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.

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ETFs Library Archives

ETFs

Three financial ETFs—but just one is a buy

Banks and other financial services firms suffered in early 2020 as the pandemic took hold. But most have since bounced back. Meanwhile, once COVID-19 eventually subsides and economic activity strengthens, the best of these stocks should be strong performers. That’s all the more so because the pandemic has accelerated their shift to online services as a way of servicing clients while cutting costs.

Here are three ETFs—among them two Canadian-listed funds—that provide investors with exposure to U.S....

5 min read

Pat McKeough

ETFs

Don’t sell your best picks too soon

We generally advise against selling your best picks too soon. The same advice applies not only to your individual stock or ETF holdings, but also to your ETF portfolio, in general.

By holding on to your best ETFs or stock picks, you improve your chances of latching on to a market superstar—a stock or ETF that will wind up producing two or five or 10 times more profit than average....

1 min read

Pat McKeough

ETFs

Market outlook remains bright despite these risks

The overall outlook for stocks looks positive, powered by profit growth. Free-spending governments will initially drive that growth, with stronger consumer spending and business investment eventually taking over as drivers. Also, central banks are expected to keep interest rates low for some time to come.

Meanwhile, though, stock markets still face several risks.

First, COVID-19 could remain a problem for longer than expected....

1 min read

Pat McKeough

ETFs

Pass on this ETF: NVESCO CEF INCOME COMPOSITE ETF

A closed-end funds has a fixed asset base invested in a portfolio of securities. The value of the fund’s assets rises and falls depending on how it invests its funds. The units of the closed-end fund trade like stocks, and most often on a stock exchange.

Those units may trade above the per-unit value of the investments the fund holds....

1 min read

Pat McKeough

ETFs

They offer top stocks outside the U.S.

We still feel that virtually all Canadians should have, say, 20% to 30% of their portfolio in U.S. stocks, or in ETFs holding those stocks. In fact, for some investors, that’s all the foreign exposure their portfolios really need. Still, international markets can add further diversification and provide exposure to some top global leaders.

Here we highlight two ETFs that hold high-quality international stocks—but without U.S....

3 min read

Pat McKeough

ETFs

Six ETFs to widen your global exposure

All of the major global stock markets fell with the initial outbreak of COVID-19. But many top markets have since rebounded. We think the outlook remains positive for quality stocks, and one way to profit from that—while cutting your risk—is to invest in quality ETFs.

Here’s a look at four international funds that we believe are well-suited for your new buying....

7 min read

Pat McKeough

ETFs

COVID-19 challenged REIT ETFs

The speed of the March 2020 stock market decline, as well its rapid recovery to previous peaks, will rank high in the record books. For instance, the 34% drop for the S&P 500 took only 24 days while the recovery to its previous peak was achieved in 150 days.

At the broad market level, the Vanguard Total World Stocks ETF (VT) gained 14.3% for the year....

1 min read

Pat McKeough

ETFs

Here’s how we’re picking 2021’s best ETFs

When we look for ETFs to recommend, we start with what we see as the most important factor: what stocks does the ETF hold?

And when we look at those stocks, we use tools and measures from three key areas to form our assessment:

1) Investment-quality markers—we use them to award our TSINetwork investment-quality ratings;

2) Valuation factors, including the P/E and other financial ratios;

3) Extra value factors—hidden value and other overlooked pluses that help create outsized returns.

How we judge investment quality

The essence of investment quality is a company’s ability to survive a business setback and go on to still greater success when conditions improve....

6 min read

Pat McKeough

ETFs

Here’s three new ETFs directed at Canadians

This month we look at three new ETFs. The first is an actively managed ETF that invests in “frontier” technology companies; they’re selected by a manager with roots in venture capital. The next two funds are ETFs where their managers use a “black box” to pick dividend-paying companies.

INNOVATOR LOUP FRONTIER TECH ETF $54.32 (New York symbol LOUP) is an ETF invested in technology companies that its managers believe will drive the next wave of technological innovation.

Loup Ventures, a venture capital firm with two decades of experience in technology, is the ETF’s advisor....

1 min read

Pat McKeough

ETFs

A closer look at three top global players from Denmark

Novo Nordisk (New York symbol NVO) started up 85 years ago, and is considered a pioneer and leader in diabetes care.

The company claims a 28% share of the $50 billion global diabetes treatment market and half of the $20 billion insulin market....

1 min read

Pat McKeough

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Investors Association of Canada
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Financial Post Columnist
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Subscriber since 1996. Inner Circle Member Since 2006
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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.