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]

You Can See Our Exchange-Traded Funds Portfolio For November 2024 Here.

ETFs in brief

Exchange-traded funds are set up to mirror the performance of a stock-market index or sub-index....

1 min read

Pat McKeough

ETFs

How to cut risk among financial stocks

Collectively, U.S. banks and insurance companies have performed well over the past year, beating the S&P 500 by a comfortable margin. Canadian financials also produced a strong performance. Still, banks generally have high debt, which occasionally can cause significant share price drops....

2 min read

Pat McKeough

ETFs

Free cash flow is a valuable tool for investors

Prominent investor Warren Buffett once remarked that “Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business.”

Stock analysis that examines a company’s free cash flow can cut through the unpredictability of how the business chooses to report its earnings....

2 min read

Pat McKeough

ETFs

Here’s a look at two new ETFs for Canadians

This month we focus on high-income, leveraged single-stock ETFs; one was launched by Harvest and another, focused on physical gold bullion, was launched by BMO.

HARVEST ELI LILLY ENHANCED HIGH-INCOME SHARES $12.04 (Toronto symbol LLHE) invests in the shares of Eli Lilly & Co....

1 min read

Pat McKeough

ETFs

Post-bubble, South Korean stocks offer investor value

From its bottom in March 2020 until mid-2021, the Korea Exchange advanced 120% on the back of a retail trading frenzy. Retail investors (locally known as “ants”) became large-scale participants in Korean stocks. Social media played a large role in fuelling speculative trading activities.

Large, global companies such as Samsung, Posco, LG Electronics, Hynix, and Hyundai performed well, but the speculators’ favourites such as Kakao and Seegene rose between 450% and 1,200%.

But all speculative bubbles eventually burst.

When we last wrote about this in September 2022 we commented on the sharp declines in the prices of not only the speculative stocks but also stocks that represent highly rated Korean companies.

For example, Samsung Electronics, one of the top global consumer electronics and semiconductor manufacturers, saw a share price decline of 40%, while the price of semiconductor producer SK Hynix declined 49%....

1 min read

Pat McKeough

ETFs

South Korea’s outlook remains bright

When we last wrote about South Korea—in late 2022—we pointed out that the country’s stocks had seen a two-year run-up in prices and then a sharp decline. That left many high-quality companies trading at attractive valuations. Since that time the South Korean market has gained 25%, but is still well off its peak....

5 min read

Pat McKeough

ETFs

Here’s a closer look at the fees of exchange-traded funds

Fees charged by ETFs have several components:

First are the operating expenses of the fund, such as the portfolio management fee, custody and administration fees, and marketing fees. These fees are all rolled into the Management Expenses Ratio (MER) and are paid directly from the ETF’s assets....

1 min read

Pat McKeough

ETFs

Use diversity to cap volatility of Financial ETFs

Banks and insurance companies have performed strongly over the past year, easily beating the main market indices. However, banks, in particular, use a lot of debt to boost returns, and are prone to volatility when they encounter problems.

We’ve always said most investors should diversify within the finance sector by holding not just banks, but also insurers, fund managers and so on....

4 min read

Pat McKeough

ETFs

Consider this low-cost ETF focused on top global firms

BMO MSCI All Country World High-Quality ETF $69.66 (Toronto symbol ZGQ; TSI Network ETF Rating: Aggressive; Market cap: $730.7 million) tracks the MSCI All-Country World High Quality Index. From the broad universe of available stocks, those with high-quality scores based on three main fundamental —high return on equity, stable year-over-year earnings growth, and low financial leverage—are selected for inclusion in the ETF.

The ETF currently holds 479 stocks; the largest geographical allocation is to the U.S....

1 min read

Pat McKeough

ETFs

Pass on this ETF

GLOBAL X INTERNATIONAL DEVELOPED MARKETS EQUITY ETF $48.32 (Toronto symbol HXDM) provides exposure to major companies listed in developed markets excluding North America. The fund, launched in September 2017, holds $557.3 million of assets, and it charges what sounds like a reasonable MER of 0.22%.

The ETF tracks the Global X EAFE Futures Roll Index....

1 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.