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

Both benefits and drawbacks to dividend ETFs

The merits of investing in top dividend-paying companies are well known—capital gains, regular income, and lower risk. However, investors in ETFs that focus on dividend-paying companies need to be aware that the dividend payouts of ETFs are not as smooth as those of the best… Read More

Big drop in April for many stock

Aggressive talk of further interest rate increases by the U.S. Federal Reserve Chairman Jerome Powell contributed to the big drop for stock markets in April. Rising inflation is the main reason that the Fed plans to keep raising rates.
Growth stocks, especially those with only remote… Read More

Two new ETFs for Canadian investors

This month we highlight an ETF that invests in dividend-paying energy stocks, plus another that focuses on renewable energy.
NINEPOINT ENERGY INCOME FUND ETF $19.79 (NEO exchange symbol NRGI) invests in dividend-paying companies involved in the energy industry. The ETF is managed by Eric Nuttall, who feels that his… Read More

Global powerhouse Adidas is a top German company

The iShares Germany ETF (see page 55) includes several companies that are among the global leaders in their respective industries. While these companies are generally as profitable as their U.S. counterparts, they typically trade on average at a substantial discount to earnings compared to their… Read More

Germany’s rebound will reward investors

The German economy was recovering in the first quarter of 2022. Then came the Russian invasion of Ukraine, and that has dampened the country’s recovery. The war exacerbates supply-chain disruptions, pushing up commodity prices and weighing on industrial production.
Still, Germany’s strong, ongoing government response to… Read More

Dividend ETFs aim to provide solid income

Rising interest rates mean dividend-paying stocks must increasingly compete for investor interest in fixed-income investments. However, sustainable dividends still offer an attractive and growing income stream for investors.
Meanwhile, dividend-focused ETFs can—but not always—follow strategies that we feel set investors up for maximum long-term gains with… Read More

Pass on this ETF

ROUNDHILL MEME ETF $6.02 (New York symbol MEME) invests in companies that attract considerable attention on social media sites like Reddit. They are called “meme stocks.” The fund started in December 2021 but has gathered only a small $1.2 million asset base. The management fee is 0.69%.
The ETF… Read More

Utilities offer you income and growth

Utilities could suffer more than other sectors as interest rates further rise. That’s because they have a lot of debt, and higher rates make it more expensive to raise money and refinance existing debt. As well, their shares, which typically offer high yields, compete with… Read More

Six global markets: 4 ETF buys and 2 holds

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

Look beyond commodities for food profits

Despite the significant long-term growth potential in food demand, the prices of agricultural commodities are volatile, and as a group performed poorly over the past 15 years. Still, many of the larger companies involved in the industry have done well and outperformed the S&P 500… Read More

Two new ETFs for Canadian investors

This month we highlight two new ETFs that invest in futures contracts linked to carbon credits.
Government regulations aimed at reducing carbon emissions include carbon credit trading systems. The systems effectively place a price on carbon emissions to compensate for their climate-change effects. Under these arrangements,… Read More

ETF’s top holding supplies key commodities

Sociedad Quimica Y Minera(SQM) is currently the largest holding in the iShares MSCI Chile ETF, making up a big 26% of its total assets. The company is a major global producer of lithium, iodine, and fertilizers.
SQM’s share price tends to follow a cyclical pattern over… Read More

Chile offers promise for aggressive investors

After a strong 2021 fourth quarter, the Chilean economy has likely slowed this year, amid higher inflation and interest rates. Meanwhile, the country faces challenges: the possibility of new COVID-19 variants, higher energy prices pushed up further by the conflict in Ukraine, and uncertainties around… Read More

Agriculture ETFs tap expanding demand

With yearly revenue of over $4 trillion, the global agriculture industry offers enormous opportunities for firms ready to satisfy growing food demand.
Crop and food prices will continue to fluctuate from year to year—as we’ve seen with wheat and fertilizer exports disrupted from major producers Russia,… Read More

Pass on this ETF

BMO U.S. PUT WRITE ETF $14.36 (Toronto symbol ZPW) sells put options on a range of U.S. large-cap stocks to generate income for the ETF. These options give the put buyers the right to sell specific stocks to the ETF at a pre-determined price. Buyers profit when… Read More

These gold ETFs have more gains ahead

For many investors, gold represents a “safe harbour” in these turbulent times. That’s reflected in the sharp price jumps we continue to see—most notably in the wake of the Russian invasion of Ukraine.
Meanwhile, we expect gold-loving markets in Asia and other emerging economies to rebound… Read More

Buy the best of Taiwan

ISHARES MSCI TAIWAN INDEX FUND, $62.12, 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 Taiwan Semiconductor at 21.1%… Read More

Six North American ETFs: 5 buys, 1 hold

The major Canadian and U.S. stock markets, while subject to volatility, 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… Read More