With more than 500 exchange-traded funds (ETFs) listed in Canada, how do
you pick the right one for your portfolio? That’s where it all starts. I
suggest there are four key criteria for selecting an ETF that can help
achieve your investment goals. Your financial advisor can work with you to
assess the four criteria during your search.
Most Canadian-focused dividend funds look for Canadian companies that have
the ability to pay, sustain, and grow their dividends. And most do a
reasonable job to meet their targets. Some managers, however, take the next
step, looking for an extra boost by supporting an active investing mandate
with a rigorous fundamental investment approach in the hope of delivering
at least index-matching longer-term returns or better. One such fund is the
Horizons Active Canadian Dividend ETF (TSX: HAL).
Vanguard Aggregate Bond Index ETF (TSX: VAB) provides broad exposure to the Canadian bond market. It is designed to
track the Bloomberg Barclays Global Aggregate Canadian Float Adjusted Bond
Index, net of fees. The index is cap weighted and holds a mix of government
and investment-grade corporate bonds of Canadian issuers. The ETF received
a FundGrade A+® Award
for excellence in 2016.
One of the fastest-growing segments in the investment universe is active
exchange traded funds (ETFs). In Canada, the number of active ETFs has
grown from 82 in December 2014 to over 143 at the end of last year1. Over
the same two-year time frame, assets have more than doubled, reaching a
record $17 billion in 2016. Although that’s just a sliver of the overall
$1.3-trillion Canadians have invested in mutual funds, it’s big enough to
start turning heads.
The Bank of Canada last week raised its benchmark target overnight bank
rate by 25 basis points, to 1.0%. Rising interest rates are both good and
bad news for income investors. On the plus side, they could eventually lead
to better rates from the banks on guaranteed investment certificates
(GICs), which are still a popular choice for many people. The downside is
the negative effect that higher interest rates have on bond prices and
interest sensitive securities, such as REITs and utility stocks. So where
can you find some decent income stocks that aren’t vulnerable to rising
With both Canada and the U.S. looking to dramatically increase
infrastructure spending over the next decade, the medium- to long-term
outlook for infrastructure is positive. A number of exchange-traded funds
(ETFs) are available, but one of the best is the three-time FundGrade A+ Award-winning
BMO Global Infrastructure Index ETF (TSX: ZGI).