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.

[text_ad]

Read More Close

ETFs Library Archives

ETFs

The city that (almost) ran dry

Cape Town in South Africa, a city of almost 4.3 million people, narrowly avoided a major disaster earlier this year when it came within weeks of running out of water.

It is hard to imagine how a city with a relatively high level of annual winter rainfall and adequate water storage facilities could run out of water....

1 min read

Pat McKeough

ETFs

These ETFs tap global water demand

Major cities such as Sao Paulo and Cape Town have come close to running out of water in recent years. This again highlights the urgent need for city planners and governments to consider the implications of population growth, urbanization and climate change on the demand and supply of fresh water.

Meanwhile, here are three ETFs that aim to benefit from the opportunities presented by companies providing products and services to the water industry (see the supplement on page 120 for more information).

INVESCO WATER RESOURCES ETF $29.64 (Nasdaq symbol PHO; TSINetwork ETF Rating: Aggressive; Market cap: $809.0 million) invests in companies listed on U.S....

4 min read

Pat McKeough

ETFs

Robo-advisors aim to put investors in suitable ETFs

Generally, robo-advisors offer a set number of investment portfolios largely composed of ETFs. They then use a client’s investment profile—factoring in their needs and risk tolerance—to determine which of those portfolios is best suited to the individual investor.

Robo-advisors claim that their exclusive algorithms take the emotion out of investing and lead to better returns for a lower cost than traditional financial advisors.

Typically, robo-advisors aim to build what they see as diversified portfolios covering all the main asset categories....

1 min read

Pat McKeough

ETFs

Pass on this ETF

VELOCITYSHARES DAILY 2X VIX SHORT-TERM ETN $47.22 (Nasdaq symbol TVIX) is an exchange-traded note (ETN) that tracks the VIX Short-Term Futures Index.

While they are technically debt instruments like bonds, ETNs pay no interest and offer no protection for an investor’s principal....

1 min read

Pat McKeough

ETFs

Profit from the fintech revolution

The growing use of technology in financial services has produced a high-growth industry—fintech. The companies involved provide a wide range of services, including digital payment systems, data analytics, process automation and investment management.

Here are two ETFs that aim to benefit from fintech....

3 min read

Pat McKeough

ETFs

India is on the right track

ISHARES INDIA 50 ETF $33.61 (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), 8.9%; HDFC Bank, 7.7%; Housing Development Finance, 6.9%; Infosys (information technology), 6.0%; ITC (conglomerate), 5.7%; ICICI Bank, 5.4%; Tata Consultancy (information technology), 4.8%; and Kotak Mahindra Bank, 3.6%....

1 min read

Pat McKeough

ETFs

Japan has room to rise

ISHARES MSCI JAPAN INDEX FUND $56.02 (New York symbol EWJ; buy or sell through brokers; us.ishares.com) is an ETF that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan Index.

The fund’s top holdings include Toyota, 4.0%; Mitsubishi UFJ Financial, 2.2%; Sony Corp., 2.1%; Softbank, 2.0%; Sumitomo Mitsui Financial, 1.6%; Keyence Corp....

1 min read

Pat McKeough

ETFs

These six ETFs offer international exposure

We think foreign stocks can safely make up 10% of a conservative investor’s portfolio. One way is through the selection of 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.

ISHARES MSCI EMERGING MARKETS ETF $41.63 (New York symbol EEM; buy or sell through brokers) is designed to track the MSCI Emerging Markets Index.

The fund’s geographic breakdown is as follows: China, 30.7%; South Korea, 14.0%; Taiwan, 11.6%; India, 8.6%; Brazil, 7.8%; South Africa, 6.2%; Russia, 3.8%; Mexico, 2.9%; Malaysia, 2.4%; Thailand, 2.4%; Indonesia, 2.1%; and Poland, 1.2%.

Its top stocks are Tencent Holdings (China: Internet), 4.5%; Taiwan Semiconductor (computer chips), 3.8%; Samsung Electronics (South Korea), 3.8%; Alibaba Group (China: e-commerce), 3.5%; Naspers (South Africa: media and Internet), 1.8%; China Construction Bank, 1.6%; China Mobile, 1.2%; Baidu (China: Internet), 1.1%; Ping An Insurance Group (China), 1.1%; Industrial & Commercial Bank of China, 1.0%; Vale SA (Brazil: mining), 1.0%; and Reliance Industries (India: conglomerate), 0.9%.

iShares launched the ETF on April 7, 2003....

7 min read

Pat McKeough

ETFs

Leaders in cybersecurity meet rising demand

Hackers, organized crime and even state-sponsored actors are increasingly targeting government and business infrastructure, not to mention individuals, to gain access to confidential information. The list of targets is endless but any entity that is digitally connected is vulnerable....

2 min read

Pat McKeough

ETFs

High-quality REITs can boost your returns

Real estate investment trusts (REITs) can play a useful role in well-balanced, income-seeking portfolios. Not only can they provide regular and stable income streams, but they can also deliver capital gains. In addition, they can add diversification, reducing the overall risk and volatility of the portfolio.

Many investors are reluctant to consider direct investments into commercial property for their portfolios....

2 min read

Pat McKeough

Testimonials

The cornerstones of Pat’s strategy–value, diversification and timelines–make his newsletter, The Successful Investor, highly profitable while minimizing risk. His advice is no-nonsense, down-to-earth and based on solid research. You’ll know what to invest in and what to avoid.

Chuck Chakrapani, PhD
Investors Association of Canada
The older I get the better dividends look. For retirees and would-be retirees who want to sleep at night, I can’t think of a better source of information on reliable growing dividend income than Pat McKeough’s newsletter, Dividend Advisor.

Jonathan Chevreau
Financial Post Columnist
As a manager of more than $500 million in mutual funds, I have access to the best brokerage research available in this country. But I still take time to read Pat McKeough’s premium newsletters

John Sartz
I appreciate the 25 years of above market returns I received by following your advice. at least 95% of my investment decisions were based on TSI recommendations.

Chuck J.
Subscriber since 1996. Inner Circle Member Since 2006
The newsletters I receive in Inner Circle Pro are fantastic! I have been following Pat’s advice for years and everything he has said has been amazing. His commentaries are brilliant, insightful, educational, rational and balanced. My returns are almost double the TSE and I have referred many of my friends who have switched over to your services.

Walter H.
Inner Circle Pro subscriber

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.