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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

Budget overruns delay their returns

Building and maintaining infrastructure is an important undertaking for many cities and countries. Sewage and water-supply systems, for example, keep diseases such as E. coli from spreading. Big infrastructure projects can also be hugely important to economies. The Panama and Suez canals, for example, contribute significantly to their countries’ GDP.

Private infrastructure investors would normally look for returns of at least 15% per year....

1 min read

Pat McKeough

ETFs

Profit from rising infrastructure spending

Governments around the world know the benefits that flow from the development of better infrastructure. However, their stretched budgets and a reluctance to increase taxes constrain their ability to initiate these projects. This provides opportunities for private companies to develop and manage these assets.

Here are three ETFs that invest in publicly listed companies that own and operate infrastructure assets (see the supplement on page 20 for more information).

FLEXSHARES STOXX GLOBAL BROAD INFRASTRUCTURE ETF $45.49 (New York symbol NFRA; TSINetwork ETF Rating: Aggressive; Market cap: $791.0 million) tracks the Stoxx Global Broad Infrastructure Index....

4 min read

Pat McKeough

ETFs

ETFs can offer big cost savings over mutual funds

ETFs have two major advantages over traditional mutual funds.

First, they are easy to trade on stock exchanges, which gives them better liquidity.

Second, and perhaps more important, ETFs provide a low-cost investment option. In many cases, they also have superior performance results compared to mutual funds, even before fees have been taken into account.

Compare the following: Various ETFs track the Canadian equity market....

1 min read

Pat McKeough

ETFs

Our top ETF for 2019

SPDR S&P 500 ETF $258 (New York symbol SPY) holds the stocks in the S&P 500 Index; they are 500 major U.S. companies chosen based on their market cap, liquidity and industry group.

The highest-weighted stocks for the SPDR S&P 500 ETF are Microsoft, 3.8%; Apple, 3.4%; Amazon.com, 2.9%; Alphabet, 2.9%; Berkshire Hathaway, 1.9%; Johnson & Johnson, 1.6%; Facebook, 1.6%; JPMorgan Chase, 1.5%; ExxonMobil, 1.4%; Pfizer, 1.2%; and UnitedHealth, 1.3%....

1 min read

Pat McKeough

ETFs

These ETFs aim for stable returns

One of the key lessons from financial market history is that stocks perform better than almost any other asset class over long periods. There will inevitably be periods of heightened volatility or even sustained market downturns. But at the same time, a focus on high-quality, dividend-paying companies will provide the best portfolio returns.

Here are two ETFs aimed at focusing on stocks that gain along with the market, but that also hold on to their value in market setbacks....

3 min read

Pat McKeough

ETFs

Tariffs may help this ETF

INVESCO CHINA SMALL CAP PORTFOLIO ETF $22.65 (New York Exchange symbol HAO; buy or sell through brokers; www.invesco.com) aims to track the AlphaShares China Small Cap Index. It’s made up of the 329 Chinese stocks that foreign investors are allowed to hold and that have market caps of less than $1.5 billion....

1 min read

Pat McKeough

ETFs

Five North American ETF buys and one sell

The six ETFs we update below mainly hold high-quality stocks that are widely traded on Canadian and U.S. exchanges. Each fund tracks the performance of a major stock market index. That’s different from ETFs focused on narrower indexes or themes such as cryptocurrencies or biotechnology.

Of course, you pay brokerage commissions to buy and sell these investments....

4 min read

Pat McKeough

ETFs

Zero in on Vietnam’s best

VANECK VECTORS VIETNAM ETF $14.90 (New York symbol VNM; buy or sell through brokers) holds Vietnamese companies and foreign firms that get a significant share of their revenue from the Southeast Asian nation.

The ETF’s top holdings are Vietnam Dairy, 8.3%; Vinhomes (real estate), 8.1%; Vingroup (conglomerate), 8.4%; No Va Land (real estate), 7.0%; and Masan Group (conglomerate), 7.5%.The ETF’s MER is 0.66%.

The fund cuts some of Vietnam’s above-average political risk by investing part of its assets in firms that are based outside of the country, but do at least 50% of their business there....

1 min read

Pat McKeough

ETFs

Rising rates are a risk for these bond ETFs

The Bank of Canada increased its benchmark interest rate in October 2018 from 1.50% to 1.75%. That rate could rise further in 2019 depending on economic growth and the level of unemployment.

We continue to caution against investing in bonds. Today’s still-low interest rates make them unattractive, and rising interest rates will push down their future value....

2 min read

Pat McKeough

ETFs

Diversify outside Canada with these ETFs

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers over $6 trillion U.S., spread across 400 mutual funds and ETFs.

Generally speaking, Canadians are blocked from buying mutual funds that are registered in the U.S....

2 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.