF with top holdings and exceptionally low fees, then Pennsylvania-based Vanguard Group offers you strong options. Vanguard is one of the world’s largest investment management companies. In all, it administers over $6.2 trillion U.S. for investors spread across 420 mutual… Read More

Yield and income are key factors to weigh

Retirees and other investors who depend on the income from their portfolios face a time of low returns on their fixed-income investments.
The table below indicates the current income yields available on those investments, plus other asset classes—as represented by the ETFs highlighted below. It also provides an… Read More

Know the risks & rewards of your bond ETFs

In Best ETFs for Canadian Investors, we mostly focus on funds that hold equities, although we have on occasion covered ETFs that focus on savings accounts, preferred shares, commodities, and alternative investments. In this supplement, we look at the pros and cons of holding government and corporate… Read More