ETFs
Exchange traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management ETF fees. They are also very liquid.
Investors use ETFs in a variety of ways, and some investors work only with ETFs and no other type of investment in portfolio creation.
An amazing aspect of ETFs is their diversity. Some investors may create an entire portfolio solely from a few well-diversified ETFs.
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.
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 taxes generated by the yearly distributions most conventional mutual funds pay out to unitholders.
ETFs have a place in every investor’s portfolio, at TSI Network we also recommend using our three-part Successful Investor strategy:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
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ETFs Library Archives
You Can See Our Exchange-Traded Funds Portfolio For February 2026 Here.
ETFs in brief
Exchange-traded funds 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 of that index or sub-index and will allow the fund to “track” its performance.
The MER (Management Expense Ratio) is generally much lower on traditional ETFs than on conventional mutual funds. That’s because most traditional ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest so as to mirror the holdings and performance of a particular stock-market index.
ETFs practice this “passive” fund management style, in contrast to the “active” management that conventional mutual funds traditionally provide at much higher costs.
ETFs in brief
Exchange-traded funds 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 of that index or sub-index and will allow the fund to “track” its performance.
The MER (Management Expense Ratio) is generally much lower on traditional ETFs than on conventional mutual funds. That’s because most traditional ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest so as to mirror the holdings and performance of a particular stock-market index.
ETFs practice this “passive” fund management style, in contrast to the “active” management that conventional mutual funds traditionally provide at much higher costs.
Here’s a more in-depth look at the ETFs we looked at on pages 11 to 14 and their strategies.
A focus on dividends will pays off
Shares Core MSCI Canadian Quality Dividend ETF (Toronto symbol XDIV)
Stocks involved in artificial intelligence have dominated the investing landscape over the past two years, while dividend-paying companies have had less momentum. Nonetheless, it pays to not forget the attractions of high-quality dividend-paying stocks. Consider the following:
A focus on dividends will pays off
Shares Core MSCI Canadian Quality Dividend ETF (Toronto symbol XDIV)
Stocks involved in artificial intelligence have dominated the investing landscape over the past two years, while dividend-paying companies have had less momentum. Nonetheless, it pays to not forget the attractions of high-quality dividend-paying stocks. Consider the following:
This month, we highlight two new funds from asset manager Global X. The first claims to be a world first—a covered call strategy on copper producers. The second is an ETF that holds Hong Kong-listed Chinese technology companies.
Global X Copper Producer Equity Covered Call ETF $24.26 (Toronto symbol CPCC) invests in an ETF that holds copper producers, as well investing in individual copper miners.
The ETF manager then sells call options against the portfolio holdings in order to generate additional income for the ETF.
Global X Copper Producer Equity Covered Call ETF $24.26 (Toronto symbol CPCC) invests in an ETF that holds copper producers, as well investing in individual copper miners.
The ETF manager then sells call options against the portfolio holdings in order to generate additional income for the ETF.
The two top holdings in the iShares MSCI South Korea ETF, Samsung Electronics and SK Hynix, are both among the top global manufacturers of memory semiconductors, although Samsung is also a major player in the mobile phone and consumer electronics market. Over the past five years, the stock price performances of the two companies were vastly different, with Hynix up by 394% compared to a 48% gain for Samsung.
Hynix has done well over the past five years, raising its revenue by 164% and its earnings per share by 638% while maintaining high profit margins—although the company did struggle in 2023 when semiconductor memory prices dropped sharply. The company’s success is mainly due to its dominant position in the high-bandwidth memory (HBM) market. That’s where Hynix has a global market share of about 70%, with Nvidia one of its key customers. The HBM chips are used in AI servers and are currently in demand, with high selling prices and profit margins.
Hynix has done well over the past five years, raising its revenue by 164% and its earnings per share by 638% while maintaining high profit margins—although the company did struggle in 2023 when semiconductor memory prices dropped sharply. The company’s success is mainly due to its dominant position in the high-bandwidth memory (HBM) market. That’s where Hynix has a global market share of about 70%, with Nvidia one of its key customers. The HBM chips are used in AI servers and are currently in demand, with high selling prices and profit margins.
When we last wrote about South Korea in late 2024, we concluded that there were excellent opportunities among high-quality South Korean companies. Since that time, our recommendation of the iShares MSCI South Korea ETF has gained a whopping 75.5% for our subscribers! Meanwhile, many of those same stocks still trade at attractive valuations. (For more on that, see box next page.)
Here is an ETF that provides exposure to the top South Korean publicly listed companies.
Here is an ETF that provides exposure to the top South Korean publicly listed companies.
One of the major benefits of exchange-traded funds is the lower and more transparent fees when compared to mutual funds.
The average cost in Canada for a passively managed mutual fund is between 0.50% and 0.90%, while actively managed mutual funds have MERs between 2.0% and 2.5% (Advisor-Class A Series). This compares to average MERs of passively managed ETFs of around 0.35% and actively managed ETFs of 0.90%.
Fees can significantly impact the total returns of an investment plan. Compare a fund that charges 2.0% per year to another that charges 0.25%. Both offer exposure to the same group of assets, say, global stocks. And let’s further assume that both funds see a return of 10% per year.
The average cost in Canada for a passively managed mutual fund is between 0.50% and 0.90%, while actively managed mutual funds have MERs between 2.0% and 2.5% (Advisor-Class A Series). This compares to average MERs of passively managed ETFs of around 0.35% and actively managed ETFs of 0.90%.
Fees can significantly impact the total returns of an investment plan. Compare a fund that charges 2.0% per year to another that charges 0.25%. Both offer exposure to the same group of assets, say, global stocks. And let’s further assume that both funds see a return of 10% per year.
Here are three more ETF investment ideas for 2026. See also the related Supplement on page 19 and 20 for more on the prospects for these types of funds.
INVESCO AEROSPACE & DEFENSE ETF $176.98 (New York symbol PPA; TSINetwork ETF Rating: Aggressive; Market cap: $6.9 billion) tracks the SPADE Defense Index. Qualifying stocks are included on an adjusted market value basis. The fund and the index are rebalanced and reconstituted quarterly.
Firms held in the portfolio include those that target markets such as naval vessels, military aircraft, armoured vehicles, drones and remotely piloted vehicles, missiles, secure communications, space systems, biometric screening systems, and military cybersecurity.
INVESCO AEROSPACE & DEFENSE ETF $176.98 (New York symbol PPA; TSINetwork ETF Rating: Aggressive; Market cap: $6.9 billion) tracks the SPADE Defense Index. Qualifying stocks are included on an adjusted market value basis. The fund and the index are rebalanced and reconstituted quarterly.
Firms held in the portfolio include those that target markets such as naval vessels, military aircraft, armoured vehicles, drones and remotely piloted vehicles, missiles, secure communications, space systems, biometric screening systems, and military cybersecurity.
BetaPro Natural Gas Leveraged Daily Bull ETF $12.25 (Toronto symbol HNU) aims to use a combination of derivatives and debt to offer daily returns that correspond to twice the daily gains (200%) of the BetaPro Natural Gas Rolling Futures Index.
If HNU is successful in meeting its investment objective, its price should gain (or lose) approximately twice that of the index’s rise.
The ETF launched in January 2008 and holds assets of $148 million. The MER is 1.38%; there are also trading costs that add 0.88% to the overall costs of the ETF. Together, these fees make for a high 2.26%.
If HNU is successful in meeting its investment objective, its price should gain (or lose) approximately twice that of the index’s rise.
The ETF launched in January 2008 and holds assets of $148 million. The MER is 1.38%; there are also trading costs that add 0.88% to the overall costs of the ETF. Together, these fees make for a high 2.26%.
VANGUARD INDUSTRIALS ETF $318.87 (New York symbol VIS; TSINetwork ETF Rating: Conservative; Market cap: $6.8 billion) invests in U.S. industrial companies. That includes stocks of companies that convert unfinished goods into finished durables used to manufacture other goods or to provide services. The ETF began trading on September 23, 2004. It charges a low MER of 0.09%; its dividend yield is 1.0%.
The highest-weighted stocks in the Vanguard U.S. Industrials ETF are General Electric (5.1%), Caterpillar (4.4%), RTX (3.8%), Uber Technologies (2.8%), GE Vernova (2.6%), Union Pacific (2.2%), Eaton Corp. (2.2%), Honeywell (2.0%), Boeing (2.0%), Deere & Co. (1.9%) and Parker-Hannifin (1.8%).
The highest-weighted stocks in the Vanguard U.S. Industrials ETF are General Electric (5.1%), Caterpillar (4.4%), RTX (3.8%), Uber Technologies (2.8%), GE Vernova (2.6%), Union Pacific (2.2%), Eaton Corp. (2.2%), Honeywell (2.0%), Boeing (2.0%), Deere & Co. (1.9%) and Parker-Hannifin (1.8%).
Here we highlight two ETF investment ideas for 2026. The Supplement on page 19 expands on their strategies and outlook.
ISHARES CORE MSCI CANADIAN QUALITY DIVIDEND INDEX ETF $37.46 (Toronto symbol XDIV; TSINetwork ETF Rating: Conservative; Market cap: $3.7 billion) tracks the MSCI Canada High Dividend Yield Index. The index includes Canadian companies with growing or steady dividends, solid balance sheets, and less volatile earnings. Stock weights are capped at 10% of the portfolio on the rebalancing dates.
The fund’s approach has a number of negatives for investors. It incurs ongoing brokerage charges as it rebalances its holdings. The approach also forces the ETF to sell off portions of stocks that are rising steadily—perhaps missing out on some of the stocks’ biggest gains.
ISHARES CORE MSCI CANADIAN QUALITY DIVIDEND INDEX ETF $37.46 (Toronto symbol XDIV; TSINetwork ETF Rating: Conservative; Market cap: $3.7 billion) tracks the MSCI Canada High Dividend Yield Index. The index includes Canadian companies with growing or steady dividends, solid balance sheets, and less volatile earnings. Stock weights are capped at 10% of the portfolio on the rebalancing dates.
The fund’s approach has a number of negatives for investors. It incurs ongoing brokerage charges as it rebalances its holdings. The approach also forces the ETF to sell off portions of stocks that are rising steadily—perhaps missing out on some of the stocks’ biggest gains.