manulife financial

Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, the long-term outlook is for higher stock prices.

One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio.

ETFs trade on stock exchanges, just like stocks....

iShares S&P/TSX Capped Financials Index Fund, $22.71, symbol XFN on Toronto (Shares outstanding: 35.6 million; Market cap: $808.5 million; 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 25 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 3.5%. The iShares S&P/TSX Capped Financials Index Fund’s top holdings are Royal Bank at 20.5%; TD Bank, 18.7%; Bank of Nova Scotia, 15.6%; Bank of Montreal, 9.5%; CIBC, 7.8%; Manulife Financial, 5.5%; Sun Life Financial, 3.6%; National Bank, 3.1%; Power Corporation, 2.1%; and Intact Financial, 2.0%....

Aston Hill VIP Income Fund, $8.70, symbol VIP.UN on Toronto (Shares outstanding: 36.0 million; Market cap: $313.2 million; www.astonhill.ca), is a closed-end fund that holds a portfolio of mostly Canadian stocks, as well as bonds and some U.S. stocks. The fund used to be called the Brompton VIP Income Fund. The Aston Hill VIP Income Fund first sold units to the public at $10 and began trading on Toronto in February 2002. Manulife Asset Management, a division of Manulife Financial, is the fund’s investment manager. The fund’s management fees are 0.85% per year. The units yields 9.7%....

ISHARES S&P/TSX 60 INDEX FUND $17.91 (Toronto symbol XIU; buy or sell through brokers; 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, the fund holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 6.9%; TD Bank, 6.4%; Bank of Nova Scotia, 5.2%; Suncor Energy, 5.0%; Barrick Gold, 4.5%; Canadian Natural Resources, 4.0%; Potash Corp., 3.7%; Goldcorp, 3.6%; Bank of Montreal, 3.4%; CN Railway, 3.1%; BCE Inc., 2.9%; CIBC, 2.8%; Enbridge, 2.7%; TransCanada Corp., 2.7%; Cenovus Energy, 2.5%; and Manulife Financial, 1.9%.

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You may find that exchange-traded funds (ETFs) have a place in your portfolio. Unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to withdraw. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. They have another advantage. Since shares are only added or removed when the underlying index changes, there’s a low turnover. That means you aren’t faced with the capital gains bills generated by the yearly distributions most mutual funds pay out to their unitholders....

Exchange traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

ISHARES S&P/TSX 60 INDEX FUND $16.56 (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. The index’s top holdings are Royal Bank, 6.7%; TD Bank, 6.4%; Bank of Nova Scotia, 5.5%; Barrick Gold, 4.8%; Suncor Energy, 4.1%; Potash Corp., 3.9%; Goldcorp, 3.8%; Bank of Montreal, 3.7%; Canadian Natural Resources, 3.2%; CN Railway, 3.2%; BCE Inc., 3.0%, TransCanada Corp., 2.9%, CIBC, 2.9%; Enbridge, 2.6%; Cenovus Energy, 2.3% and Manulife Financial, 2.1%....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders. Below, we update our advice on six ETFs — five buys and one we don’t recommend....

We place a lot of importance on investment quality. We assign one of our six TSINetwork Investment Quality Ratings to every stock we recommend. We base these six ratings on a total of nine key factors. Many of the factors are widely recognized as investments quality hallmarks, such as a long-term record of earnings and a long-term record of dividends. Others are less widely followed, such as a company’s ability to profit from secular trends. Secular trends go far beyond mere business cycles. They reflect ongoing changes in the world. One key secular trend today is the fact that vast numbers of workers in emerging markets are pole-vaulting into the middle class. This opens up great opportunities for many of our recommendations in the consumer area, such as Tupperware, Kraft and many others. These companies can take the products and procedures they developed and perfected in the west, and put them to work in China, India and other emerging markets, with little additional development cost. Fertilizer companies can also profit from this secular trend. When poor people begin making more money, one of the first things they do is improve their diet. They want more and better food, and more meat in particular. This pattern will fuel growth in the fertilizer business for years if not decades to come....

iShares S&P/TSX Capped Financials Index Fund, $20.99, symbol XFN on Toronto (Shares outstanding: 38.9 million; Market cap: $816.5 million; 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 3.2%. The fund’s top holdings are Royal Bank of Canada at 18.6%; TD Bank, 18.4%; Bank of Nova Scotia, 15.5%; Bank of Montreal, 10.2%; CIBC, 8.0%; Manulife Financial, 6.2%; Sun Life Financial, 4.0%; National Bank, 3.1%; Power Corporation, 2.1%; and Fairfax Financial Holdings, 2.1%....