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

Know your financial stocks

One of the key tenets of our Successful Investor philosophy is to diversify by spreading your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance, and Utilities.
And as part of your holdings, we… Read More

2021 is off to a mixed start

The Vanguard Total World Stocks ETF (VT) gained 0.1% in January 2021. The Vanguard S&P 500 ETF (VOO) lost 0.3%, and the iShares MSCI Canada Equity ETF (EWC) lost 1.1%. The iShares Core EAFE ETF (IEFA), which excludes U.S. and Canadian stocks, lost 1.5% in the month.
Emerging markets underperformed developed markets over the… Read More

There are ETF opportunities beyond Canada

Canadian investors, not unlike investors from most other countries, often have a bias for investing in their home markets. Familiarity with the domestic environment and companies—and a lack of familiarity with foreign markets—are big reasons.
And we agree with that bias—we still recommend that most Canadians… Read More

New ETFs for Canadian investors

This month we look at two new ETFs. The first of those funds invests in companies involved in the management of private equity. The second is an actively managed ETF concentrating on companies that its managers believe will benefit from a rise in inflation.

Brexit reduces uncertainty for investors in the U.K.

Investors don’t typically like uncertainty, and the prolonged negotiations about the future business relationship between the U.K. and the EU was a main contributor to weakness in both the country’s stock market and its currency over the last few years.
Between June 23, 2016—the day of… Read More

The U.K. is looking beyond Brexit and COVID

Last year was a difficult one for the U.K. and its economy due the coronavirus pandemic. But the outlook for 2021 is much more positive.
The rebound will come from the easing of COVID-19 restrictions as the pandemic slows and from the government’s extensive stimulus spending… Read More

Three financial ETFs—but just one is a buy

Banks and other financial services firms suffered in early 2020 as the pandemic took hold. But most have since bounced back. Meanwhile, once COVID-19 eventually subsides and economic activity strengthens, the best of these stocks should be strong performers. That’s all the more so because… Read More

Don’t sell your best picks too soon

We generally advise against selling your best picks too soon. The same advice applies not only to your individual stock or ETF holdings, but also to your ETF portfolio, in general.
By holding on to your best ETFs or stock picks, you improve your chances of… Read More

Market outlook remains bright despite these risks

The overall outlook for stocks looks positive, powered by profit growth. Free-spending governments will initially drive that growth, with stronger consumer spending and business investment eventually taking over as drivers. Also, central banks are expected to keep interest rates low for some time to come.
Meanwhile,… Read More

They offer top stocks outside the U.S.

We still feel that virtually all Canadians should have, say, 20% to 30% of their portfolio in U.S. stocks, or in ETFs holding those stocks. In fact, for some investors, that’s all the foreign exposure their portfolios really need. Still, international markets can add further… Read More

Six ETFs to widen your global exposure

All of the major global stock markets fell with the initial 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 quality ETFs.
Here’s… Read More

COVID-19 challenged REIT ETFs

The speed of the March 2020 stock market decline, as well its rapid recovery to previous peaks, will rank high in the record books. For instance, the 34% drop for the S&P 500 took only 24 days while the recovery to its previous peak was… Read More

Here’s how we’re picking 2021’s best ETFs

When we look for ETFs to recommend, we start with what we see as the most important factor: what stocks does the ETF hold?
And when we look at those stocks, we use tools and measures from three key areas to form our assessment:
1) Investment-quality markers—we use them… Read More

Here’s three new ETFs directed at Canadians

This month we look at three new ETFs. The first is an actively managed ETF that invests in “frontier” technology companies; they’re selected by a manager with roots in venture capital. The next two funds are ETFs where their managers use a “black box” to… Read More

Tap Denmark’s industry-leading firms

Stability and a well-educated workforce are two key traits of the Danish economy. The Scandinavian country is also home to leading global companies in the fields of healthcare and green energy. Meanwhile, the economy has coped relatively well with the pandemic and should regain more… Read More

ETFs keep attracting record inflows

In 2020, ETFs continued to attract new money at a rapid pace, with almost $33 billion in inflows through the end of November. That should lead to a record year of inflows, beating the previous record of $30 billion set in 2019.
Canada now has 39… Read More

These past picks are still going strong

In our February 2020 issue, we recommended a number of ETFs for gains ahead—including our #1 ETF Pick for 2020.
Little did investors know at the time how tumultuous the year would turn out. Economies all over the world suffered under the strain of government-enforced lockdowns… Read More

Here’s your look at three more ETFs for 2021

Vaccination plans in the U.S. and globally have spurred a more positive economic outlook for 2021. Still, there are risks on the horizon, like potential delays in the rollout of those vaccines as well as political and trade-war tensions.
Here’s a look at three popular ETFs… Read More