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]
The ETF’s top holdings are Canadian Apartment REIT (13.5%), RioCan REIT (10.9%), Granite REIT (9.5%), First Capital Reality REIT (8.2%), Choice Properties REIT (8.0%), Dream Industrial (6.9%), SmartCentres REIT (6.9%), H&R REIT (6.3%), Boardwalk REIT (5.6%) and Allied Properties REIT (4.8%).
Its top holdings are First Solar (China; solar panels), 9.3%; NEXTracker Inc. (U.S. solar trackers), 9.3%; GCL Technology (China; polysilicon), 7.5%; Enphase Energy (U.S.; home solar systems), 6.9%; Sunrun (U.S.; panels), 6.5%; and Xinyi Solar (China; solar panels), 5.0%. The ETF’s MER is a relatively high 0.67%.
The long-term outlook for renewables remains positive as governments and corporations move steadily away from fossil fuels.
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.
The MER (Management Expense Ratio) is generally much lower on traditional ETFs than on conventional mutual funds. That’s because most traditional ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest so as to mirror the holdings and performance of a particular stock-market index.
Here we consider the risks and rewards of some of the main strategies employed by ETF managers to generate income for their funds.
For the month of July, there were advances from the top global technology companies (as illustrated by Toronto symbol TEC), uranium producers (Toronto symbol HURA), U.S. utilities (New York symbol VPU), and U.S. biotech companies (New York symbol IBB).
The fund is managed by Norges Bank on behalf of the Norwegian government. Its mission is to build financial wealth for the Norwegian people.
Time will tell how complete or successful that transition is. Meanwhile the country’s economy and stock market will likely remain heavily influenced by energy prices.
Here is an ETF that provides exposure to many of Norway’s top companies..