Everything you need to know about ETFs
An ETF (Exchange-Traded Fund) is a type of investment product that owns and manages an underlying basket of assets (equities, bonds, commodities, derivatives, etc.) and divides the ownership of those assets into individual shares.
Lower feesETFs strip away the unnecessary layers of fees that typically plague other investments, such as mutual funds. Because they trade directly on a stock exchange, you do not have to pay added costs such as trailer fees, sales charges, etc.
DiversificationETFs typically invest in a basket of underlying companies, commodities, etc. So, purchasing an ETF lets you gain exposure to many different companies at once.
DividendsBecause the companies an ETF holds pay a dividend, the ETFs will pass the dividend onto you.
Flexible investment optionsInvestors can borrow funds (also known as buying on margin) to purchase ETFs. This is convenient for people looking to use leverage to their advantage. Investors can also short ETFs, profiting when the ETF declines in price.
ETFs are similar to mutual funds, but with different qualities:
Majority of ETFs are index funds and attempt to replicate a specific index of securities such as stocks, bonds, currencies, and commodities, etc.
Track certain indexes or sectors and typically consist of 100% stocks
Invest in different kind of bonds (corporate, federal, and provincial) based on the funds objective.
Invest in commodities such as precious metals and agricultural products
Constructed to track the performance of currencies
Actively managed ETFs
ETFs where the fund manager is able to make changes based on current market conditions.
Designed with the use of derivatives to earn profit from declining markets
Use debt and derivatives to increase the performance of a certain index, sector or asset class
Asset allocation ETFs
An ETF of ETFs, made up of several "sub-ETFs." This provides a whole portfolio's worth of assets—global equities and fixed-income—in a single ETF.
Offer exposure to the alternatives asset class. There are various alternative classifications, including hedge fund, long/short, managed futures and a few others.
With Questwealth Portfolios, you receive your own pre-built portfolio of ETFs designed by experts to help you achieve your financial goals faster.
You can purchase ETFs yourself with a self-directed account. Or you can get a pre-built portfolio of ETFs with a Questwealth Portfolios account.
You can buy ETFs in any type of account. RRSP, TFSA, RESP, margin. You can hold an ETF in any of them.
No, ETFs require no minimum to invest. You can buy as little as one share of any ETF available.