Here at the Fool, I tend to cover stocks, but every once in a while, an interesting piece of news about ETFs or mutual funds crosses my desk that piques my curiosity.
A recent National Bank of Canada (TSX: NA) report stated that a record 30 ETFs were launched in Canada in September, bringing the overall total to more than 600. Whether you invest in ETFs or not, that’s a significant milestone. Naturally, you probably would like to know if any of these ETFs are any good.
Here’s what I found
1. It’s not a new product launch as such, but the news is welcoming for investors trying to capture the S&P/TSX 60. On September 21, Horizons ETFs Management (Canada) Inc. announced that it was extending the four-basis-point rebate on the Horizons S&P/TSX 60 Index ETF (TSX: HXT) through September 30, 2018. As a result, the 0.03% management fee remains the lowest Canadian equity ETF in the world.
2. For those who believe in a business world where women and men are treated equally, paid equally, and given the same opportunities for career advancement, the Evolve North American Gender Diversity Index ETF (TSX:HERS) is an ETF you ought to consider.
Starting with a 1,156 Canadian and U.S. companies with a market cap of US$2 billion or more, the 150 stocks scoring the highest based on 35 points according to 19 gender criteria are selected and included on an equal-weighted basis. It is reviewed quarterly and rebalanced annually. If you care about this increasingly popular form of investing, the 0.55% annual fee should not scare you away.
They once said ESG funds were a gimmick, and today they’re a vital piece of the investment management pie. Expect the same for gender diversity.
3. If you’re dividend oriented, which a lot of Foolish readers are, WisdomTree has a fundamentally weighted ETF that invests in U.S. dividend-paying mid-caps. The WisdomTree U.S. MidCap Dividend Index ETF (TSX:UMI) invests in the top 75% of U.S. dividend-paying stocks by market cap after removing the 300 largest companies. It then tilts the individual weightings to favour higher-yielding stocks.
Historically, when it comes to U.S. equities, mid caps are often the forgotten market cap, but the truth is, they provide a better combination of earnings-growth potential, financial stability, and greater liquidity than either small-cap or large-cap stocks.
I write a fair bit about U.S. stocks, and my experience is that mid-caps are the sweet spot when it comes to above-average performance in U.S. equities. At 0.35%, WisdomTree gives you access to stocks you can’t get with a plain vanilla S&P 500 ETF.
4. For this final point, I won’t list any specific ETF providers, but in the month of September, there were at least nine or 10 fixed-income ETFs launched by as many as four companies. Fixed-income ETFs are especially crucial for Foolish readers because of their specific focus on individual stocks. Everyone over the age of 30 should have a sprinkling of fixed income in their portfolios, and ETFs provide a much more efficient way to deliver this in a diversified manner.
Bottom line
Even if you don’t care to invest in ETFs, some of which are pretty good, by examining their holdings, you provide yourself with potential stock ideas you might not have thought of otherwise.
With more than 600 ETFs in Canada today and much more in the pipeline, at the very least, you’re not going to have a shortage of investment ideas in the future.
Happy investing!
