ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.
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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VANGUARD TOTAL STOCK MARKET ETF $112.67 (Toronto symbol VUN; TSINetwork ETF Rating: Aggressive; Market cap: $9.65 billion) invests in U.S. publicly listed companies. That broader mandate gives this fund a wider reach than the typical U.S. large-cap ETF focused on the top 500 companies.
This Vanguard ETF tracks… Read More
Closed-end funds work with a fixed asset base invested in a portfolio of securities. The value of their assets rises and falls depending on how they invest. Their units trade like stocks, and most often on a stock exchange. They may trade above the per-unit… Read More
Uranium prices have retreated lately but are still at 16-year highs. The gain has been fuelled by rising demand and constrained supply. Demand growth is supported by several factors: commitments provided by major world governments to increase the use of uranium in electricity production; the… Read More
GLOBAL X COPPER MINERS ETF, $43.85, is a buy. The ETF (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) lets you track the Solactive Global Copper Miners Index, with 38 global mining and exploration firms. It started up in April 2010.
Canadian firms make up 38.2% of the… Read More
ISHARES MSCI JAPAN INDEX FUND, $69.38, is a buy. The ETF (New York symbol EWJ; buy or sell through brokers; us.ishares.com) aims to mirror the return of the Morgan Stanley Capital International Japan Index.
The fund’s top holdings include Toyota, 5.3%; Mitsubishi UFJ Financial, 3.2%; Sony Corp., 2.8%; Hitachi (conglomerate),… Read More
We think foreign stocks can safely make up 10% of a conservative investor’s portfolio. One way is through exchange traded funds (ETFs) with an overseas focus. The best of those ETFs charge you very low management fees yet offer you well-diversified, tax-efficient portfolios of high-quality… Read More
Most precious-metal stocks dropped, along with the market, in March 2020. They then quickly reversed that trend to soar for investors, in part because of gold’s appeal as a “safe harbour” in times of economic uncertainty. In fact, in August 2020, gold jumped to over… Read More
You Can See Our Exchange-Traded Funds Portfolio For November 2024 Here.
ETFs in brief
Exchange-traded funds are set up to mirror the performance of a stock-market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings of that index or… Read More
Collectively, U.S. banks and insurance companies have performed well over the past year, beating the S&P 500 by a comfortable margin. Canadian financials also produced a strong performance. Still, banks generally have high debt, which occasionally can cause significant share price drops. We’ve always said… Read More
Prominent investor Warren Buffett once remarked that “Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing… Read More
This month we focus on high-income, leveraged single-stock ETFs; one was launched by Harvest and another, focused on physical gold bullion, was launched by BMO.
HARVEST ELI LILLY ENHANCED HIGH-INCOME SHARES $12.04 (Toronto symbol LLHE) invests in the shares of Eli Lilly & Co. (symbol LLY on New York)… Read More
From its bottom in March 2020 until mid-2021, the Korea Exchange advanced 120% on the back of a retail trading frenzy. Retail investors (locally known as “ants”) became large-scale participants in Korean stocks. Social media played a large role in fuelling speculative trading activities.
Large, global… Read More
When we last wrote about South Korea—in late 2022—we pointed out that the country’s stocks had seen a two-year run-up in prices and then a sharp decline. That left many high-quality companies trading at attractive valuations. Since that time the South Korean market has gained… Read More
Fees charged by ETFs have several components:
First are the operating expenses of the fund, such as the portfolio management fee, custody and administration fees, and marketing fees. These fees are all rolled into the Management Expenses Ratio (MER) and are paid directly from the ETF’s… Read More
Banks and insurance companies have performed strongly over the past year, easily beating the main market indices. However, banks, in particular, use a lot of debt to boost returns, and are prone to volatility when they encounter problems.
We’ve always said most investors should diversify within… Read More
BMO MSCI All Country World High-Quality ETF $69.66 (Toronto symbol ZGQ; TSI Network ETF Rating: Aggressive; Market cap: $730.7 million) tracks the MSCI All-Country World High Quality Index. From the broad universe of available stocks, those with high-quality scores based on three main fundamental —high return on equity, stable year-over-year… Read More
GLOBAL X INTERNATIONAL DEVELOPED MARKETS EQUITY ETF $48.32 (Toronto symbol HXDM) provides exposure to major companies listed in developed markets excluding North America. The fund, launched in September 2017, holds $557.3 million of assets, and it charges what sounds like a reasonable MER of 0.22%.
The ETF tracks… Read More
Companies that generate a lot of free cash flow (regular cash flow less capital expenditures) are generally in a strong financial position. For investors, free cash flow eliminates the distraction of non-cash deductions like goodwill, purchased R&D, depreciation and so on. That makes it easier… Read More
VANECK VECTORS VIETNAM ETF, $12.70, is a buy for aggressive investors. This emerging-markets ETF (New York symbol VNM) taps the leading Vietnamese firms as well as foreign firms that get a significant share of their revenue from this Southeast Asian nation. The fund started up in August 2009. Its… Read More
ISHARES MSCI TAIWAN INDEX FUND, $53.60, is a buy for aggressive investors. The ETF (New York symbol EWT; buy or sell through brokers) gives you direct exposure to some of the top public companies of this East Asian powerhouse economy.
The fund’s largest holding is Taiwan Semiconductor at 22.7%… Read More
