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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Iron ore is its main product, with the Pilbara mines in Western Australia representing its core asset. Production costs from those mines are among the lowest in the world.
Copper is another major product....
Please see the supplement section starting on page 49 for more information on our five-sectors approach.
BMO GLOBAL CONSUMER STAPLES HEDGED TO CAD INDEX ETF $22.97 (Toronto symbol STPL; TSINetwork ETF Rating: Conservative; Market cap: $36.6 million) tracks the FTSE Developed Consumer Staples Capped Index and invests globally....
The fund has been operational since 2013 and became the first publicly traded bitcoin fund in 2015....
This has two main benefits: a) It keeps you from investing too heavily in any industry or sector that is headed into a period of big losses; and b) by spreading your investments out more widely, it also improves your chances of latching onto a market superstar—a stock that will wind up producing two, five or 10 times more profit than average.
Here we discuss ETFs that represent two of the main equity sectors—Resources, and Utilities—while the section starting on page 43 looks at the remaining three sectors represented by three additional ETFs....
ISHARES MSCI TAIWAN INDEX FUND, $49.01, is a buy for aggressive investors. The ETF (New York symbol EWT; buy or sell through brokers) gives you direct exposure to some of the top public companies of this East Asian powerhouse economy.
The fund’s largest holding is Taiwan Semiconductor at 23.7% of assets....
Defining ‘value investing’
There is no universal definition of value investing....