There’s not an investment product easier to research on your own than exchange-traded funds.
For every ETF, there’s an online fund profile with almost all the information you need to assess whether it might work in your portfolio. But not all ETF companies do an equally good job with their online fund profiles. Either they make certain key metrics hard to find, or they’re slow to update their websites with the latest data. It’s not a deal-breaker if an ETF company’s online web profiles are comparatively sketchy, but it’s still noteworthy as a consideration in which companies and products to use.
Here are five investor-friendly characteristics of online ETF profiles:
Fees are shown prominently and clearly
One of the big draws of ETF investing is the low cost, at least for traditional index-tracking funds. An investor-focused ETF company understands this and displays the management expense ratio for funds prominently in its fund profiles. Showing just management fees, as some companies do, isn’t enough. Management fees account for most of the MER, but not everything. MERs are the definitive cost metric. One cost that pretty much every ETF company does not show prominently is the trading expense ratio, which measures the stock-trading costs incurred by the fund. You need to add the TER to the MER for the complete cost picture.
There’s a prominent link to ETF Facts documents
ETF Facts are concise four-page regulatory documents with plain-language information about a particular fund. For TER information, download a fund’s ETF Facts document.
Updates returns quickly after the turn of the month
Of course, you want the most up to date numbers when evaluating ETF returns. Some ETF companies demonstrate their understanding of this by updating the returns for their products promptly at the beginning of each month. Stale return data suggests a lesser level of care in keeping investors informed.
Makes yield data easy to find and understand
For high interest savings account ETFs, gross and net (after-fee) yield data is vital. For dividend-paying funds, you want to see the yield based on the past 12 months of distributions.
An investing rationale
There are well more than 1,000 Canadian-listed ETFs to choose from, with dozens or even hundreds of competitors in some categories. A useful ETF fund profile explains quickly and clearly what the fund does and why an investor should consider it. It’s not enough to say a fund tracks the performance of a particular index – that’s just boilerplate.
-- Rob Carrick, personal finance columnist
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Stocks to ponder
Boston Pizza Royalties Income Fund (BPF-UN-T) This high-yielding security is seeing positive price moment and is nearing a breakout of its trading range of the past two years. Its same-restaurant sales have risen sharply over the past year as the world puts COVID-19 restrictions behind it. Is this the right time for buy the fund? Jennifer Dowty looks at the investment case.
The Rundown
Tech is looking frothy. These other sectors may have better prospects
Tech valuations are looking uncomfortably high, and exciting as AI might be, anyone allocating new money right now is probably better to look at sectors that have been beaten down over the past year, says Gordon Pape. Here are some sectors and stocks he thinks are worthy of your attention.
Also see:
David Berman: There’s an easy way to bet against AI, but should you?
David Rosenberg: AI is not the major game changer some think it is - but it will be disinflationary
David Randall: As earnings loom, investors weigh recession resilience
The stock-picking strategy that’s been producing gains for nearly 90 years
The stock market spawns a plethora of stock-picking strategies, but a simple one has been producing gains for 86 years. The idea is to buy 10 of the 30 blue-chip stocks in the venerable Dow Jones Industrial Average that have the lowest price-to-earnings ratios each year. Norman Rothery looks at the returns it has generated, both way in the past and more recently.
International diversification makes sense, but the timing and specifics are crucial
If you’re a typical Canadian investor, most of the stocks in your portfolio are Canadian. And why not? You know more about Canadian companies than foreign ones. Plus, you don’t have to worry about currency fluctuations when you collect dividends in loonies and spend those loonies in Canada. Add in tax advantages and there would appear to be solid reasons for investors to stay close to home. Yet practically no one in the investing industry agrees with that cozy stand. In recent months, a stream of research papers has made the case for why most investors need more international diversification. What is behind this sudden outpouring of love for international diversification? Ian McGugan went looking for answers.
Also see: Citigroup downgrades U.S. stocks amid recession risks, upgrades Europe
Cruise lines have had a remarkable change of fortune
At midyear, three of the big cruise companies - Carnival, Royal Caribbean Group, and Norwegian Cruise Line Holdings - were among the top 10 performing stocks in the S&P 500. Consider that only three years ago, in the first months of the coronavirus pandemic, all cruise lines suspended operations and that, in the ensuing months, the shares of publicly traded cruise companies were devastated. Now, with fears of contagion ebbing and pent-up demand for pleasure trips being unleashed, cruise lines have had a remarkable change of fortune. Jeff Sommer of The New York Times takes a look at their breathtaking rebound.
Others (for subscribers)
The most oversold and overbought stocks on the TSX
Monday’s analyst upgrades and downgrades
Standard Chartered boosts 2024 bitcoin forecast to US$120,000
Ask Globe Investor
Question: My daughter is 18 and just opened a TFSA. Her investment time horizon is very long. There are a lot of good stocks to consider (Google, Microsoft, Amazon, etc.), but I wonder if you can suggest something better with a dividend. - Carolina A.
Answer: Given your daughter’s age and lack of investment experience, I’d suggest a well-established company with some growth potential and a history of regular dividend increases.
Canadian National Railway Co. (CNR-T) fits the bill. We originally recommended it in my Internet Wealth Builder newsletter in 2002 at $12.98. Twenty-one years later, we’re looking at a gain of 1,135 per cent, not including dividends. The yield is low, but CN has a history of increasing the payout each year, sometimes by a significant amount. The increase this year was almost 8 per cent. The downside risk is small, although if there is a recession expect a temporary retreat in the share price. Long-term, however, this would be an excellent investment for her.
--Gordon Pape (Send questions to gordonpape@hotmail.com and write Globe Question in the subject line.)
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Compiled by Globe Investor Staff