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:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

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ETFs Library Archives
ETFs
Buy these low-cost ETFs if you want bonds
The Bank of Canada increased its benchmark interest rate in January 2018 from 1.00% to 1.25%. That rate could rise further later this year on stronger economic growth and low unemployment. Inflation has also moved up, sitting at 2.3% in March 2018.


We continue to caution against investing in bonds....
2 min read
Pat McKeough
ETFs
Here’s the risk of chasing high yields
The yield of a stock is the percentage you get when you divide the current yearly dividend payment by the share price of the stock.


The yield of an ETF is the dividend per ETF unit, which is based on the dividends paid by each of the companies it holds.


Yield is an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters....
3 min read
Pat McKeough
ETFs
U.S. consumers and rising interest rates
U.S. retail sales have staged a strong recovery since the 2008-2009 global financial crisis. Rising employment and greater consumer confidence have helped to lift consumer spending. Still, future increases will in large part depend on how quickly and how high interest rates move up.


The U.S....
3 min read
Pat McKeough
ETFs
Ins and outs of ETF benchmarks
ETF managers use benchmark indexes to manage their ETF portfolios. Benchmarks are expected to fairly represent a target universe. The S&P 500 index, for example, is often used by ETF providers who aim to offer investors broad exposure to the U.S. stock market.


Benchmark providers, such as Standard & Poor’s or the Financial Times, must decide which companies to include in a benchmark index and the weight to give each company....
1 min read
Pat McKeough
ETFs
We recommend staying out of trendy ETFs
Promoters of ETFs are in the business to make money from the products they provide. This is a legitimate objective, but sometimes promoters aim to capitalize on short-term fads to appeal to investors. These products can deliver poor results in the long term. Below, we look at three ETFs:


ISHARES MSCI BRIC ETF $46 (New York symbol BKF; Market cap: $333.5 million) invests in companies based in the BRIC countries—Brazil, Russia, India and China....
2 min read
Pat McKeough
ETFs
Norway’s fund reevaluates assets
At $1 trillion U.S. in assets, Norway’s sovereign wealth fund made headlines in November 2017 with the news it would consider selling its oil and gas stocks over time. Those stocks make up around 3.6% of the fund’s total assets.


Environmental groups in the Scandinavian country—itself one of the world’s leading oil and gas exporters—praised the decision....
1 min read
Pat McKeough
ETFs
Norway looks to ease its energy dependence
An abundance of oil and natural gas resources has made Norway one of the wealthiest countries in the world. However, efforts are underway to diversify its economy beyond natural resources, and there are early signs of success.


Time will tell how complete or successful that transition is....
4 min read
Pat McKeough
ETFs
Four dividend ETFs—four strategies
Rising interest rates mean dividend-paying stocks and fixed-income instruments must increasingly compete for investor interest. However, sustainable dividends still offer an attractive and growing income stream for investors (see supplement on page 50).


Here are four ETFs that provide exposure to Canadian, U.S....
5 min read
Pat McKeough
ETFs
Now, more than ever, use caution when picking ETFs
In the 1950s, some shoe stores kept a specialized x-ray machine on the sales floor. The ads in the window said you could use the machine to check the fit on a new pair of shoes before buying them. Critics called it a gimmick to speed up shoe sales, and warned about the risk of needless exposure to x-rays.


Something like this happens today with ETFs.


For instance, fund marketers see ETFs as a potent selling tool....
1 min read
Pat McKeough
ETFs
Pass on this ETF
PROSHARES DECLINE OF THE RETAIL STORE ETF $34 (New York symbol EMTY; TSINetwork ETF Rating: Aggressive; Market cap: $24 million) is designed to move in the opposite direction of its underlying index—specifically, the Solactive-ProShares Bricks and Mortar Retail Store Index.


That means the ETF’s investors profit as share prices for 56 U.S....
1 min read
Pat McKeough
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