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]

Read More Close

ETFs Library Archives

ETFs

Netherlands: Home to top-quality companies

Some investors overlook the Netherlands given its small size and small population. Still, other investors recognize it as one of the world’s top 20 economies and among the world’s top 10 exporters.

The Dutch economy recovered well from the COVID-19 pandemic....

4 min read

Pat McKeough

ETFs

Buy utilities despite today’s higher rates

Rising interest rates boost bond yields and their appeal with investors. Conversely, rising rates can hurt the appeal of high-yield utilities, and their shares, since those companies must pay higher interest on their debt. Still, top utilities remain financially healthy and continue to expand and pay dividends....

4 min read

Pat McKeough

ETFs

Artificial intelligence under performs at picking top stocks

When asked to pick stocks to beat the market, the popular ChatGPT online chatbot/search engine replied that it was unable to do so—and the AI program noted that the stock market is unpredictable and that investors should consult an investment professional.

Still, fund managers have for a long time tried to use quantitative, computer-driven models to select stocks and manage investment portfolios....

1 min read

Pat McKeough

ETFs

Pass on this ETF: AI Powered Equity ETF

AI POWERED EQUITY ETF $30.90 (Nasdaq symbol AIEQ) uses machine learning and natural language processing capabilities running on IBM’s Watson platform to select a portfolio of U.S. publicly listed stocks. Using artificial intelligence (AI), the ETF’s computer processes regulatory filings, news stories, management profiles, sentiment gauges, and financial models.

The computer then proceeds to build scoring models for each company that include aspects of financial health, news flow, and management....

1 min read

Pat McKeough

ETFs

Emerging markets offer key pluses

Over the last couple of years, many emerging-market ETFs are down more than the overall market. They have struggled to attract investors because the growing U.S. economy and sharply higher interest rates have pushed up the U.S. dollar. That typically results in capital flowing to the U.S....

3 min read

Pat McKeough

ETFs

Hold this top REIT ETF

ISHARES S&P/TSX REIT INDEX ETF, $16.39, 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 0.61%, and the fund gives you a 4.9% yield.

The iShares...

1 min read

Pat McKeough

ETFs

Buy the best of solar

INVESCO SOLAR ETF, $69.98, 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.

The fund’s top holdings are First Solar (China; solar panels) at 10.1%; SolarEdge Technologies (Israel; solar-power batteries), 9.7%; Enphase Energy (U.S.; home solar systems), 8.4%; Xinyi Solar (China; solar panels), 4.7%; GCL Technology (China; polysilicon), 4.6%; and Sunrun (U.S.; solar panels), 4.1%. The ETF charges a relatively high MER of 0.69%.

Renewable stocks have drifted down since early 2021; that follows big run-ups in 2020 on President Biden’s support for sun, wind and hydro power—plus strong investor interest in stocks gaining from environmental concerns....

1 min read

Pat McKeough

ETFs

These ETFs offer top-quality foreign stocks

Generally speaking, Canadians are blocked from buying mutual funds that are registered in the U.S. unless those funds are also registered with provincial securities commissions. (Moreover, some Canadian mutual funds are only available in a limited number of provinces.)

Investors in this country can, however, buy exchange-traded funds, or ETFs, listed on U.S....

2 min read

Pat McKeough

ETFs

Ways ETFs determine their stock weightings

Most of the large and popular exchange-traded funds are passively managed index-tracking funds. Passive fund management for ETFs involves investing to mirror the holdings and performance of a specific stock-market index. The indexes that form the basis of these ETFs are provided by major index providers such as MSCI, S&P, FTSE and Solactive.

Meanwhile, the methods used to construct those major indexes can dramatically influence their composition and performance....

2 min read

Pat McKeough

ETFs

The risks and rewards of high-yielding ETFs

Exchange-traded funds offering regular income have grown in popularity lately, especially during the low interest rate years of 2020 to 2021. But with interest rates moving higher over the past 18 months, ETF managers have to become more creative in their efforts to offer appealing yields to investors....

3 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.