stock exchange

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....

Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in the U.S. stocks we recommend in Wall Street Stock Forecaster. These investments can provide all the foreign exposure most investors need. If you do want to add more foreign content, you could buy individual stocks. But for most investors, directly investing in foreign stocks can add an extra layer of risk and expense. As well, timely and accurate information about overseas companies is not always available, and securities regulations vary widely between countries. It can also be hard for your broker to buy shares on foreign markets without paying a premium. Tax rules and restrictions on transferring funds between nations add further uncertainty and cost. We think one of the best ways to invest in foreign (non-U.S.) markets is through exchange traded funds (ETFs). You could add some of these ETFs in reasonable quantities: perhaps 10% of your holdings if you’re a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

Rambler Metals & Mining plc, $0.45, symbol RAB on Toronto (Shares outstanding: 142.4 million; Market cap: $64.1 million; www.ramblermines.com), is a U.K.-based mining and development company. The stock is also listed on the AIM market in the U.K. (AIM is the London Stock Exchange’s international market for smaller companies.) In 2012, Rambler brought its first mine into commercial production—the 100%-owned Ming copper-gold-silver mine. The Ming mine is located on the Baie Verte peninsula in Newfoundland. The company shipped its first load of concentrate from the mine through its Goodyear Cover deep-water port facility in November 2012. Rambler also has interests in other early-stage properties, as well as small, former-producing mines, in the general area of the Ming mine....

ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $51.39 (New York Exchange 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 are mainly traded on the Santiago Stock Exchange.

The fund’s top holdings are S.A.C.I. Falabella (retail), 9.2%; Empresas Copec SA (conglomerate), 8.5%; Enersis AS (electricity), 8.3%; Cencosud SA (retailer), 6.7%; Empresa Nacional de Electricidad (electricity), 5.9%; Banco Santander Chile (banking), 5.5%; LATAM Airlines SA, 5.1%; Empresas CMPC (pulp and paper), 4.4%; Banco de Chile, 4.2%; and Quimica y Minera de Chile (mining), 3.7%.

The fund’s industry breakdown is: Utilities, 24.4%; Financials, 17.9%; Consumer Staples, 13.3%; Materials, 11.2%; Consumer Discretionary, 10.9%; Energy, 8.5%; Industrials, 8.2%; Telecommunications, 3.0%; and Information Technology, 2.1%.
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We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus.

The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks.

Here are six international ETFs we like:

ISHARES MSCI JAPAN INDEX FUND $11.81 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.

The ETF’s top holdings include Toyota, 6.6%; Mitsubishi UFJ Financial, 3.1%; Sumitomo Mitsui Financial, 2.4%; Softbank Corp., 2.4%; Honda Motor, 2.3%; Mizuho Financial Group, 1.9%; Japan Tobacco, 1.5%; Takeda Pharmaceutical, 1.4%; Canon, 1.3%; and Hitachi, 1.2%.

The fund’s industry breakdown is as follows: Financials, 21.4%; Consumer Discretionary, 21.1%; Industrials, 19.6%; Information Technology, 9.6%; Consumer Staples, 6.3%; Materials, 6.2%; Health Care, 5.9%; Telecommunication Services, 5.1%; Utilities, 2.8%; and Energy, 1.2%.

iShares MSCI Japan Index Fund was launched on March 12, 1996....

Royal Canadian Mint Gold Reserves Exchange Traded Receipts (ETRs), $14.00, symbol MNT on Toronto (Receipts outstanding: 30.9 million; Market cap: $455.5 million; www.reserves.mint.ca), are receipts issued by the Royal Canadian Mint (the Crown corporation responsible for the minting and distribution of Canada’s circulation coins) that let investors own gold bullion stored in the Mint’s vaults. The value of these ETRs varies with the price of gold. Investors can trade their ETRs on the stock exchange, or once a month they can redeem them for gold coins or bullion with a minimum purity of 99.99%. This requires a minimum of 10,000 ETRs plus redemption and fabrication fees for the gold coins or bars. Instead of physical gold, investors can choose to redeem their units for cash equal to 95% of the lesser of: a) the ETR price on the redemption date; or b) the volume-weighted average price of the ETRs for five trading days prior to and including the redemption date....

ROYAL BANK OF CANADA $61 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $85.4 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is part of a consortium that plans to set up a new Canadian stock exchange. Other investors include pension funds and mutual fund company IGM Financial (see page 76).

A new company called Aequitas Innovations Inc. will operate this exchange, which will be mainly aimed at institutional investors. It will also limit high-frequency computer trading, which can distort stock prices. Aequitas plans to begin operating in late 2014.

IGM and Royal did not say how much they are contributing to this new business or how much they will own. Still, this new exchange aims to capture 20% of Canada’s stock-trading volumes over the next few years.
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AASTRA TECHNOLOGIES, $23.65, symbol AAH on Toronto, jumped this week after the company reported improved sales and earnings in the latest quarter—and announced a $7.20-a-share special dividend. The company develops and markets products and systems for accessing communication networks, including the Internet. Its technology is centred around business telephone systems and includes products that integrate land lines and mobile phones. In the three months ended June 30, 2013, Aastra’s sales rose 2.5%, to $150.8 million from $147.1 million a year earlier, as the company’s key markets in Germany and France showed significant improvement. Earnings per share jumped to $0.21 from $0.13....

ROYAL BANK OF CANADA $61(Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $85.4 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is part of a consortium that plans to set up a new Canadian stock exchange....

ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $56.48 (New York Exchange 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 are mainly traded on the Santiago Stock Exchange.

The fund’s top holdings are Enersis AS (electricity), 8.0%; Empresas Copec SA (conglomerate), 7.4%; Cencosud SA (retailer), 7.2%; S.A.C.I. Falabella (retail), 6.6%; Empresa Nacional de Electricidad (electricity), 6.2%; LATAM Airlines SA, 5.7%; Quimica y Minera de Chile (mining), 5.0%; Banco Santander Chile (banking), 4.4%; and Empresas CMPC (pulp and paper), 3.9%.

The fund’s industry breakdown is: Utilities, 24.8%; Financials, 17.2%; Consumer Staples, 13.6%; Materials, 12.6%; Industrials, 9.3%; Consumer Discretionary, 8.3%; Energy, 7.4%; Telecommunications, 3.2%; and Information Technology, 2.5%.
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