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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

Poland gains global competitiveness

The Global Competitiveness Index, published annually by the World Economic Forum, ranks around 140 countries by several factors deemed responsible for the long-term competitiveness of nations. Studies show that more competitive countries—with that higher competitiveness running across all of their income groups—experience higher economic growth in the long term compared to less-competitive countries.

The 113 factors are grouped in 12 “pillars.” The country’s score for each of those factors are then added up to determine its overall grade....

1 min read

Pat McKeough

ETFs

ETF profits from an emerging Poland

Poland has a troubled history of foreign occupation and communist government. However, the country moved away from that political system in 1990, joined NATO in 1999 and was accepted into the European Union in 2004. This has encouraged stability and helped to increase prosperity.

This ETF holds many of Poland’s top public companies.

ISHARES MSCI POLAND ETF $24 (New York symbol EPOL; TSI Network ETF Rating: Aggressive; Market cap: $328.0 million) tracks the performance of the largest publicly listed Polish companies.

Financial Services account for 47% of its assets....

4 min read

Pat McKeough

ETFs

NATO expands military commitments

The U.S. continues to urge each member of the North Atlantic Treaty Organization (NATO) to meet its 2014 pledge to spend 2% of GDP on defense by 2024. Currently, only five of the organization’s 28 member nations—the U.K., Greece, Estonia, Poland and the U.S.—meet that goal.

At 1.8% of GDP, France’s defense spending in 2017 fell short of its target, as did Germany’s (1.2%) and Canada’s (1.3%)....

1 min read

Pat McKeough

ETFs

Higher military spending drives these ETFs

An improving global economy and growing military threats continue to push up defense spending. Still, the total investment as a percentage of global GDP sits near recent lows. That leaves room for significant growth (see supplement on page 60).

Here are three ETFs that provide exposure to companies positioned to benefit from increased military spending.

SPDR S&P AEROSPACE & DEFENSE ETF $88 (New York symbol XAR; TSINetwork ETF Rating: Aggressive; Market cap: $1.3 billion) invests in U.S....

5 min read

Pat McKeough

ETFs

Pass on all three of these ‘balanced’ ETFs

In January 2018 Vanguard Canada introduced three new balanced ETFs with a mix of stocks and bonds. All three have low 0.22% MERs.

The Vanguard Conservative ETF Portfolio, $24.78, symbol VCNS on Toronto, holds roughly 40% of its assets in Vanguard stock ETFs and 60% in bond ETFs.

The Vanguard Balanced ETF Portfolio, $24.74, symbol VBAL on Toronto, has the opposite proportions to the Vanguard Conservative ETF Portfolio....

1 min read

Pat McKeough

ETFs

Pass on this ETF

HORIZONS EMERGING MARIJUANA GROWERS ETF $8.05 (Aequitas NEO Exchange symbol HMJR; TSINetwork ETF Rating: Aggressive; Market cap: $12.1 million) invests in small, publicly listed companies involved in the production and distribution of cannabis....

1 min read

Pat McKeough

ETFs

Cannabis ETFs offer risky gains

We continue to recommend investors steer clear of marijuana stocks. But as Canada gets ready to legalize cannabis for recreational purposes, most likely by the end of this summer, readers are increasingly asking for our analysis on cannabis-related stocks and ETFs.

It remains difficult to say which marijuana growers will prosper and which will not....

3 min read

Pat McKeough

ETFs

A few holdings cut its appeal

ISHARES CDN REIT INDEX FUND $16.61 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds all 15 Canadian real estate investment trusts in the S&P/TSX REIT Index.

The fund has an MER of 0.61%, and it currently yields a high 4.8%.

The ETF’s top ten holdings are RioCan REIT (16.5...

1 min read

Pat McKeough

ETFs

Low-fee ways to invest outside Canada

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers over $5 trillion U.S., spread across 388 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

ETFs

Hold the top Chinese stocks

ISHARES CHINA LARGE-CAP ETF $46.75 (New York symbol FXI; buy or sell through brokers) tracks the 50 largest, most-liquid Chinese stocks.

The ETF started up October 4, 2004, and has an MER of 0.74%. It yields 2.3%.

Top holdings for the $4.5 billion fund are China Construction Bank, 9.1%; Industrial & Commercial Bank, 8.6%; Tencent Holdings, 8.3%; Ping An Insurance, 5.6%; China Mobile, 5.7%; Bank of China, 4.6%; CNOOC, 4.3%; China Petroleum and Chemical, 4.3%; China Life, 3.5%; and China Merchants Bank, 2.7%.

China still has strong growth potential, and the economy appears to be rebounding....

1 min read

Pat McKeough

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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.