etf
An ETF (Exchange-Traded Fund) is an investment fund that holds a collection of underlying assets, such as stocks or bonds, in a single pooled vehicle. ETFs allow investors to purchase a variety of different securities at once, providing greater diversification compared to owning individual assets. They are traded on stock exchanges like regular stocks, allowing for intraday trading at market prices. ETFs typically have lower fees than mutual funds and often passively track an index or sector, making them a popular choice for investors seeking a cost-effective way to invest in a diversified portfolio.
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Today, we look at a hedged ETF, a BMO dividend fund that Pat McKeough was asked to evaluate by a Member of his Inner Circle....
PowerShares Dynamic Healthcare Sector Portfolio ETF, $60.44, symbol PTH on New York (Units outstanding: 4.0 million; Market cap: $241.9 million; www.invescopowershares.com), holds 48 U.S. health care stocks. Its top holdings are Regeneron Pharmaceuticals, Allergan plc, Cooper Cos., Cigna Corp., Medivation Inc., Illumina Inc., Incyte Corp., HCA Holdings, Humana and Sarepta Therapeutics. The fund has a 0.60% MER. PowerShares Dynamic Healthcare Sector Portfolio ETF is okay to hold....
BMO US Dividend Hedged to CAD ETF, $17.36, symbol ZUD on Toronto (Units outstanding: 5.3 million; Market cap: $92.0 million; www.etfs.bmo.com), holds U.S. stocks that have maintained or increased their dividend rates over the last three years and meet other criteria, including yield and dividend payout ratio. The fund’s managers rebalance the underlying portfolio in June and December. Top holdings are Philip Morris International, ONEOK Inc., Garmin, Noble Corp., Verizon Communications, Mattel, Williams Cos., Gamestop, McDonald’s and Darden Restaurants. The ETF is hedged against movements of foreign currencies against the Canadian dollar. Its value rises and falls solely with the stocks in its portfolio, so it wouldn’t give you any diversification through foreign currency exposure....
ISHARES CDN REIT SECTOR INDEX FUND $15.79 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index.
iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.1%.
The ETF’s largest holding is RioCan REIT at 20.1%, followed by H&R REIT (14.6%), Smart REIT (7.9%), Canadian Apartment Properties REIT (7.9%), Canadian REIT (7.3%), Allied Properties REIT (6.7%), Cominar REIT (6.5%), Dream Office REIT (6.1%), Boardwalk REIT (5.3%), Granite REIT (4.5%), Artis REIT (4.3%), Dream Global REIT (2.5%), Crombie REIT (2.3%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.6%).
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iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.1%.
The ETF’s largest holding is RioCan REIT at 20.1%, followed by H&R REIT (14.6%), Smart REIT (7.9%), Canadian Apartment Properties REIT (7.9%), Canadian REIT (7.3%), Allied Properties REIT (6.7%), Cominar REIT (6.5%), Dream Office REIT (6.1%), Boardwalk REIT (5.3%), Granite REIT (4.5%), Artis REIT (4.3%), Dream Global REIT (2.5%), Crombie REIT (2.3%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.6%).
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VANGUARD FTSE EMERGING MARKETS ETF $37.85 (New York symbol VWO; buy or sell through brokers) aims to track the Financial Times Stock Exchange (FTSE) Emerging Index, which is made up of common stocks of companies in developing countries. The fund’s MER is just 0.15%.
The Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), Tencent Holdings (China: Internet), China Mobile, China Construction Bank, Naspers Ltd. (South Africa: media), Industrial & Commercial Bank of China, Bank of China, Hon Hai Precision Industry (Taiwan: electronics), Petroleo Brasileiro (Brazil: oil and gas) and Ping An Insurance Group of China.
The $65.4-billion fund’s breakdown by country is as follows: China, 28.4%; Taiwan, 14.2%; India, 11.6%; South Africa, 9.3%; Brazil, 8.8%; Mexico, 5.1%; Russia, 4.4%; Malaysia, 4.1%; Thailand, 2.6%; Indonesia, 2.4%; Philippines, 1.8%; Poland, 1.7%; Turkey, 1.7%; and others, 3.9%.
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The Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), Tencent Holdings (China: Internet), China Mobile, China Construction Bank, Naspers Ltd. (South Africa: media), Industrial & Commercial Bank of China, Bank of China, Hon Hai Precision Industry (Taiwan: electronics), Petroleo Brasileiro (Brazil: oil and gas) and Ping An Insurance Group of China.
The $65.4-billion fund’s breakdown by country is as follows: China, 28.4%; Taiwan, 14.2%; India, 11.6%; South Africa, 9.3%; Brazil, 8.8%; Mexico, 5.1%; Russia, 4.4%; Malaysia, 4.1%; Thailand, 2.6%; Indonesia, 2.4%; Philippines, 1.8%; Poland, 1.7%; Turkey, 1.7%; and others, 3.9%.
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VANGUARD GROWTH ETF $110.34 (New York symbol VUG; buy or sell through brokers) aims to track the Center for Research in Security Prices (CRSP) U.S. Large Cap Growth Index, a broadly diversified index that mainly consists of large U.S. companies. The fund’s MER is just 0.09%.
The $48.1-billion Vanguard Growth ETF’s top holdings are Apple, Google, Coca-Cola, Facebook, Oracle, Home Depot, Comcast, Amazon.com, Gilead Sciences and Walt Disney Co.
The fund’s breakdown by industry is as follows: Technology, 23.9%; Consumer Services, 21.8%; Health Care, 14.6%; Financials, 12.1%; Industrials, 11.5%; Consumer Goods, 9.3%; Oil and Gas, 5.0%; Materials, 1.4%; and Telecom Services, 0.3%.
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The $48.1-billion Vanguard Growth ETF’s top holdings are Apple, Google, Coca-Cola, Facebook, Oracle, Home Depot, Comcast, Amazon.com, Gilead Sciences and Walt Disney Co.
The fund’s breakdown by industry is as follows: Technology, 23.9%; Consumer Services, 21.8%; Health Care, 14.6%; Financials, 12.1%; Industrials, 11.5%; Consumer Goods, 9.3%; Oil and Gas, 5.0%; Materials, 1.4%; and Telecom Services, 0.3%.
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Because it’s always important to diversify beyond Canada, a look at two Vanguard ETFs that offer a low-fee way to achieve diversification.
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....
ISHARES CDN REIT SECTOR INDEX FUND $15.79 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.1%. The ETF’s largest holding is RioCan REIT at 20.1%, followed by H&R REIT (14.6%), Smart REIT (7.9%), Canadian Apartment Properties REIT (7.9%), Canadian REIT (7.3%), Allied Properties REIT (6.7%), Cominar REIT (6.5%), Dream Office REIT (6.1%), Boardwalk REIT (5.3%), Granite REIT (4.5%), Artis REIT (4.3%), Dream Global REIT (2.5%), Crombie REIT (2.3%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.6%)....
Two questions—on Greek recovery and a tech ETF—bring our response on the risks and rewards of profiting from market trends through ETFs.