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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

Here are new ETFs for Canadian investors

This month we highlight two ETFs from Harvest that use leverage and call-option writing in an effort to enhance the returns of their portfolios.

HARVEST BRAND LEADERS ENHANCED INCOME ETF $10.36 (Toronto symbol HBFE) invests indirectly in large U.S....

1 min read

Pat McKeough

ETFs

Stick with quality for long-term gains

One of the best methods of building wealth over time is to zero in on the shares of quality companies with a consistent history of sales and earnings (or the ETFs that hold them). Solid balance sheets and a strong hold on a growing clientele are also pluses.

Here are two ETFs that focus on selecting high-quality companies with strong fundamental value....

3 min read

Pat McKeough

ETFs

Short-term challenges, long-term opportunity in Vietnam

The Vietnamese stock market, as measured by the FTSE Vietnam 30 Index, has done very well over the longer term, gaining 436% over the 10 years ending December 2021. This was considerably better than most developed and emerging equity markets over that same period.

However, since its peak in the first week of 2022, the index has declined by 48% making it one of the worst-performing stock markets in the world.

There are likely several reasons for this weak performance.

First, the very strong performance of Vietnamese stocks during the peak COVID-19 period pulled a large, short-term focused investor base into the market....

1 min read

Pat McKeough

ETFs

Tap Vietnam’s bright future with this ETF

Vietnam is now emerging from the pandemic, with tourism leading the way. Longer-term, it should also continue to attract foreign manufacturers looking to steer clear of any China-U.S. trade issues. Meanwhile, the country’s free-trade pact with the European Union came into effect in August 2020....

4 min read

Pat McKeough

ETFs

These ETFs profit from steady demand

Traditionally, the price of most stocks, and the ETFs that hold them, drop during bear markets like the one we saw in 2022. However, certain segments generally perform better than the overall market during downturns—and bounce back faster, including during the 2000-2002 and 2008-2009 bear markets.

Below, we highlight three ETFs focused on resilient market segments: value stocks, military defence and healthcare....

4 min read

Pat McKeough

ETFs

EVs will spur copper

GLOBAL X COPPER MINERS ETF, $36.19, is a buy. The ETF (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) lets you track the Solactive Global Copper Miners Index, with 40 global mining and exploration firms....

1 min read

Pat McKeough

ETFs

These ETFs tap into precious-metal gains

Most precious-metal stocks dropped, along with stock markets, in March 2020. They then quickly reversed that trend to soar for investors, in part because of gold’s appeal as a “safe harbour” in uncertain times. In fact, in August 2020, gold jumped to over $2,000 U.S....

2 min read

Pat McKeough

ETFs

Buy the best solar stocks

INVESCO SOLAR ETF, $83.98, 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 Enphase Energy (U.S.; home solar systems) at 11.2%; First Solar (China; solar panels), 10.4%; SolarEdge Technologies (Israel; solar-power batteries), 9.0%; GCL Technology (China; polysilicon), 4.9%; Sunrun (U.S.; solar panels), 4.7%; and Xinyi Solar (China; solar panels), 4.6%. The ETF charges a reasonable MER of 0.66%.

Renewable stocks have drifted down lately, after big run-ups last year on President Biden’s support for sun, wind and hydro power—plus strong investor interest in stocks that will gain from the push for global decarbonization....

1 min read

Pat McKeough

ETFs

These ETFs let you invest outside Canada

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

Consumer-focused ETFs add stability

Consumer companies such as Walmart, Kellogg and Nestle provide basic goods that consumers need, even during a recession. It is therefore not surprising that these companies have relatively consistent revenue and profit histories and are able to maintain their dividends even during tough economic times.

These providers of consumer staples are also part of a very select group that help protect investor portfolios during market downturns.

How bear market affects certain sectors

When stock markets drop, most stocks will fall along with the market....

2 min read

Pat McKeough

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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.