ETF Insights blog

Whether to hedge or not is a question that most Canadian investors face at some point. Given the relatively small size of our economy (1.86% of global GDP) and stock market (3.13% of the MSCI World Developed Markets Index), diversification is essential. However, buying foreign assets leads to currency risk.

In this second and final part of the series, we delve into more questions that are rarely answered by ETF providers and look at how ETFs perform in periods of volatility, trading volumes and research resources.

ETFs’ popularity continues to grow among Canadian investors: a record-breaking $53 billion was invested in ETFs in Canada in 2021.

Over the past few years, ETF series have seen considerable growth. Essentially, an ETF series is simply a version of an existing or new mutual fund trust, such as series A, series D, etc.

In early 2022, we were reminded of what volatility can truly mean in terms of performance. Many single stocks (particularly in the growth space) experienced painful downward swings from their highs in 2021, and the Nasdaq confirmed it had entered a bear market.

Excess return and tracking error can be valuable tools when trying to measure the performance of an index ETF. But what do these terms mean, exactly?

One of the first decisions many investors make is regarding the asset allocation of their portfolio: this is typically the percentage of equities they’ll hold versus the percentage of fixed income assets.

An investing style can often reflect the investor’s style in other aspects of their life, from fashion-sense to hobbies and even food choice.

When the world’s first ETF was launched in Canada over 30 years ago, it was a fairly basic fund. It tracked the TSE-35 Index (the 35 largest companies in Canada listed on the TSX). Since then, ETFs have evolved enormously, but many people still think of them as simply replicating an index.

The Chinese word for crisis – 危机 – is made up of two characters: one meaning danger and the other opportunity.

No one likes to talk about their investment losses, but let’s be honest, it happens to even the world’s smartest investors from time to time.

Many investors know about exchange traded funds, or ETFs as they’re better known. However, some investors are unaware that there are actually three categories of ETFs, and they can deliver far more than simply mimicking an index’s performance.

Given that emerging markets account for 80% of the world’s population and almost 70% of the world’s GDP growth, this sector of the global economy is simply too big to ignore.

ETFs’ growing popularity seems to have no end in sight. Canadian ETFs currently hold almost $320 billion in assets, a 36.2% annual increase. Canadian investors seemingly can’t get enough of this flexible, low-cost, high-diversification option.

“Current inflation is just transitory.” How many times have you heard that recently? Both the Bank of Canada and the US Federal Reserve have been at pains recently to convince us that the current spike in inflation is only temporary.

Even before COVID-19, sustainable investments were experiencing a boom. In the two years to the end of 2019, responsible investing assets in Canada grew by 48%.

How seemingly similar index ETFs can have crucial differences – and how you can spot them

This series of articles, “Solving your investment problems,” will explore advisors’ and investors’ key concerns and suggest some of the best solutions for each one.

How seemingly similar index ETFs can have crucial differences – and why it matters

With Canada’s population aging at a rapid rate and demographics shifting, having enough income in retirement is becoming a key concern for investors.

Most investors’ portfolios contain core holdings, which track markets and typically aim to bring in consistent returns. One example of this would be a Canadian equity index fund. However, core holdings often provide returns that are close to the markets’ overall performance.

We often hear that you should invest in what you know – Warren Buffet is a high-profile exponent of this advice. However, over-investing in sectors we’re comfortable with can be very risky to our financial health.

DIY investors hit the headlines in a big way in early 2021 when a group of them caused several stocks (such as GameStop) to have massive volatility.

This series of articles, “Solving your investment problems,” will explore those key concerns and suggest some of the best solutions for each one.

Advisors and investors have a variety of concerns when it comes to growing wealth. Today’s financial markets bring several key challenges that investors didn’t have to worry about 20 years ago.

Many investors are good at stock picking across the spectrum of market capitalization in both Canada and the U.S. There is still more diversification work and education to do!

Asset allocation is essential for investors looking to maximize their growth potential, while managing risk. It can account for up to 92% of the variation in a portfolio’s returns.

Over time, the market itself will move a portfolio’s asset allocation away from its intended mix.

Money changes hands, often. And new money comes into play, hopefully just as often.

With the expected ongoing growth of the ETF industry, investors and fund providers should welcome the continued scrutiny by regulators across the globe.

I recently had the opportunity to present to Do-It-Yourself (DIY) investors at a recent conference event . I present some highlights below.

Fund providers are in the business of trust, and the monetization of trust is changing.

ETFs are the fastest-growing segment of the asset management industry and this momentum shows no sign of dissipating moving forward.

Over 80% of advisors surveyed in North America now use ETFs. This number has more than doubled in the last decade. Here’s how they are doing it and why, and from whom they may be taking their lead.

The application of ETF layers within an investment mandate or portfolio can be a powerful tool to allow active managers to focus more time on what they do best – security selection.

Perhaps more than ever, Canadians need a sense of confidence that they can achieve their investment and retirement objectives.