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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The Swiss watch industry has enjoyed uncontested domination of the global market for more than two decades. Despite higher costs and high wages, Switzerland is the home of most of the largest companies in this industry. That makes it the largest exporter of watches in the world.
The country is the world’s largest watch exporter....
Switzerland has a stable, export-oriented economy, which regularly ranks among the most competitive in the world. In addition, it is home to some of the world’s top-performing and best-known companies.
Here is one ETF that provides exposure to leading Swiss publicly traded companies.
ISHARES MSCI SWITZERLAND ETF $34.57 (New York symbol EWL; TSI Network ETF Rating: Conservative; Market cap: $902 million) tracks the performance of the the country’s top big-cap and mid-cap stocks.
Health-care companies account for 31.1% of its assets, while Consumer Defensive (22.0%), Financial Services (19.3%), Basic Materials (9.3%), and Industrials (9.2%) are other key segments.
The ETF holds a portfolio of 38 stocks; the top 10 holdings make up a sizeable 68.5% of its assets....
In a comprehensive 2018 study of the best-performing emerging economies, the McKinsey Global Institute identified 18 nations that have achieved at least 3.5% GDP growth over the past 50 years, or 5% over the past 20 years.
These top-performing economies share two common characteristics: A pro-growth agenda, adopted across the public and private sectors and aimed at boosting productivity, investment, income, and demand; and the presence of large, competitive local firms that propel the domestic economies and, in many cases, become globally competitive....
Some ETFs promote a “scientific” strategy designed to cut their risk without cutting their gains.
Computer modelling is such an approach sound. In our view, though, it’s likely to detract from long-term returns. That’s what happens with many funds that use a so-called “black box” to pick stocks, even though it may work for a while, or in retrospect....
Brazil’s economy continues its slow recovery after a major recession in 2015-2016. That’s when the economy contracted 7% over that two-year period. Ongoing turmoil—the impeachment of president Dilma Rousseff in May 2016, corruption scandals for a major corporation, volatile commodity prices, and high inflation—kept the pressure on financial markets....
ISHARES CANADIAN FINANCIAL MONTHLY INCOME ETF $7.04 (Toronto symbol FIE; TSINetwork ETF Rating: Conservative; Market cap: $629.9 million) invests primarily in the common shares, preferred shares, corporate bonds and income trusts of firms in the Canadian finance sector.
The fund has an MER of 0.93%, which is high by ETF standards....
Many emerging markets seen slower growth lately. That’s because a growing U.S. economy and rising interest rates have pushed up the U.S. dollar. This typically results in capital flowing to the U.S. from emerging markets. That hurts investments in those economies....
Top holdings for the $6.4 billion fund are Tencent (Internet services), 9.0%; China Construction Bank, 9.0%; Industrial & Commercial Bank, 7.3%; China Mobile, 6.6%; Ping An Insurance, 6.3%; Bank of China, 4.6%; CNOOC (oil), 4.0%; China Petroleum, 3.5%; China Life (insurance), 3.7% and China Merchants Bank, 3.0%.
China still has strong growth potential....
Generally speaking, Canadians are blocked from buying mutual funds that are registered in the U.S....
The fund has an MER of 0.61%, and it currently yields a...