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Every flaw in your portfolio will be magnified to larger-than-life dimensions when the next stock market downturn happens.

Smart investors won’t wait. They’ll get out in front of the next market plunge by examining their holdings in a moment of relative calm. This brings us to the 2022 Globe and Mail ETF Buyer’s Guide, which rolls out at a time when stocks are taking a breather after a long surge from their pandemic lows.

First up in the guide are exchange-traded funds that hold Canadian stocks. What a year it was for these basic portfolio building blocks: double-digit gains up and down the line over the previous one- and three-year periods.

The ETF guide helps you dig into these returns by showing you the sectors and strategies used to produce them, and the resulting volatility. Expect your tolerance for big swings in the price of an ETF to be a lot lower when stocks tank.

Five more installments to the ETF guide will appear on alternating weeks over the next couple of months – they’ll cover funds holding Canadian bonds, U.S. stocks, and global/international stocks, dividend stocks and asset allocation funds, which are a fully diversified portfolio packaged into a single fund. Generally, ETFs must have at least five years of history to be in the Buyer’s Guide.

All types of ETFs are included – traditional index-trackers, funds that apply a screening process to the market and actively managed funds. A recurring theme in the guide is the benefit of owning low-fee funds that do nothing more than deliver the returns of widely followed stock and bond indexes.

To invest in ETFs, you need a brokerage account. For help on that, consult the 2022 Globe and Mail digital brokerage ranking. Also consider robo-advisers, which can build and manage a portfolio of ETFs for you at a reasonable cost.

Click here to download an Excel version of the guide.

Notes: Market data as of Feb. 15, 2022. Returns to Jan. 31, 2022. Source: Rob Carrick;, TMX Money, ETF company websites

Here’s an explanation of investing terms used in the ETF Buyer’s Guide:

  • Assets: Shown to indicate how popular a fund is. A $1-billion fund is a whale, while $100-million is a serious size.
  • Management expense ratio (MER): The main cost of owning an ETF on a continuing basis; returns are shown on an after-fee basis both here and on ETF company websites.
  • Trading expense ratio (TER): The cost of stock-trading commissions incurred by the managers of an ETF as they maintain the portfolio. Add the TER to the MER for a complete picture of a fund’s cost. Funds with more elaborate strategies can have significant TERs, while simple index-trackers often have a TER of zero.
  • Yield: Based in most cases on distributions paid over the previous 12 months. Distributions are primarily dividend income, but a return of capital may also be present.
  • Number of holdings: A higher number suggests you’re buying the entire market, while a smaller number suggests a more selective process is used to build the portfolio. You’ll need to decide whether that process is adding value.
  • Top three sector weightings: A key differentiator between Canadian equity ETFs. Financial stocks dominate our stock market, but some funds are deeper into the sector than others.
  • Returns: The ETF guide shows total returns, which reflect price changes in the stocks that a fund holds as well as dividends paid by those stocks.
  • Three-year beta: Beta is a measure of volatility that compares funds with the benchmark index (in this case, the S&P/TSX Composite), which always has a beta of one. A lower beta means less volatility on both the up and down side.
  • Launch date: The older an ETF is, the more likely you can look back at a history of returns through good markets and bad.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 16/04/24 3:25pm EDT.

SymbolName% changeLast
BMO S&P TSX Capped Comp ETF
BMO Low Volatility CAD Equity ETF
CI Morningstar Cda Momentum Idx ETF
Horizons S&P Tsx60 Index ETF
Ishares Core S&P TSX Capped Comp ETF
Ishares S&P TSX 60 Index ETF
Mackenzie Max Dvrs Cda Index ETF
TD S&P TSX Capped Comp Index ETF
Vanguard FTSE Canada Index ETF
Vanguard FTSE Canada All Cap ETF

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