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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VANECK VECTORS VIETNAM ETF, $13.76, is a buy for aggressive investors. This emerging market ETF (New York symbol VNM) lets you tap leading Vietnamese companies and foreign firms that get a significant share of their revenue from the Southeast Asian nation.
Your top holdings through this ETF are Vinhomes (real estate), 7.5%; Vingroup (conglomerate), 7.5%; Vietnam Dairy, 7.4%; the Bank for Foreign Trade of Vietnam, 6.8%; No Va Land Investment, 5.7%; and Mani (Japanese medical instrument maker with a Vietnam factory), 5.6%....
The major Canadian and U.S. stock markets have moved back up since their initial COVID-19 drop. Still, they have yet to regain their 2020 highs. Nonetheless, we think the worst is over for many stocks. We see ETFs as one way for you to profit from that recovery, while cutting your risk.
The best of these funds offer a diversifed group of stocks while charging you low management fees....
ISHARES S&P/TSX REIT INDEX ETF, $14.93, is a hold. The ETF (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) lets you tap all 21 Canadian real estate investment trusts in the S&P/TSX REIT Index. Investors pay a MER of 0.61%, and the REIT fund gives you a high 6.3% yield.
The ETF’s...
The Bank of Canada cut its benchmark interest rate to 0.25% from 1.75% in March. The move was meant to spur the economy after COVID-19 hit. Whether the bank holds that rate steady, or cuts it even further, depends on the country’s economic growth and unemployment levels.
Meanwhile, even for our conservative investors, we caution against investing in bonds....
At the broad market level, the Vanguard Total World Stocks ETF (VT) gained 6.3% in May, the Vanguard S&P 500 ETF (VOO), 6.0%, and the iShares MSCI Canada Equity ETF (EWC), 5.2%....
As China’s economy developed rapidly, it needed large quantities of natural resources for its infrastructure development and manufacturing expansion....
This month, we look at three tax-efficient ETFs launched by Horizons earlier this year.
The ETFs don’t hold actual stocks or other investments, but rather financial instruments called “total return swaps” that replicate the returns of indexes.
Instead of paying dividends or interest that is taxable each year, these ETFs reinvest the value of the payments and reflect them in the net asset value of the funds....
Central banks have reduced their primary lending rates over the past few months in an effort to help borrowers, including governments, corporations and individuals, cope with the economic fallout from the COVID-19 pandemic.
In addition, central banks have also commenced large-scale purchases of government and corporate debt in an effort to further inject money into the system and force down longer-term interest rates.
These actions have resulted in sharply lower interest rates available to lenders and investors....