It’s now more than a quarter century since the first exchange-traded fund launched in Canada, an event many market watchers assumed signalled the beginning of an inevitable, rapid disruption of the fund industry. Surely, the thinking went, making low-cost, tax-efficient investment diversification available to Canadians everywhere on the wealth spectrum would change everything.
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Read MoreInvesting in exchange-traded funds, commonly known as ETFs, has become a more taxing exercise as the long bull market in North American stocks shows signs of losing its fizz.
ETFs typically track a market index, which means that picking winners has not exactly been rocket science since the current upswing in equities began in March 2009. The S&P500 index had trebled by late October. Even the more volatile S&P/TSX Composite index was up more than 80 per cent from its low.
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If proof was needed of the burgeoning popularity of exchange traded funds (ETFs), consider the prospectuses filed in recent months by two of Canada’s top money managers.
Mackenzie Investments and TD Asset Management have built their business largely on mutual funds. But their prospectuses suggest that both are now on the verge of launching their own stable of ETFs.
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Read MoreIf you’re looking for an indicator of the world’s perception of Canada’s economy, you might consider the exchange value of our currency, hovering around 75 cents U.S.
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Read MoreAmid volatile markets, ETF investors hoping to reap better returns – and continue paying lower costs – are turning to “smart beta” alternatives to traditional index funds.
While market capitalization-based index ETFs reduce systematic risk, increasing evidence shows other factors may produce longer-term outperformance, says Barry Gordon, president of Toronto-based First Asset.
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For decades, mutual funds were the go-to investment for Canadians. While they still hold most of the country’s investment dollars, exchange-traded funds have gained ground and continue to grow strong. There are many reasons why investors are turning to ETFs – they’re cheaper, for one – but there are still a lot of people who aren’t familiar with how this security works. This Q&A looks at some of the basics you need to know about ETFs.
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