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.

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.


 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

Read More

ETFs Library Archives

Consumer ETFs offer stability in downturns

Value investing has long been considered the investment style that provides superior returns over the long run. However, for much of the past 15 years “growth investing” produced much better results. That may be changing, as “value investing” staged a comeback over the past three… Read More

Let value stocks add to your investment gains

Consumer defensive companies such as Walmart, Proctor & Gamble, and Nestle provide basic goods that consumers need even during a recession. It is therefore not surprising that these companies have relatively stable revenue and profit histories and can maintain their dividends during tough economic times.
In… Read More

New ETFs for Canadian investors

This month we highlight an ETF that aims to profit from the popularity of a single company—Nvidia—and a second that wants to jump aboard the artificial intelligence bandwagon.
NVIDIA YIELD SHARES PURPOSE ETF $30.82 (Neo Exchange symbol YNVD) invests in the common stock of Nvidia Corp. (Nasdaq symbol NVDA). The… Read More

Switzerland’s global competitiveness is a major plus

Switzerland is one of the most competitive countries in the world according to the most recent annual survey published by the IMD World Competitiveness Center.
The ranking system considers 336 different data points.
Those data points are grouped into four broad overall categories: economic performance, government efficiency,… Read More

Switzerland’s outlook for investors is bright

Switzerland has a stable, export-oriented economy, which regularly ranks among the world’s most competitive. In addition, it is home to some of the top performing and best-known global companies. The Swiss economy continues to outperform the overall Euro area, aided by comparatively low inflation and… Read More

These ETFs aim to spot value investments

As their name implies, value stocks trade lower than their fundamentals would suggest. Investors perceive them as undervalued with the potential to rise. Even so, it’s best for you to zero in on the shares of quality companies with a consistent history of sales and… Read More

Pass on this ETF: Global X SuperDividend

GLOBAL X SUPERDIVIDEND ETF $21.23 (New York symbol SDIV) invests in 100 of the highest-yielding stocks worldwide.
Stocks in the fund’s portfolio are equally weighted to reduce the risk associated with a high exposure to individual companies. The stocks must also meet certain market-cap and liquidity criteria.
With 33.8%… Read More

Consumer staples stabilize your returns

Traditionally, the price of most stocks, and the ETFs that hold them, drop in market declines. However, certain segments generally perform better than the overall market. Below, we highlight three ETFs focused on firms that produce and sell consumer staples. They should, as in past… Read More

EVs are a plus for copper

GLOBAL X COPPER MINERS ETF, $35.55, is a buy. The ETF (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) lets you track the Solactive Global Copper Miners Index, with 38 global mining and exploration firms. It started up in April 2010.
Canadian firms make up 35.1% of the… Read More

These ETFs offer precious-metal gains

Most precious-metal stocks dropped, along with the market, in March 2020. They then quickly reversed that trend to soar for investors, in part because of gold’s appeal as a “safe harbour” in times of economic uncertainty. In fact, in August 2020, gold jumped to over… Read More

Profit with top solar stocks

INVESCO SOLAR ETF, $42.01, is a buy for aggressive investors. The ETF (New York symbol TAN; buy or sell through brokers) tracks solar-related companies (including technology firms and utilities) listed on global exchanges.
Its top holdings are Enphase Energy (U.S.; home solar systems) at 12.6%; First Solar (China; solar… Read More

These ETFs tap international growth

Generally speaking, Canadians are blocked from buying mutual funds that are registered in the U.S. unless those funds are also registered with provincial securities commissions. (Moreover, some Canadian mutual funds are only available in a limited number of provinces.)
Investors in this country can, however, buy… Read More

Two new ETFs for Canadian investors

Last year, Canada saw the listing of 164 new ETFs. This month we highlight two of the most successful new launches in 2023. The first is an balanced ETF, while the second invests in technology companies with a covered call strategy.
PURPOSE ACTIVE BALANCED ETF $21.61 (Toronto symbol… Read More

Here’s a look at the pros and cons of small caps

Smaller companies can generate higher returns than their larger counterparts, but their shares are often riskier and less liquid, and may underperform for long periods.
Small cap stocks are also more volatile in times of unsettled or falling markets.
Still, if you focus on the best-quality small companies—or… Read More

U.S. new housing demand remains steady

The U.S. housing and homebuilding markets dropped in 2020 on fears that a COVID-induced catastrophe would disrupted the U.S. economy. The recovery, however, came quickly in 2021, aided by decades-low mortgage rates, limited housing supply, and a strong job market.
The recovery was nonetheless shortlived as the… Read More

Chile offers gains for aggressive investors

The Chilean economy will likely emerge from recession in 2024, further reducing joblessness and lifting wages. Consumer purchasing power will improve as inflation falls. Longer-term, as the world transitions to greener technologies, the global demand for copper, lithium, and renewable energy should rise. That represents… Read More

Three small-cap ETFs for Canadian investors

Smaller firms can sometimes generate higher returns than their larger counterparts, but they are often riskier, less liquid, and may underperform for long periods. One way to offset some of the risk is to focus on ETFs that hold top-quality small-capitalization companies.
Here’s a look at… Read More

We like this ETF’s holdings—but not its ‘capping’

BMO S&P/TSX CAPPED COMPOSITE INDEX ETF $28.09 (Toronto symbol ZCN; TSINetwork ETF Rating: Conservative; Market cap: $7.3 billion) tracks the S&P/TSX Capped Composite Index. The index includes over 200 top-ranked Canadian stocks, which represent more than 90% of the Canadian equity market. Individual stock weights are capped… Read More

Pass on this ETF: BMO Covered Call Canadian Banks ETFs

BMO COVERED CALL CANADIAN BANKS ETF $17.30 (Toronto symbol ZWB) holds shares of Canada’s six largest banks (CIBC, TD Bank, Bank of Montreal, Bank of Nova Scotia, Royal Bank and National Bank).
The fund started up in January 2011. Its MER is a relatively high 0.71%.
BMO Canadian High Dividend Covered… Read More