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

China’s recovery continues

ISHARES CHINA LARGE-CAP ETF, $45.80, 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 pay a high 0.74% MER. The units yield 2.2%.

Top holdings for the $4.5 billion fund… Read More

Six top international ETFs: 4 buys, 2 holds

All of the major global stock markets fell at 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

Renewable energy: Still lots of room for gains

When we last wrote about this topic in mid-2018, the conclusion was that the share of renewable energy was growing rapidly. That reflects government-driven efforts, especially in Europe, the U.S. and Canada, to expand renewable capacity.
Demand is also strong from power-using corporations, looking to increase… Read More

REITs are bouncing back from COVID

Investors who owned marijuana or energy stocks in the first quarter of 2021 saw considerable gains for these investments. Other big winners in the first quarter were U.S. homebuilders, value stocks, financials, agricultural equities, and mid- and small-cap stocks.
Stocks had another good quarter. At the… Read More

Investing for children can include ETFs

Taking the time to pick the right investments for children and grandchildren is a worthwhile endeavour. Here’s a look at two aspects of an investment program for children.
First are the administrative aspects of setting up the investment program. If the child is under the age… Read More

Two new ETFs for Canadian investors

This month we look at a new ETF from BMO that aims to capture “megatrends.” We also analyze an ETF that aims to pick winning stocks based on the social media attention these stocks receive.
The BMO MSCI INNOVATION INDEX ETF $29.36 (Toronto symbol ZINN), covers four different trends, namely genomics,… Read More

There are no bargains in hedged ETFs

Investors in Canadian-listed ETFs with non-Canadian international holdings effectively gain exposure to the currencies of the countries where those holdings are listed.
Investors in unhedged ETFs with foreign exposure will receive the foreign currency gains on the underlying securities, expressed in Canadian dollars. Simply stated, investments… Read More

Invest in clean energy with these three ETFs

Demand for renewable energy continues to grow, supported by government incentives and technological advances that lower costs. Still, the broad increase in power needs worldwide—along with relatively cheap oil and natural gas prices—should keep fossil fuels as the primary energy source for years to come.
There… Read More

Investing for the long run beats short-term trading

The COVID-19 pandemic has delivered many unexpected outcomes. One such surprise was the large number of new retail, or individual, investors.
In the first quarter of 2020, discount online brokerages in Canada added 500,000 new accounts, growing at three times their normal pace. That same growth was… Read More

Pass on this ETF: Defiance Next-Gen SPAC Derived ETF

DEFIANCE NEXT-GEN SPAC DERIVED ETF $25.84 (New York symbol SPAK) invests in special purpose acquisition corporations (SPACs) and companies spawned from SPACs.
SPACs are companies with no commercial operations that are established solely to raise capital from investors to acquire operating businesses. This provides an alternative route for… Read More

ETFs for children—and for all ages

For parents or grandparents who wish to save for their children’s future, there are few better ways than to invest in a diversified portfolio of high-quality, growing companies. Here are two ETFs that can help investors achieve that goal. And even better, these same ETFs… Read More

Gain from China’s recovery

SPDR S&P CHINA ETF $130.46 (New York Exchange symbol GXC; buy or sell through brokers; tracks the S&P China BMI Index. This includes all publicly traded Chinese stocks available to foreign investors.
Right now, the SPDR S&P China ETF holds 820 stocks. The fund launched on March… Read More

Buy the best of Taiwan

ISHARES MSCI TAIWAN INDEX FUND, $60.35, 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 20.3%… Read More

Here are 5 top ETFs for your new buying

The major Canadian and U.S. stock markets 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 to buy. We see ETFs… Read More

Buy these bond funds for steady income

The Bank of Canada cut its benchmark interest rate to 0.25% in March 2020. That was meant to support economic activity after COVID-19 hit. Whether the bank continues to hold that rate steady, cuts it further or raises it depends on Canada’s economic growth and… Read More

Commodities are looking up for investors

Commodities can help diversify portfolios, but are cyclical and come with higher levels of price volatility.
However, well-diversified ETFs that offer exposure to commodity producers can help investors overcome the problems associated with direct investments in physical commodities or funds that track a single commodity.
Meanwhile, while… Read More

Utilities are a key part of a sound portfolio

Utility stocks are shares in companies that provide services like electric power, telecommunications, and pipeline transportation. While most utility stocks are steady income producers, some utilities also offer opportunities for growth. This happens mostly when utilities expand into new markets or geographic regions.
Utility stocks, or… Read More

Two new bitcoin ETFs for Canadian investors

This month we look at two new bitcoin ETFs—one from Purpose Investment and the other from Evolve Funds. Due to U.S. regulatory restrictions, these Canadian-listed ETFs are among the first globally that directly hold bitcoin.
PURPOSE BITCOIN ETF $11.80 (Toronto symbol BTCC.B or BTCC.U) invests in the digital… Read More