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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The largest cryptocurrencies by market value, Bitcoin and Ethereum, can be accessed by Canadian investors through ETFs such as the Purpose Bitcoin ETF (Toronto symbol BTCC) and the CI Galaxy Ethereum ETF (Toronto symbol ETHX).
In 2024, the country welcomed 32.4 million tourists, ranking 8th in the world in terms of arrivals. These tourists spent $42 billion during the year, up sharply from 2023 but still well below the $60 billion of 2019. The industry is credited with employing over 4 million people.
Well-diversified ETFs that offer exposure to commodity producers can, however, help investors overcome the problems associated with direct investments in physical commodities, or funds that track a single commodity.
Below, we look at three ETFs providing exposure to commodity producers. For more information on the risks and returns of commodities, see the supplement on page 80.
The ETF tracks the Solactive U.S. Large Cap Index. That index includes large companies listed on the U.S. public markets. Stocks are weighted based on their market values.
Stocks in the fund’s portfolio are equally weighted to reduce the risk associated with high exposure to individual companies. The stocks must also meet criteria for market cap and liquidity.
Here we discuss two ETFs that hold companies involved in the development of AI and more. Meanwhile, in the supplement on page 79, we look at how whole industries are being reshaped by the advances of AI companies, many of which are held by the following ETFs.
VANECK VECTORS VIETNAM ETF, $13.76, 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’s largest holding is Taiwan Semiconductor at 23.6% of assets....