ETFs
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
One of the major benefits of exchange-traded funds is the lower and more transparent fees when compared to mutual funds.
The average cost in Canada for a passively managed mutual fund is between 0.50% and 0.90%, while actively managed mutual funds have MERs between 2.0% and 2.5% (Advisor-Class A Series). This compares to average MERs of passively managed ETFs of around 0.35% and actively managed ETFs of 0.90%.
Fees can significantly impact the total returns of an investment plan. Compare a fund that charges 2.0% per year to another that charges 0.25%. Both offer exposure to the same group of assets, say, global stocks. And let’s further assume that both funds see a return of 10% per year.
The average cost in Canada for a passively managed mutual fund is between 0.50% and 0.90%, while actively managed mutual funds have MERs between 2.0% and 2.5% (Advisor-Class A Series). This compares to average MERs of passively managed ETFs of around 0.35% and actively managed ETFs of 0.90%.
Fees can significantly impact the total returns of an investment plan. Compare a fund that charges 2.0% per year to another that charges 0.25%. Both offer exposure to the same group of assets, say, global stocks. And let’s further assume that both funds see a return of 10% per year.
Here are three more ETF investment ideas for 2026. See also the related Supplement on page 19 and 20 for more on the prospects for these types of funds.
INVESCO AEROSPACE & DEFENSE ETF $176.98 (New York symbol PPA; TSINetwork ETF Rating: Aggressive; Market cap: $6.9 billion) tracks the SPADE Defense Index. Qualifying stocks are included on an adjusted market value basis. The fund and the index are rebalanced and reconstituted quarterly.
Firms held in the portfolio include those that target markets such as naval vessels, military aircraft, armoured vehicles, drones and remotely piloted vehicles, missiles, secure communications, space systems, biometric screening systems, and military cybersecurity.
INVESCO AEROSPACE & DEFENSE ETF $176.98 (New York symbol PPA; TSINetwork ETF Rating: Aggressive; Market cap: $6.9 billion) tracks the SPADE Defense Index. Qualifying stocks are included on an adjusted market value basis. The fund and the index are rebalanced and reconstituted quarterly.
Firms held in the portfolio include those that target markets such as naval vessels, military aircraft, armoured vehicles, drones and remotely piloted vehicles, missiles, secure communications, space systems, biometric screening systems, and military cybersecurity.
BetaPro Natural Gas Leveraged Daily Bull ETF $12.25 (Toronto symbol HNU) aims to use a combination of derivatives and debt to offer daily returns that correspond to twice the daily gains (200%) of the BetaPro Natural Gas Rolling Futures Index.
If HNU is successful in meeting its investment objective, its price should gain (or lose) approximately twice that of the index’s rise.
The ETF launched in January 2008 and holds assets of $148 million. The MER is 1.38%; there are also trading costs that add 0.88% to the overall costs of the ETF. Together, these fees make for a high 2.26%.
If HNU is successful in meeting its investment objective, its price should gain (or lose) approximately twice that of the index’s rise.
The ETF launched in January 2008 and holds assets of $148 million. The MER is 1.38%; there are also trading costs that add 0.88% to the overall costs of the ETF. Together, these fees make for a high 2.26%.
VANGUARD INDUSTRIALS ETF $318.87 (New York symbol VIS; TSINetwork ETF Rating: Conservative; Market cap: $6.8 billion) invests in U.S. industrial companies. That includes stocks of companies that convert unfinished goods into finished durables used to manufacture other goods or to provide services. The ETF began trading on September 23, 2004. It charges a low MER of 0.09%; its dividend yield is 1.0%.
The highest-weighted stocks in the Vanguard U.S. Industrials ETF are General Electric (5.1%), Caterpillar (4.4%), RTX (3.8%), Uber Technologies (2.8%), GE Vernova (2.6%), Union Pacific (2.2%), Eaton Corp. (2.2%), Honeywell (2.0%), Boeing (2.0%), Deere & Co. (1.9%) and Parker-Hannifin (1.8%).
The highest-weighted stocks in the Vanguard U.S. Industrials ETF are General Electric (5.1%), Caterpillar (4.4%), RTX (3.8%), Uber Technologies (2.8%), GE Vernova (2.6%), Union Pacific (2.2%), Eaton Corp. (2.2%), Honeywell (2.0%), Boeing (2.0%), Deere & Co. (1.9%) and Parker-Hannifin (1.8%).
Here we highlight two ETF investment ideas for 2026. The Supplement on page 19 expands on their strategies and outlook.
ISHARES CORE MSCI CANADIAN QUALITY DIVIDEND INDEX ETF $37.46 (Toronto symbol XDIV; TSINetwork ETF Rating: Conservative; Market cap: $3.7 billion) tracks the MSCI Canada High Dividend Yield Index. The index includes Canadian companies with growing or steady dividends, solid balance sheets, and less volatile earnings. Stock weights are capped at 10% of the portfolio on the rebalancing dates.
The fund’s approach has a number of negatives for investors. It incurs ongoing brokerage charges as it rebalances its holdings. The approach also forces the ETF to sell off portions of stocks that are rising steadily—perhaps missing out on some of the stocks’ biggest gains.
ISHARES CORE MSCI CANADIAN QUALITY DIVIDEND INDEX ETF $37.46 (Toronto symbol XDIV; TSINetwork ETF Rating: Conservative; Market cap: $3.7 billion) tracks the MSCI Canada High Dividend Yield Index. The index includes Canadian companies with growing or steady dividends, solid balance sheets, and less volatile earnings. Stock weights are capped at 10% of the portfolio on the rebalancing dates.
The fund’s approach has a number of negatives for investors. It incurs ongoing brokerage charges as it rebalances its holdings. The approach also forces the ETF to sell off portions of stocks that are rising steadily—perhaps missing out on some of the stocks’ biggest gains.
VANECK VECTORS VIETNAM ETF, $19.44, is a buy for aggressive investors. This emerging-markets ETF (New York symbol VNM) taps the country’s leading firms as well as foreign firms that get a significant share of their revenue from this Southeast Asian nation. The fund started up in August 2009. Its MER is 0.68%.
Major Canadian and U.S. stock markets remain volatile. but still they continue to offer attractive prospects for investors, especially if you buy the top stocks. All in all, we think that if you can afford to stay in the market for several years or longer, now is a good time for new buying. We see ETFs as one way for you to profit from the continuing stock market rise while at the same time cutting your risk.
The best of these funds offer a diversified group of stocks and charge you low management fees. Here are five ETFs we like, and one we think you should pass on buying for now.
The best of these funds offer a diversified group of stocks and charge you low management fees. Here are five ETFs we like, and one we think you should pass on buying for now.
ISHARES S&P/TSX REIT INDEX ETF, $15.21, is a hold. The ETF (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) lets investors tap all 16 Canadian real estate investment trusts in the S&P/TSX REIT Index. Investors pay an MER of 0.60%, and the fund gives you a 5.1% yield.
Vanguard is one of the world’s largest investment management companies. In all, it administers over $10 trillion U.S., spread across 441 mutual funds and ETFs. Here are two of its ETFs that we see as buys for you right now.
VANGUARD GROWTH ETF, $491.81, is a buy. The fund (New York symbol VUG; buy or sell through brokers) lets investors track the Center for Research in Security Prices U.S. Large Cap Growth Index. That broadly diversified index focuses on big U.S. firms.
VANGUARD GROWTH ETF, $491.81, is a buy. The fund (New York symbol VUG; buy or sell through brokers) lets investors track the Center for Research in Security Prices U.S. Large Cap Growth Index. That broadly diversified index focuses on big U.S. firms.
INVESCO SOLAR ETF, $47.38, is a buy for aggressive investors. The ETF (New York symbol TAN; buy or sell through brokers) tracks solar-related companies (including technology firms and utilities) listed on global exchanges.
Its top holdings are Nextpower (U.S. solar trackers), 11.8%; First Solar (China; solar panels), 11.7%; Sunrun (U.S.; panels), 6.5%; Enlight Renewable Energy (Israel; solar plants), 5.0; GCL Technology (China; polysilicon), 4.9%; ;and Enphase Energy (U.S.; home solar systems), 4.9%. The ETF’s MER is a relatively high 0.71%.
Its top holdings are Nextpower (U.S. solar trackers), 11.8%; First Solar (China; solar panels), 11.7%; Sunrun (U.S.; panels), 6.5%; Enlight Renewable Energy (Israel; solar plants), 5.0; GCL Technology (China; polysilicon), 4.9%; ;and Enphase Energy (U.S.; home solar systems), 4.9%. The ETF’s MER is a relatively high 0.71%.