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All trading basics

Exchange Traded Funds

What are ETFs?

Exchange Traded Funds (ETFs) offer investors the opportunity to diversify their investments while being able to trade just like stocks. ETFs trade on most major exchanges. In Canada, the largest family of ETFs is iShares, managed by Barclays Global Investors Canada Limited and traded on the Toronto Stock Exchange.

ETFs combine the advantages of stocks and those of index funds. Like stocks, they are liquid and easy to track. Like index funds, they provide diversification, market tracking and low expense ratios. In short, ETFs are powerful investment tools you can use to get the exposure you need, at the level you want, at the moment you need it.

Over the years, investors have learned that appropriate asset allocation is vastly more important than a hot stock tip; that portfolio diversification makes far more sense than putting all your eggs in one basket; and that taxes can erode some traditional mutual fund returns. ETFs can provide a solution for asset allocation, diversification and tax efficiency; helping to build a cost-effective, balanced core portfolio.

Source: Barclays Global Investors Canada Limited. Used with permission. Adapted for use by Desjardins Online Brokerage.