Exchange Traded Fundamentals Fully transparent investing, with lower fees and solid returns O Mike Magreehan is an Investment Mike welcomes your comments or mike.magreehan@canaccord. ne of the most intriguing investment classes to have emerged over the past de- cade is Exchange Traded Funds (ETFs). Growth and interest in ETFs has been stellar, especially when compared to mutual funds. ETFs are similar to mutual funds, but they offer numerous advantages that every in- vestor must know. When properly selected, ETFs can form a solid foundation for your portfolio. WHAT’S AN ETF? Sometimes referred to as “index” funds, ETFs are diversified baskets of stocks or bonds that replicate the performance of a market index. \UE sure to the performance of the S&P 500 (a basket of 500 largest American companies). Because ETFs are not actively managed like mutual funds, ETFs are referred to as “pas- sive” investments. The ETF market has since grown to over $1 trillion worldwide. The Toronto Stock Exchange (TSX) is home to 100 ETFs that track everything from fixed income to equities to sector-specific activities – such as utilities, energy, financials – and country-specific sectors – such as emerging markets – and even specialty sectors, like commodities and gold bullion. ETFs are fully transparent, in that the investor can view all of the holdings within that ETF at any time. Mutual funds do not offer this privilege. IShares, Canadian Large Cap TSX60, is Canada’s largest ETF. This ETF tracks Canada’s largest 60 companies as measured by their market weight. The largest company on the TSX is presently the Royal Bank and, as such, forms the largest weighting at eight per cent. | APRIL 2010 www.canadianchiropractor.ca feature
Chiropractic + Naturopathic Doctor April 2010: Page 38
