ishares

iShares S&P/TSX Capped Energy Index Fund, $21.11, symbol XEG on Toronto (Shares outstanding: 50.5 million; Market cap: $1.1 billion; 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 0.55%. It yields 1.4%. iShares S&P/TSX Capped Energy Index Fund’s top 10 holdings are Suncor Energy, 18.5%; Canadian Natural Resources, 13.5%; Cenovus Energy, 7.5%; Encana Corp., 6.8%; Talisman Energy, 6.4%; Canadian Oil Sands Trust, 4.4%; Nexen, 3.7%; Imperial Oil, 3.5%; Crescent Point Energy, 3.4%; and Penn West Energy Trust, 3.3%. We continue to think most investors are better off investing in individual companies as part of a well-balanced and diversified portfolio, rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level – 25% in the case of the iShares S&P/TSX Capped Energy Index Fund – can cut your return by reducing the contribution from top performers if they soar to make up more that the capped limit....

Investors continue to be concerned about high debt levels in many European countries. That’s especially true of the so-called PIIGS countries (Portugal, Italy, Ireland, Greece and Spain). Portugal recently accepted a 78-billion euro ($107 billion Canadian) bailout package from the European Union and International Monetary Fund. That’s in addition to previous bailouts for Ireland (67 billion euros) and Greece (110 billion euros). Worries persist that Greece, in particular, may not be able to cut its spending enough to avoid defaulting on its debt.

Why we recommend that you focus on Canadian stocks—and limit your European holdings

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iShares S&P/TSX Capped Financials Index Fund, $24.56, symbol XFN on Toronto (Shares outstanding: 42.4 million; Market cap: $1.0 billion; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Financials Index, which is made up of the largest-capitalization financial-sector stocks on the Toronto exchange. The fund currently holds 26 stocks. The weight of any one company is capped at 25% of the index’s market capitalization, regardless of how big the stock is in relation to the index. The fund’s MER is 0.55%. It yields 5.0%. The fund’s top holdings are Royal Bank of Canada at 20.5%; TD Bank, 17.3%; Bank of Nova Scotia, 14.9%; Bank of Montreal, 8.5%; CIBC, 7.7%; Manulife Financial, 7.3%; Sun Life Financial, 4.13%; National Bank, 3.1%; Power Corporation, 2.3% and Fairfax Financial Holdings, 1.8%....

Gold hit an all-time high of $1,577.50 U.S. an ounce in April, before moving down to today’s price of $1,527.50. Silver jumped to an all-time high of $49.76 U.S. before retreating sharply to $39.94. Gold and silver could well regain their highs and move up even further over the longer term, although they will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic instability will weaken key currencies, such as the U.S. dollar. If you want to hold a number of gold or silver stocks, these two exchange-traded funds offer top-quality global miners and low fees....

During the election campaign, Prime Minister Stephen Harper promised to double the annual contribution limit for your tax-free savings account (TFSA) after the federal budget is balanced, which the government expects to do by 2015. (I recently wrote a special bulletin about how the election results could affect your investments. Click here to read this special bulletin and add your comments.) The federal government first made TFSAs available to investors in January 2009. Your TFSA lets you earn investment income — including interest, dividends and capital gains — tax free. You could contribute $5,000 in 2009 to start your tax free savings account....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “The top 3 ways to earn higher profits in world stock market investing” High-quality foreign stocks are a great way to diversify your portfolio. Moreover, many fast-growing markets, like China and India, have positive outlooks. That’s because their people are generally younger than North Americans, and rising incomes are helping more of them advance into the middle class....

Japan’s gross national product (GNP) will fall this year in the wake of the earthquake and tsunami. The disaster is relatively far from Tokyo, Japan’s economic centre. However, it has disrupted the country’s electricity grid, as well as transportation and communications networks. That will hurt most segments of the economy. Japan’s economy was forecast to grow by 1.4% this year, but it will likely contract in the second quarter due to the disaster. That will likely push down Japan’s growth rate to 1% or less for the year....

Exchange-traded funds (ETFs) offer very low management fees. As well, the best ETFs offer well-diversified, tax-efficient portfolios of high-quality stocks. But the quality of ETFs varies widely. All too many exist to tap into popular, but risky, themes and fads. So you need to be highly selective with your ETF holdings. Here are six foreign ETFs we like:...

ISHARES AUSTRALIA INDEX FUND $26.54 (New York symbol EWA; buy or sell through brokers), is an ETF that holds the 74 largest Australian stocks. The fund’s top holdings include BHP Billiton, 15.9%; Commonwealth Bank of Australia, 8.4%; Westpac Banking Corp., 7.2%; Australia and New Zealand Banking Group, 6.3%; National Australia Bank, 5.6%; Rio Tinto, 3.8%; Wesfarmers, 3.4%; Woolworths, 3.4%; Newcrest Mining, 3.0%; and Woodside Petroleum, 2.7%. Australia benefits from its stable banking and political systems. It is also rich in natural resources, and its exports are in high demand in nearby Asian markets....

ISHARES S&P/TSX 60 INDEX FUND $20.44 (Toronto symbol XIU; buy or sell through a broker; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets. Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, it holds a few we wouldn’t include, such as Yellow Media Inc. The index’s top holdings are: Royal Bank, 6.7%; Suncor Energy, 5.9%; TD Bank, 5.8%; Bank of Nova Scotia, 5.3%; Canadian Natural Resources, 4.4%; Barrick Gold, 4.3%; Potash Corp., 4.2%; Goldcorp, 3.1%; Bank of Montreal, 2.9%; CN Railway, 2.7%; Manulife Financial, 2.7%; CIBC, 2.7%; Research in Motion, 2.5%; and Cenovus Energy, 2.3%....