Topic: ETFs

These ETFs help you diversify with top U.S. stocks

We recommend that Canadian investors have as much as 20% to 30% of their portfolios in U.S. stocks in order to improve the diversification and growth potential of their investments. One convenient way to achieve this is through low-fee ETFs.

The three ETFs below mainly hold high-quality stocks that are widely traded on the major U.S. stock exchanges. Each fund tracks the performance of a major stock market index. That’s different from ETFs focused on narrower indexes or themes such as cryptocurrencies or biotechnology.

Although you pay brokerage commissions to buy and sell these ETFs, their lower management fees give them a cost advantage over most mutual funds. We recommend all three of these ETFs, although one is for more aggressive investors only.


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SPDR S&P 500 ETF (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index; they are 500 major U.S. companies chosen based on their market cap, liquidity and industry group. The ETF began trading on January 22, 1993.

The highest-weighted stocks for the SPDR S&P 500 ETF are Apple, 4.2%; Microsoft, 3.6%; Amazon.com, 3.3%; Alphabet, 3.0%; Berkshire Hathaway, 1.7%; Facebook, 1.6%; JPMorgan Chase, 1.5%; Johnson & Johnson, 1.5%; ExxonMobil, 1.5%; Bank of America, 1.1%; and Visa, 1.1%. The fund’s MER is just 0.10%; it yields 1.8%.

SPDR S&P 500 ETF is a buy.

Recommendation in Canadian Wealth Advisor: SPDR S&P 500 ETF is a buy.

SPDR DOW JONES INDUSTRIAL AVERAGE ETF (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.

The ETF began trading on January 14, 1998. The MER for the SPDR Dow Jones Industrial Average ETF is 0.17%; it yields 2.4%.

The fund’s top holdings are Boeing Company, 9.5%; UnitedHealth
Group, 6.8%; Apple Inc., 5.8%; Goldman Sachs, 5.7%; 3M Company, 5.4%; Home Depot, 5.3%; McDonald’s Corp., 4.3%; IBM, 3.9%; Caterpillar Inc., 3.9% and Visa Inc., 3.8%.

Recommendation in Canadian Wealth Advisor: SPDR Dow Jones ETF is a buy.

ETFs: This ETF holds top tech stocks, but no financial firms

POWERSHARES QQQ ETF (Nasdaq symbol QQQ; buy or sell through brokers; www.invescopowershares.com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index. They include the exchange’s 100 largest stocks by market cap. This ETF first began trading on March 10, 1999.

The Nasdaq 100 Index contains shares of companies in a number of major industries, including telecommunications, computer hardware and software, retail/wholesale trade, and biotechnology. It does not contain financial firms.

The ETF’s highest-weighted stocks are Apple, 12.4%; Amazon.com, 11.2%; Microsoft, 10.0%; Alphabet, 8.9%; Facebook, 4.7%; Cisco Systems, 2.6%; Intel Corp., 2.4%; Netflix Inc., 1.9%; Nvidia Corp., 1.9%; Adobe Systems, 1.5%; and Broadcom, 1.2%.

The fund’s MER is about 0.20%. It yields 0.7%.

Recommendation in Canadian Wealth Advisor: PowerShares QQQ ETF is a buy for aggressive investors only.

What to Read Next

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