Canadian investors love dividends, and they're more open than ever to global markets. So it's logical that one of the hotter trends in the exchange-traded fund business is U.S. and global dividend funds.
In the sixth and final instalment of the ETF Buyer's Guide, we look at dividend and income funds that focus on stocks from U.S., global (all markets), international (outside North America) and emerging markets. The Guide has already covered Canadian (here), U.S. (here) and international equity funds, as well as bond ETFs and Canadian dividend and income funds.
There's also an ETF tax guide that will help you understand the withholding taxes that may apply in various types of accounts to dividends paid by foreign companies.
ETFs are a low-fee version of mutual funds that trade like a stock. Traditionally, ETFs tracked major stock and bond indexes; today, many funds follow more obscure indexes or have a manager who picks stocks. To invest in ETFs, you need a brokerage account. For help on that, consult my latest ranking of online brokers.
Here are explanations of some of the terms you'll find in the Guide:
Assets: Shown to give you a sense of how interested other investors are in a fund; unless they're new, the smallest funds may be candidates for delisting.
Management expense ratio (MER): The MER is the main cost of owning an ETF on an ongoing basis; published returns are shown on an after-fee basis.
Trading expense ratio (TER): The TER is the cost of trading commissions racked up by the managers of an ETF as they shuffle the portfolio to keep it in line with a target index; add the TER to the MER for a fuller picture of a fund's cost.
Yield: Supplied by Globeinvestor.com and based on monthly or quarterly payouts and the latest share price.
Average daily trading volume: Trading of less than 10,000 shares per day, on average, tells you an ETF isn't generating much interest from investors.
Top sector weightings: Financial stocks dominate many dividend and income ETFs, so be cautious if you already have a lot of exposure to the sector.
Returns: ETF companies typically disclose total returns, or share price change plus dividends or distributions.
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Click here for printable spreadsheet
Note: *these are management fees, which will be slightly lower than the MER once it’s established for these new funds.
Sources: ETF company websites, Globeinvestor.com
Click here to download an excel version of the table.