ETFs Defined

ETFs are a flexible investment vehicle that can be used within a portfolio to achieve a variety of needs and objectives.

Similar to a mutual fund, ETFs can provide access to a diversified portfolio of stocks or bonds in a single investment, but can be traded like a stock on an exchange.

Types of ETFs

The first ETF was created in Canada in 1990 and sought to closely match the performance of the Toronto Stock Exchange. The industry has since evolved to track all the major investment categories, sub-categories, industries and sectors, providing investors the ability to use them in multiple ways within a portfolio.

What are the benefits of an ETF?

ETFs can play an essential role in an investor’s overall investment strategy as they offer numerous benefits including:

Diversification
ETFs can provide exposure to various asset classes such as equities or fixed income and a broad range of sectors and geographic regions including commodities or emerging markets.

Transparency
With ETFs, investors know exactly what they are investing in with daily visibility into what securities the fund holds, how it’s performing and what it costs.

Liquidity
ETFs can be bought and sold on an exchange at market price whenever the market is open.

Cost
Management fees for ETFs are generally lower than other investment solutions, particularly for funds that investors plan to hold for the long term As with all investment vehicles, investors who are interested in including ETFs in their portfolio mix should ensure it fits their overall investment strategy.