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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GLOBAL X COPPER MINERS ETF, $35.55, 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 35.1% of the… 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
INVESCO SOLAR ETF, $42.01, is a buy for aggressive investors. The ETF (New York symbol TAN; buy or sell through brokers) tracks solar-related companies (including technology firms and utilities) listed on global exchanges.
Its top holdings are Enphase Energy (U.S.; home solar systems) at 12.6%; First Solar (China; solar… Read More
Generally speaking, Canadians are blocked from buying mutual funds that are registered in the U.S. unless those funds are also registered with provincial securities commissions. (Moreover, some Canadian mutual funds are only available in a limited number of provinces.)
Investors in this country can, however, buy… Read More
Last year, Canada saw the listing of 164 new ETFs. This month we highlight two of the most successful new launches in 2023. The first is an balanced ETF, while the second invests in technology companies with a covered call strategy.
PURPOSE ACTIVE BALANCED ETF $21.61 (Toronto symbol… Read More
Smaller companies can generate higher returns than their larger counterparts, but their shares are often riskier and less liquid, and may underperform for long periods.
Small cap stocks are also more volatile in times of unsettled or falling markets.
Still, if you focus on the best-quality small companies—or… Read More
The U.S. housing and homebuilding markets dropped in 2020 on fears that a COVID-induced catastrophe would disrupted the U.S. economy. The recovery, however, came quickly in 2021, aided by decades-low mortgage rates, limited housing supply, and a strong job market.
The recovery was nonetheless shortlived as the… Read More
Sociedad Quimica Y Minera (ADR symbol SQM on New York) is currently the largest holding of the iShares MSCI Chile ETF (see above), making up 16% of its total assets. SQM is a large, low-cost producer of lithium, iodine, and specialty fertilizers.
SQM’s share price fluctuates in… Read More
The Chilean economy will likely emerge from recession in 2024, further reducing joblessness and lifting wages. Consumer purchasing power will improve as inflation falls. Longer-term, as the world transitions to greener technologies, the global demand for copper, lithium, and renewable energy should rise. That represents… Read More
Smaller firms can sometimes generate higher returns than their larger counterparts, but they are often riskier, less liquid, and may underperform for long periods. One way to offset some of the risk is to focus on ETFs that hold top-quality small-capitalization companies.
Here’s a look at… Read More
BMO S&P/TSX CAPPED COMPOSITE INDEX ETF $28.09 (Toronto symbol ZCN; TSINetwork ETF Rating: Conservative; Market cap: $7.3 billion) tracks the S&P/TSX Capped Composite Index. The index includes over 200 top-ranked Canadian stocks, which represent more than 90% of the Canadian equity market. Individual stock weights are capped… Read More
BMO COVERED CALL CANADIAN BANKS ETF $17.30 (Toronto symbol ZWB) holds shares of Canada’s six largest banks (CIBC, TD Bank, Bank of Montreal, Bank of Nova Scotia, Royal Bank and National Bank).
The fund started up in January 2011. Its MER is a relatively high 0.71%.
BMO Canadian High Dividend Covered… Read More
The U.S. housing construction and improvement markets have recovered strongly from the lows they hit at the start of the pandemic in March 2020. In fact, they have gone on to new highs.
That growth includes a big jump in late 2023. That rise was spurred… Read More
ISHARES S&P/TSX REIT INDEX ETF, $15.83, is a hold. The ETF (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) lets investors tap all 16 Canadian real estate investment trusts in the S&P/TSX REIT Index. Investors pay an MER of 0.61%, and the fund gives you a 4.7% yield.
The… Read More
Most top global markets have rebounded since their big drop at the outbreak of the pandemic. Going forward, we think the outlook remains positive for quality stocks. One way to profit from that—while cutting your risk—is to invest in top ETFs.
Here’s a look at four… Read More
Traditional telecommunications service providers, such as Telus and BCE, are trading at substantially lower valuations than other “infrastructure” type companies. This is not only true for Canadian companies, but also for U.S. and other similar companies in Europe.
Infrastructure-type companies such as telecommunications, pipeline, utility, and… Read More
Hackers, organized crime, and even state-sponsored groups are increasingly targeting the Internet-linked networks and databases of governments and businesses to gain access to confidential information and demand large ransom payments.
The lucrative nature of online crime, combined with a relatively low risk of being caught, and… Read More
This month we highlight two new funds: the first is a global equity ETF from a large Canadian asset manager with a considerable number of ETFs already in place; the second is a long-short equity ETF from a Canadian hedge fund manager.
MACKENZIE ALL-EQUITY ALLOCATION ETF $20.66 (Toronto… Read More
The COVID-19 pandemic caused a massive decline in Brazil’s tourism industry as international visitors declined from over 6 million in 2019 to less than 1 million by 2021.
But the tourists are now returning with estimates indicating that 6.7 million tourists visited in 2023.
Tourism is a.. Read More
Brazil is one of the top-10 global economies, and it is richly endowed with a range of base commodities.
The country has great long-term growth potential, although in the near term, it needs to get its economy back on track. Here is one ETF that provides… Read More
