Skip to main content

It's welcome but slightly troublesome news that exchange-traded fund companies have been cutting fees. Welcome because low costs are a strong argument for building portfolios with ETFs, and fee cuts make them all the more attractive. Troublesome because some of the fee information in The Globe and Mail ETF Buyer's Guide published last year is outdated. We'll fix that in the second edition of the guide, which begins here and will continue over the months ahead. The schedule: Canadian equity ETFs first, then dividend ETFs, bond ETFs, U.S. equity ETFs and international equity ETFs.

Another reason to update the buyer's guide is to see how returns are unfolding for the many newer products available to investors. Many recently introduced funds follow different indexes than the S&P/TSX composite or S&P/TSX 60, the standard benchmarks for Canadian market returns. Are there some up-and-coming ETFs following different indexes that you should know about? Read on.

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, published late last year (read it here).

Here is an explanation of the terms you'll find in this ETF Buyer's Guide:

Assets

Shown to give you a sense of how interested other investors are in a fund; the smallest funds may be candidates for delisting.

Management expense ratio (MER)

The main cost of owning an ETF on an ongoing basis; as with virtually all funds, published returns are shown on an after-fee basis.

Trading expense ratio (TER)

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. Note many ETFs do so little trading that their TERs round down to zero.

Dividend yield

Mainstream indexes can be a good source of dividend income; shown here are yields based on recent actual payouts.

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; the less liquid an ETF is, the more potential there is for buyers to have to pay a premium to market price when buying.

Top three sector weightings

Most Canadian market ETFs reflect the fact that financials, energy and materials account for almost 70 per cent of the market; a few ETFs attack the market differently.

Top three stocks

Another view on which ETFs take a different approach to tracking the Canadian market.

Click here to download an excel version of the table.

* management fee only; the fund is too new to have computed a management expense ratio.
Sources: ETF company websites, Globeinvestor.com

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.