How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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ISHARES CANADIAN UNIVERSE BOND INDEX ETF $31.67 (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the Canadian Universe Bond Index. The 929 bonds in the portfolio have an average term to maturity of 10.34 years. The fund’s MER is 0.33%.
The bonds in the index are 71.3% government and 28.7% corporate.
The fund yields 2.8%, compared to the Short-Term Bond Fund’s 2.4%. Its yield to maturity is 1.93%, 0.85% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.
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The bonds in the index are 71.3% government and 28.7% corporate.
The fund yields 2.8%, compared to the Short-Term Bond Fund’s 2.4%. Its yield to maturity is 1.93%, 0.85% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.
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ISHARES CANADIAN SHORT-TERM BOND INDEX ETF $28.69 (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a range of investment-grade federal, provincial, municipal and corporate bonds with one- to five-year terms to maturity. The fund holds 430 bonds with an average term to maturity of 2.98 years. The bonds in the index are 64.8% government and 35.2% corporate. The fund’s MER is 0.28%.
The iShares Canadian Short-Term Bond Index Fund yields 2.4%, but this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, meaning the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.
The key figure when looking at the long-term return of this fund is yield to maturity. This yield takes into account the series of capital losses the fund will experience as its above-market-rate bonds mature. The iShares Canadian Short-Term Bond Index ETF’s yield to maturity is around 1.08%—less than the 2.4% yield but still higher than the 0.42% you’d earn by investing in, say, a one-year T-bill.
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The iShares Canadian Short-Term Bond Index Fund yields 2.4%, but this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, meaning the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.
The key figure when looking at the long-term return of this fund is yield to maturity. This yield takes into account the series of capital losses the fund will experience as its above-market-rate bonds mature. The iShares Canadian Short-Term Bond Index ETF’s yield to maturity is around 1.08%—less than the 2.4% yield but still higher than the 0.42% you’d earn by investing in, say, a one-year T-bill.
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INNERGEX RENEWABLE ENERGY $10.14 (Toronto symbol INE; Shares outstanding: 101.3 million; Market cap: $1.0 billion; TSINetwork Rating: Extra Risk; Dividend yield 6.1%; www.innergex.com) operates 26 hydroelectric plants, six wind farms and one solar power facility in Quebec, Ontario, B.C. and Idaho. The company gets 73% of its power from hydroelectric plants, 26% from wind and 1% from solar. In contrast to Algonquin, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, the company has five projects under construction. But like Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new plants....
ALGONQUIN POWER & UTILITIES CORP. $9.38 (Toronto symbol AQN; Shares outstanding: 239.5 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.3%; www.algonquinpower.com) has used acquisitions to nearly triple in size over the past three years and is planning more purchases.
The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. Its hydroelectric, thermal energy, solar and wind facilities now generate 1,050 megawatts, up from 460.
Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 20.9% of Algonquin.
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The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. Its hydroelectric, thermal energy, solar and wind facilities now generate 1,050 megawatts, up from 460.
Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 20.9% of Algonquin.
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TRANSCANADA CORP. $43.86 (Toronto symbol TRP; Shares outstanding: 708.9 million; Market cap: $31.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.transcanada.com) wants to build the Energy East pipeline, which would pump oil from Alberta to Eastern Canadian refineries. The plan involves converting parts of its existing natural gas pipeline to handle oil.
The company recently signed deals with three major gas distributors (two in Ontario and one in Quebec) that ensure the project will not cut their gas supplies or increase their costs. As part of this agreement, TransCanada will add new, smaller gas pipelines to replace the portions of the main gas line it will convert to oil.
These deals help cut Energy East’s risk. The project faces strong environmental and political opposition, but if regulators approve the new line, it could start up in 2020.
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The company recently signed deals with three major gas distributors (two in Ontario and one in Quebec) that ensure the project will not cut their gas supplies or increase their costs. As part of this agreement, TransCanada will add new, smaller gas pipelines to replace the portions of the main gas line it will convert to oil.
These deals help cut Energy East’s risk. The project faces strong environmental and political opposition, but if regulators approve the new line, it could start up in 2020.
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GUGGENHEIM CHINA SMALL CAP ETF $22.04 (New York symbol HAO) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.
Chinese stocks have plunged since this summer. Chinese leader Xi Jinping seems focused on shoring up the Communist party and the Chinese stock market, rather than strengthening the Chinese economy.
Brazil has officially entered a recession with news that its economy shrank in the second quarter this year, at a faster rate than in the first. Brazil’s per-capita income has been falling since last year, and the Brazilian real has lost a quarter of its value in the year to date. State-controlled oil and gas giant Petrobras is also in the midst of a huge corruption scandal.
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Chinese stocks have plunged since this summer. Chinese leader Xi Jinping seems focused on shoring up the Communist party and the Chinese stock market, rather than strengthening the Chinese economy.
Brazil has officially entered a recession with news that its economy shrank in the second quarter this year, at a faster rate than in the first. Brazil’s per-capita income has been falling since last year, and the Brazilian real has lost a quarter of its value in the year to date. State-controlled oil and gas giant Petrobras is also in the midst of a huge corruption scandal.
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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND (formerly New York symbol ESR) has been closed by BlackRock, which manages the iShares funds. Investors were sent a final distribution of the fund’s net asset value, $16.17 per unit, on August 28, 2015.
The iShares MSCI Emerging Markets Eastern Europe Index Fund had two-thirds of its assets invested in Russia, including stocks of major Russian firms, such as gas utility Gazprom, oil producer Lukoil and retailer Magnit PJSC.
Investor interest in the fund waned after Russia’s currency, the ruble, dropped to nearrecord lows against the U.S. dollar. The ruble’s fall comes in the wake of falling prices for oil and other commodities and Western sanctions after Russia’s invasion of Ukraine.
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The iShares MSCI Emerging Markets Eastern Europe Index Fund had two-thirds of its assets invested in Russia, including stocks of major Russian firms, such as gas utility Gazprom, oil producer Lukoil and retailer Magnit PJSC.
Investor interest in the fund waned after Russia’s currency, the ruble, dropped to nearrecord lows against the U.S. dollar. The ruble’s fall comes in the wake of falling prices for oil and other commodities and Western sanctions after Russia’s invasion of Ukraine.
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ISHARES MSCI AUSTRALIA ETF $18.19 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 71 largest Australian stocks.
The fund’s top holdings include Commonwealth Bank of Australia, 11.3%; Westpac Banking Corp., 8.6%; National Australia Bank, 7.2%; BHP Billiton, 7.2%; Australia and New Zealand Banking Group, 6.9%; Wesfarmers, 4.1%; and CSL Ltd., 3.9%.
The iShares MSCI Australia ETF was launched on March 12, 1996. It has a 0.48% expense ratio.
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The fund’s top holdings include Commonwealth Bank of Australia, 11.3%; Westpac Banking Corp., 8.6%; National Australia Bank, 7.2%; BHP Billiton, 7.2%; Australia and New Zealand Banking Group, 6.9%; Wesfarmers, 4.1%; and CSL Ltd., 3.9%.
The iShares MSCI Australia ETF was launched on March 12, 1996. It has a 0.48% expense ratio.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $34.71 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange.
The fund’s top holdings are Enersis SA (electricity), 10.5%; Empresas Copec SA (conglomerate), 8.6%; Empresa Nacional de Electricidad (electricity), 7.8%; Empresas CMPC (pulp and paper), 6.4%; S.A.C.I. Falabella (retail), 6.3%; Banco Santander Chile (banking), 6.0%; Banco de Chile, 5.0%; Colbun SA (utility), 4.4%; Cencosud SA (retailer), 4.2%; and LATAM Airlines, 3.4%.
The ETF’s industry breakdown consists of Utilities, 30.7%; Financials, 19.3%; Materials, 12.3%; Consumer Staples, 9.4%; Energy, 8.4%; Consumer Discretionary, 7.8%; Industrials, 6.8%; Telecommunications, 2.6%; and Information Technology, 2.0%.
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The fund’s top holdings are Enersis SA (electricity), 10.5%; Empresas Copec SA (conglomerate), 8.6%; Empresa Nacional de Electricidad (electricity), 7.8%; Empresas CMPC (pulp and paper), 6.4%; S.A.C.I. Falabella (retail), 6.3%; Banco Santander Chile (banking), 6.0%; Banco de Chile, 5.0%; Colbun SA (utility), 4.4%; Cencosud SA (retailer), 4.2%; and LATAM Airlines, 3.4%.
The ETF’s industry breakdown consists of Utilities, 30.7%; Financials, 19.3%; Materials, 12.3%; Consumer Staples, 9.4%; Energy, 8.4%; Consumer Discretionary, 7.8%; Industrials, 6.8%; Telecommunications, 2.6%; and Information Technology, 2.0%.
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ISHARES MSCI GERMANY FUND $26.05 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.
The ETF’s top holdings are Bayer (diversified chemicals), 10.1%; Daimler (autos), 7.1%; Siemens (engineering conglomerate), 7.1%; BASF (chemicals), 6.7%; Allianz (insurance), 6.5%; SAP (software), 6.0%; Deutsche Telekom, 4.9%; Deutsche Bank AG, 3.7%; Linde AG (industrial gases), 2.9%; Munich Reinsurance, 2.9%; Volkswagen AG, 2.8%; BMW AG, 2.8%; Fresenius (health care), 2.4%; and Deutsche Post, 2.4%.
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