Dale Jackson

Personal Finance Columnist, Payback Time

Follow|Archive

Exchange traded funds have become a staple in many retail portfolios since being introduced to the market over twenty years ago. ETFs give average investors the same access to major global indices as big institutional investors at the same cost.

They can fill the gaps in a diversified portfolio, or they can become their own portfolio with exposure to every sector in every corner of the world.

Some investment advisors and most robo-advisors deal exclusively in ETF portfolios. In terms of performance they almost always beat actively managed fund over the long term.

A geographically diverse basket of indices shows how ETFs have performed, on average, each year, over the past 15 years. Returns would be slightly less when you strip out annual fees of about 0.2 per cent – but you get the idea. ETFs can be hedged or unhedged to the Canadian dollar but in this example they are hedged.   

Here is a look at some of the indices to keep an eye on

A wide variety of ETFs are also available for sectors such as commodities, technology, retail and financials, and sub-sectors. Costs could vary, so you need to do your homework.