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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

Pass on this ETF

ISHARES S&P/TSX SMALL CAP ETF $16 (Toronto symbol XCS; TSINetwork ETF Rating: Aggressive; Market cap: $121.1 million) invests in smaller listed Canadian companies.

The ETF holds 197 stocks, with the top 10 comprising only 13% of its assets....

1 min read

Pat McKeough

ETFs

Small-cap ETFs aim for growth

Smaller firms can sometimes generate higher returns than their larger counterparts, but they are often riskier, less liquid, and may underperform for long periods. One way to offset some of the risk is to focus on ETFs that hold top-quality small-capitalization companies....

3 min read

Pat McKeough

ETFs

Hold the Chinese market

SPDR S&P CHINA ETF $120.71 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) tracks the S&P China BMI Index. The fund includes all publicly traded Chinese stocks available to foreign investors.

Right now, the SPDR S&P China ETF holds 351 stocks....

1 min read

Pat McKeough

ETFs

These two ETFs offer exceptionally low fees

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers nearly $5 trillion U.S., spread across 370 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

Here’s two bond ETFs if you need them

The Bank of Canada increased its benchmark interest rate in January 2018 from 1.00% to 1.25%. That’s because the Canadian economy is growing and unemployment is low. Inflation has also moved up, to 2.1% in November 2017.

We continue to caution against investing in bonds....

2 min read

Pat McKeough

ETFs

Good way to buy REITs

ISHARES CDN REIT INDEX FUND $16.61 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds all 16 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 4.9%.

The ETF’s top ten holdings are RioCan REIT at 16.4%, H&R REIT (12.8...

1 min read

Pat McKeough

ETFs

The future is bright for the world’s banks

The global banking industry attracted most of the blame for the 2008/2009 financial crisis. (Canadian banks were one notable exception.)

Under pressure from shareholders and regulators, banks have spent the past decade rebuilding their balance sheets, reducing costs and returning to their core lending business.

A recovery is underway

Much tighter government regulations, increased compliance costs and persistent low interest rates kept the recovery modest for a number of years.

According to the consulting firm McKinsey & Co., global banks collectively increased their revenues by 5.8% annually between 2010 and 2016....

2 min read

Pat McKeough

ETFs

Global aging to fuel health-care gains

A combination of declining fertility rates and increasing life expectancy continues to fuel the rapid aging of the population.

According to a recent UN World report, the global population of people over 65 years old is expected to jump from 617 million in 2017 to 1.6 billion in 2050....

2 min read

Pat McKeough

ETFs

ETF Bonus: Auto tech to propel gains

ETFs focused on self-driving and electric-vehicle technologies seek to expose investors to a global transportation industry primed for sweeping change.

Leading automakers plan to accelerate the production of self-driving electric cars over the next few years....

1 min read

Pat McKeough

ETFs

New ETFs for the Canadian market

Here are two recent ETF launches that offer Canadian investors exposure to rapidly expanding niche markets. We also take a look at a well-established, broad-based fund. It offers the same kind of global reach as those new, more narrowly focused ETFs. However, its risk is lower....

2 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.