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:
Invest mainly in well-established companies;
Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
Downplay or avoid stocks in the broker/media limelight.
How Successful Investors Get RICH
Learn everything you need to know in ‘The Canadian Guide on How to Invest in Stocks Successfully’ for FREE from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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
The major Canadian and U.S. stock markets have moved back up since their initial COVID-19 drop. Still, they have yet to regain their 2020 highs. Nonetheless, we think the worst is over for many stocks. We see ETFs as one way for you to profit… Read More
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
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
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
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
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
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
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
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 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
If you expect the price of an asset to rise, you may be tempted to buy ETFs.using borrowed funds to boost their returns. But beware—leveraged ETFs often have big added risks.
Leveraged ETFs use a combination of derivatives and debt to double or triple any value… Read More
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
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
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
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
All of the major global stock markets are down in the wake of COVID-19’s spread. But we think the worst is over for many stocks, and one way to profit, while at the same time cutting your risk, is to invest in ETFs.
Here’s a look… Read More
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
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
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
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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What personal information do we collect?
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Changes to this Policy
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Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
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