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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Over the long run, stocks tend to perform statistically better during certain times of the year, with some degree of predictability. Seasonal investing is a strategy that attempts to exploit these market patterns.
Sell in May and go away?
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Momentum investing has been popular for many years, and some studies (see below) suggest it can be superior to other strategies—at least when using historical data and in evaluating it in retrospect.
Momentum stocks may move higher as traders buy these widely followed stocks on the latest upswings....
Stock market volatility sometimes appears when least expected. However, volatility as measured by the BetaPro S&P 500 VIX Futures ETF (Toronto symbol HUV), has substantially subsided in the months following a big spike in December 2018. As a result, this ETF, which gains in value when volatility rises or declines, lost 3.2% in July and is now down 50.7% over the past six months.
Meanwhile, the Horizons Marijuana Life Sciences ETF (Toronto symbol HMMJ) dropped 11.7% in July as the CEO of its top holding, Canopy Growth, was let go and CannTrust, another of its top holdings, violated licensing rules....
ETF providers in Canada and the U.S. continue to launch new funds to sustain investor interest. This month, we highlight one fund holding companies involved in space-related activities. Another ETF offers its own take on dividends.
An ETF investing in space-related companies launched in early April 2019....
Britain voted in June 2016 to leave the European Union. This means that 40 years of economic and social integration will have to be untangled and new rules for doing business with the EU will have to be established.
Former British prime minister Theresa May made three unsuccessful attempts to get the U.K....