ETFs
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
iShares recently published its future megatrends report and launched two new ETFs aimed at capitalizing on them. Here’s your quick look at both of iShares’ new funds. Each one is a buy, but only for aggressive investors willing to bet on the broad unfolding of these industry-disrupting trends.
BlackRock’s iShares recently introduced its new megatrend investing outlook, which includes a line of exchange-traded funds aimed at profiting from structural shifts influencing the global economy and society, generally.
The five megatrends identified are technological breakthroughs, emerging global wealth and shifting economic power, climate change and resource scarcity, demographics and social change, and rapid urbanization.
To profit from these trends, BlackRock introduced two new ETFs:
ISHARES CYBERSECURITY & TECH ETF $25.13 (New York symbol IHAK) invests in companies involved in cyber security and technology, including cyber security hardware, software, products, and services....
The Ferrari motor car manufacturing business was started in 1929 by Enso Ferrari with the goal to build a car that people would dream of owning, but which only a few could ever afford. Ninety years later, the vision of the company (symbol RACE on the New York exchange) still refers to “Italian excellence that makes the world dream.”
While Ferrari manufactures motor cars, it is positioned as an aspirational luxury goods business....
The Italian economy ranks among the biggest in the world but has offered investors very little growth for the past decade. High unemployment—especially among the country’s youth—as well as regional income disparities and high government debt are key problems.
Still the country is home to some exceptional companies, such as Ferrari (see page 106), that flourish despite the difficult overall economic situation.
Here is one ETF buy that provides you with exposure to the top public companies in Italy.
ISHARES MSCI ITALY ETF $26.98 (New York symbol EWI; TSI Network ETF Rating: Aggressive; Market cap: $233.4 million) offers investors exposure to Italy’s top publicly listed companies.
Financial firms account for 24.5% of its assets, while Utilities (21.2%), Energy (17.2%), Consumer Cyclicals (15.0%), Industrials (14.3%) and Telecommunications (3.5%) are other key segments.
The ETF holds a portfolio of 24 stocks; the top 10 make up a high 70% of its assets.
Those top stocks include Enel SpA (utilities; 18.1%), Eni SpA (energy, 11.3%), Intesa Sanpaolo (financials, 10.1%), UniCredit (financials, 6.5%), Assicurazioni Generali (financials, 4.6%), Fiat Chrysler Automobiles (consumer cyclical; 4.2%), Ferrari NV (consumer cyclical, 4.0%), Atlantia (industrials, 3.9%), CNH Industrial (industrials, 3.7%) and Snam SpA (utilities, 3.7%).
The ETF started in 1996 and charges investors a moderate 0.47% MER....
ETFs remain popular investment vehicles for investors. In the U.S., total net inflows into ETFs amounted to $197 billion (for the year to the end of September). This was about the same as 2018, which saw record inflows. Canadian ETFs attracted net new money of $15.5 billion so far this year (up to the end of August)....
As their name implies, value stocks trade lower than their fundamentals would suggest. Investors perceive them as undervalued with the potential to rise. Even so, it’s best for you to zero in on the shares of quality companies with a consistent history of sales and earnings (or the ETFs that hold them)....
Gold demand in the first half of 2019 jumped to a three-year high of 2,182 tonnes largely due to record-level central bank purchases.
Altogether, central banks bought 374 tonnes. That makes for the largest net increase in global gold reserves for the first half of the year in nearly two decades.
Buying was spread across a diverse range of emerging-market countries....
Narrowly focused agricultural commodity ETFs can give you spectacular returns when markets rise. However, there are risks to match.
A good example is the TEUCRIUM SUGAR FUND $6.54 (New York symbol CANE), which uses futures contracts to invest in sugar....
Precious metals should let you profit over the next few years if inflation rises (a clear possibility), and gold, silver and platinum stocks attract new investor interest.
What’s more, if the world economy, particularly emerging economies, continues to expand, consumer gold purchases will rise as well....
VANECK VECTORS VIETNAM ETF $16.17 (New York symbol VNM; buy or sell through brokers) holds Vietnamese companies and foreign firms that get a significant share of their revenue from the Southeast Asian nation.
The ETF’s top holdings are Vinhomes (real estate), 7.9%; Vingroup (conglomerate), 7.5%; Vietnam Dairy, 7.1%; No Va Land Investment Group, 6.4%; Bank for Foreign Trade of Vietnam, 6.0%; and Mani Inc....
The ETF’s top holdings are Vinhomes (real estate), 7.9%; Vingroup (conglomerate), 7.5%; Vietnam Dairy, 7.1%; No Va Land Investment Group, 6.4%; Bank for Foreign Trade of Vietnam, 6.0%; and Mani Inc....
SPDR S&P CHINA ETF $89.77 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) tracks the S&P China BMI Index. The fund includes all publicly traded Chinese stocks available to foreign investors.
Right now, the SPDR S&P China ETF holds 372 stocks....
Right now, the SPDR S&P China ETF holds 372 stocks....