index etf

Vanguard Health Care ETF, $128.42, symbol VHT on New York (Units outstanding: 33.7 million; Market cap: $4.3 billion; www.vanguard.com), holds 48 U.S. health care stocks. Its top holdings are Johnson & Johnson, Pfizer, Merck & Co., Gilead Sciences, Amgen, AbbVie, UnitedHealth Group, Bristol-Myers Squibb, Celgene and Biogen Idec. The fund has a low 0.12% MER and a 1.0% dividend yield....

ISHARES CANADIAN SELECT DIVIDEND INDEX ETF $24.27 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highestyielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of the ETF’s assets. The fund’s MER is 0.55%, and it yields 3.9%.

The fund’s top holdings are CIBC, 7.3%; TD Bank, 6.8%, National Bank, 6.7%; Bank of Montreal, 6.1%; Royal Bank, 5.5%; BCE, 4.8%; Ag Growth International, 4.6%; Bank of Nova Scotia, 4.5%; Bonterra Energy, 4.2%; and Laurentian Bank of Canada, 3.9%.

The ETF holds 55.2% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.

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Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. 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....

iShares S&P/TSX Capped Energy Index ETF, $12.97, symbol XEG on Toronto (Shares outstanding: 70.3 million; Market cap: $911.8 million; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.60%, and it yields 1.8%. The ETF’s top 10 holdings are Suncor Energy, 21.3%; Canadian Natural Resources, 15.6%; Cenovus Energy, 7.2%; Imperial Oil, 5.1%; Crescent Point Energy, 4.9%; Encana Corp., 4.7%; Talisman Energy, 3.5%; ARC Resources, 3.3%; Husky Energy, 3.2%; and Tourmaline Oil, 2.6%. We still think most investors are better off investing in individual companies as part of a well-balanced, diversified portfolio rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level can cut your return by reducing top performers’ contributions if they rise to make up more than the capped limit....

Mutual funds are okay to hold if you own them, but we have moved away from recommending them in favour of lower-fee exchange traded funds (ETFs). We feel most fund investors should shift into ETFs wherever possible. (That why we’ve shifted our focus to ETFs in Canadian Wealth Advisor.) The Vanguard FTSE All-World ex-Canada Index ETF, $24.53, symbol VXC on Toronto (Units outstanding: 670,000; Market cap: $16.4 million; www.vanguardcanada.ca), aims to track the FTSE All-World ex-Canada Index, which is a broad global equity index that focuses on large- and mid-capitalization stocks in emerging and developed markets, excluding Canada. To do this, the ETF mainly invests in units of the U.S.-based Vanguard Large-Cap ETF, as well as the Vanguard FTSE Europe ETF, Vanguard FTSE Pacific ETF and Vanguard FTSE Emerging Markets ETF....

The Direxion iBillionaire Index ETF, $25.40, symbol IBLN on New York (Units outstanding: 1.4 million; Market cap: $35.6 million; www.direxioninvestments.com), is designed to profit from copying the moves of billionaire investors, such as Warren Buffett, Carl Icahn, Daniel Loeb and David Tepper. The ETF began trading on August 1, 2014. Its MER is 0.65%—lower than most mutual funds, but high for an ETF. The Direxion iBillionaire Index ETF selects up to 10 billionaire investors from a pool of 50, based on their personal net worth, source of wealth, stock turnover and performance over time. It then selects stocks from their investment firms or hedge funds....

Market Vectors Africa Index ETF, $32.10, symbol AFK on New York (Units outstanding: 4.0 million; Market cap: $128.4 million; www.vaneck.com), aims to match the performance of the Market Vectors GDP Africa Index. This index tracks the performance of the largest and most liquid companies in Africa. A country’s weighting in the index is determined by the size of its gross domestic product. The ETF’s top holdings are Commercial International Bank Egypt SAE, Guaranty Trust Bank plc (Nigeria: banking), Acergy SA (U.K.: offshore oilfield services), Zenith Bank plc (Nigeria: banking), Orascom Telecom Holding SAE (Egypt: telecom), Nigerian Breweries plc, Naspers Ltd. (South Africa: media and Internet), Talaast Moustafa Group (Egypt: real estate), Attijarwafa Bank (Morocco: banking) and Tullow plc (U.K.: oil and gas)....

BMO S&P/TSX Laddered Preferred Share Index ETF, $14.48, symbol ZPR on Toronto (Units outstanding: 70.1 million; Market cap: $1.0 billion; www.etfs.bmo.com), holds Canadian floating-rate preferred shares. Issuers include Bank of Montreal, Enbridge, BCE, TransCanada and Canadian Utilities. The ETF’s MER is 0.45%. It currently yields 4.3%. Note that the dividends you receive from this fund do benefit from the Canadian dividend tax credit. Floating-rate preferred shares pay dividends that fluctuate with changes in interest rates. The dividend rate may range from 50% to 100% of (usually) the prime bank rate. As interest rates rise, so do floating-preferred dividend yields....

From time to time, companies set up one or more of their divisions or subsidiaries as an independent firm, then hand out shares in that company to their own investors as a special dividend, or “spinoff.” You can contrast a spinoff with a new stock issue. That’s when a company (often a newly created or junior company) issues new stock to sell to the public. The two situations are like two sides of a coin—one favourable to investors, the other unfavourable. The motivations of the companies are nearly opposite. Companies sell new issues to the public when they feel it’s a good time to sell. That may be, and often isn’t, a good time for you to buy. In addition, the underwriting brokerage firms try to spark publicity about the new issue, and they pay extra commission (as much as double the regular rates) to spur their salespeople to sell the new issue to their clients. This tends to create a high-water mark in the price of the new issue. Unless the new company can follow up with business success, the price of the new issue may languish for months or years....

iShares 1-5 Year Laddered Corporate Bond Index ETF, $19.82, symbol CBO on Toronto (Units outstanding: 93.1 million; Market cap: $1.8 billion; ca.ishares.com), invests in a portfolio of short-term bonds drawn from the DEX (formerly Scotia Capital) Bond Index. The ETF first sold units to the public at $20 each and began trading on Toronto on February 25, 2009. Its MER is 0.28%, and it currently yields 4.2%....