ETFs - The Successful Investor Inc

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

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

ETFs

These ETFs aim to spot value

By definition, value stocks trade lower than their fundamentals suggest. They are perceived as undervalued, and have the potential to rise. When you look for stocks that are undervalued—or the ETFs that hold them— it’s best to focus on shares of quality companies with a consistent history of sales and earnings, as well as a strong hold on a growing clientele.

Here are two ETFs that aim to provide exposure to value stocks....

3 min read

Pat McKeough

ETFs

Tap into India’s potential

ISHARES INDIA 50 ETF $34.35 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) tracks the Nifty 50 index—the 50 largest, most liquid Indian securities. It began trading in November 2009.

The fund’s top holdings are Reliance Industries (conglomerate), 9.9%; HDFC Bank, 8.2%; Housing Development Finance, 7.5%; Infosys (information technology), 6.4%; ITC (conglomerate), 5.5%; ICICI Bank, 5.3%; Tata Consultancy (information technology), 4.7%; and Kotak Mahindra Bank, 3.9%....

1 min read

Pat McKeough

ETFs

Low yen boosts exports

ISHARES MSCI JAPAN INDEX FUND $54.18 (New York symbol EWJ; buy or sell through brokers; us.ishares.com) is an ETF that aims to match the return of the Morgan Stanley Capital International (MSCI) Japan Index.

The fund’s top holdings include Toyota, 4.3%; Mitsubishi UFJ Financial, 1.9%; Sony Corp., 1.9%; Softbank, 1.9%; Takeda Pharmaceutical, 1.9%; Sumitomo Mitsui Financial, 1.5%; Keyence Corp....

1 min read

Pat McKeough

ETFs

Four of these six international ETFs are buys

We think foreign stocks can safely make up 10% of a conservative investor’s portfolio. One way is through exchange-traded funds (ETFs) with an overseas focus.

The best of those ETFs continue to offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks.

Here’s a look at four international ETFs we see as suitable for new buying and two others we feel you should continue to hold....

7 min read

Pat McKeough

ETFs

Infrastructure opens up to private buyers

Infrastructure assets such as toll roads, airports or port facilities have long been available only to large institutional investors or private equity funds. However, with a global focus on the development of infrastructure and a shortage of government funding, more of these unique investments have become available in the form of publicly listed stocks....

3 min read

Pat McKeough

ETFs

Quality stocks offset doom and gloom

As an investor, you will always find someone forecasting widespread financial calamity. Recessions come and go and the market rises and falls (but mostly rises, at least over long periods). But the dreaded financial calamities always seem to fizzle, like the Y2K computer scare of the late 1990s (or the great California earthquake, or the Swine Flu pandemic, and so on)....

2 min read

Pat McKeough

ETFs

ETF Performance: A tough 2018

The year turned out to be tough globally for most asset classes.

The Vanguard Total Bond Index ETF (BND) lost 3% over the year while the Vanguard Total World Stocks ETF (VT) lost 12.5% after big final quarter losses. Real Estate, as measured by the iShares Global REIT ETF (REET), lost 9.8%....

1 min read

Pat McKeough

ETFs

Top performing (but risky) ETFs in 2018

With broad-based losses across all of the major investment classes, the year 2018 will not be fondly remembered by many investors. However, some ETFs defied the odds and generated spectacular returns.

Here are three of the highest-returning ETFs of 2018.

DIREXION NATURAL GAS BEAR 3X ETF $33.17 (New York symbol GASX) invests in futures and options that in combination provide three times the opposite return of the ISE Natural Gas Index....

2 min read

Pat McKeough

ETFs

Russia needs change to spur gains

Russia has a huge economy, considerable natural resources, especially oil and gas, and a large labour force. Its emergence from communist rule in 1990 and the large-scale privatization of government-owned entities raised hopes that it would become one of the top-performing emerging economies.

Despite the strong performance of Russian between 1996 and 2008, it has faltered over the past decade....

1 min read

Pat McKeough

ETFs

Russia ETF reflects country’s significant risk

Declining commodity prices and international sanctions have hurt the Russian economy. But despite that, the country has proved surprisingly resilient. The economy is on a modest growth path, government finances are in reasonable shape, inflation is under control and the currency has stabilized.

Here is one ETF that provides exposure to the top Russian public companies.

VANECK VECTORS RUSSIA ETF $20.08 (New York symbol RSX; TSINetwork ETF Rating: Aggressive; Market cap: $1.5 billion) tracks the MVIS Russia Index, which includes publicly traded companies that are incorporated in Russia or that are incorporated outside of Russia but have at least 50% of their revenues/related assets in Russia.

Energy firms account for 41% of its assets, with commodities at 23%; Financial Services, 12%; Consumer Defensive, 8%; and Technology, 7.0%.

The ETF holds a portfolio of 27 stocks; the top 10 holdings make up a high 56% of its assets....

4 min read

Pat McKeough

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Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.