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 Chinese economy was hit hard by the COVID-19 pandemic, but there are early signs of a recovery. While its economic growth is forecast to drop to 1.2% for 2020, its management of outbreaks positions it to bounce back in 2021. That also bodes well for investors’ long-term growth.
Here is one ETF that provides exposure to the top Chinese publicly listed companies.
ISHARES MSCI CHINA ETF $72.86 (Nasdaq symbol MCHI; TSI Network ETF Rating: Aggressive; Market cap: $5.8 billion) tracks the performance of the largest publicly listed Chinese companies that are available to international investors.
Consumer Cyclical stocks account for 31% of its assets, while Communication Services (22%), Financial Services (15%), Consumer Defensives (5.9%), Technology (5.5%), and Healthcare (5.3%) are other key segments.
The ETF holds a large portfolio of 609 stocks, although the top 10 make up 50% of its assets....
The relationship between China and the U.S. has further deteriorated since the start of this year. The list of issues includes the new security law in Hong Kong, South China Sea, Huawei, trade, intellectual property, and blame for the coronavirus. This has resulted in an effectively closed border between the countries and the forced closing of one regional consulate in each country.
While there is always a risk that the relationship could deteriorate further, it’s worth remembering that both countries have much to gain from maintaining good relations longer term.
Total trade between the two nations amounted to over $600 billion in 2018....
This month we look at two new ETFs launched by U.S. providers. The first promises to provide some protection when markets decline, and the second invests in companies that will benefit from the work-from-home trend.
NATIONWIDE RISK-MANAGED INCOME EQUITY ETF $27.45 (New York symbol NUSI) seeks to provide regular income, plus downside protection, from a portfolio of U.S....
Exchange-traded funds have traditionally offered investors three main advantages: ease of trading, low fees, and transparency. We still believe passively managed ETFs—which simply track benchmark indexes—do the best job of meeting those goals. However, actively managed ETFs, where fund managers tinker with their holdings to beat the benchmarks, are gaining popularity in Canada....
Actively managed exchange-traded funds are very similar to actively managed mutual funds. In both cases, the portfolio managers strive to beat their benchmarks.
However, whether they aim to use fundamental research, or computer driven analysis, actively managed mutual funds have struggled over the past decade to beat their benchmarks....
China, India and Asia’s other emerging markets have seen strong growth for several decades. Recently, though, their economies have been knocked back by stringent measures to curtail the COVID-19 pandemic. However, there are solid signs of recovery. That bodes well over the next few years for investors in emerging Asian ETFs....
The EVENTSHARES US LEGISLATIVE OPPORTUNITIES ETF $24.98 (New York symbol PLCY) aims to hold stocks in companies that will be impacted by U.S. government policy and regulations.
The fund currently holds 112 stocks. Top holdings include Avalara (sales tax software supplied to governments), Teladoc (virtual healthcare services), Axon Enterprises (technology and weapons such as tasers for law enforcement plus wearable cameras), and Tyler Technologies (information management solutions for local governments).
The ETF launched in October 2017, and charges a high MER of 0.75%.
Since inception almost 3 years ago, the fund has gained 17.7% compared to a gain of 25.7% for the broad-based Russell 1000 index.
The ETF’s managers believe that government policies remain one of the great overlooked drivers of investment performance....
Here’s a look at four international funds that we believe are well-suited for your new buying....
Right now, the SPDR S&P China ETF holds 734 stocks....
Companies that pay regular and growing dividends have performed very well over time compared to broad market indices.
A simple strategy capitalizing on that is to select ETFs holding stocks with a long history of uninterrupted dividend growth such as represented by the S&P 500 Dividend Aristocrats....