ETFs are flexible investment vehicles that can be used within a portfolio in many ways to meet different investment needs and objectives.
Similar to a mutual fund, an ETF is a pooled investment vehicle that owns the underlying assets (stocks, bonds, commodities, currencies) and divides ownership of those assets into shares. Unlike a mutual fund that can only be bought or sold directly with the mutual fund company at the end of the day at net asset value, an ETF can be bought or sold throughout the trading day like a stock on a stock exchange at the prevailing market price.
ETFs initially caught the attention of investors as an efficient investment vehicle for gaining access to broad passively managed equity indices such as the S&P/TSX 60, S&P 500, and MSCI EAFE. Over time they have evolved to track all the major investment categories, sub-categories, industries and sectors, providing investors the ability to use them in multiple ways in a portfolio.
ETFs can play an essential role in an investor’s overall investment strategy as they offer numerous benefits including:
ETFs can provide exposure to various asset classes such as equities or fixed income and a broad range of sectors and geographic regions including commodities or emerging markets.
Investors can generally see the portfolio composition of an ETF at any time as current holdings are available daily.
ETFs are listed on the stock exchange and can be bought or sold throughout the trading day.
Management expense ratios (MERs) for ETFs are generally lower than other investment solutions. However, it is important to remember that transaction costs (i.e. stock commissions) are incurred for every buy or sell, and advisor compensation, if any, is extra.
Investors who are considering adding one or more ETFs to their portfolio should first take a careful look at their own situation, investment style, knowledge level and time horizon to determine whether an ETF fits their overall investment strategy.
Learn about these flexible investment
and trading vehicles.
RBC Global Asset Management Inc. is Canada's largest fund company by assets under management (IFIC, as of August 31, 2017). Commissions, management fees and expenses all may be associated with investments in exchange-traded funds (ETFs). Please read the prospectus or Fund Facts document before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. ETF units are bought and sold at market price on a stock exchange and brokerage commissions will reduce returns. RBC ETFs do not seek to return any predetermined amount at maturity. Index returns do not represent RBC ETF returns. RBC ETFs are managed by RBC Global Asset Management Inc., an indirect wholly-owned subsidiary of Royal Bank of Canada. The indicated rates of return are the historical total returns for the periods including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, commission charges or income taxes payable by any unitholder that would have reduced returns.
RBC ETFs are available across Canada. The information contained on this site does not constitute an offer or solicitation to buy or sell any investment fund, security or other product, service or information to any resident of the U.S. or the U.K. or to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot legally be made or to any person to whom it is unlawful to make an offer or solicitation. The information is not intended to provide specific financial, investment, tax, legal or accounting advice for you, and should not be relied upon in that regard. You should not act or rely on the information without seeking the advice of a professional.
This information has been provided by RBC Global Asset Management Inc. (RBC GAM) and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. The information contained herein is from sources believed to be reliable, but accuracy cannot be guaranteed. Commissions, management fees and expenses all may be associated with investments in exchange-traded funds (ETF). Please read the prospectus or Fund Facts document before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. ETF units are bought and sold at market price on a stock exchange and brokerage commissions will reduce returns. RBC ETFs do not seek to return any predetermined amount at maturity. Index returns do not represent RBC ETF returns. RBC ETFs are managed by RBC Global Asset Management Inc., an indirect wholly-owned subsidiary of Royal Bank of Canada.
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