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section header ETF fundamentals

subsection header Strategies

Liquidity management

ETFs can be a good option for an investor who has a large temporary cash position.

Such a cash position may tilt an investor's portfolio away from its targeted allocation to equities or fixed income. Over extended periods, that position can result in performance shortfalls relative to benchmarks or financial goals. Why? Historically, equity and fixed income markets have had more periods of positive returns than periods of negative returns. The longer the time period, the stronger this performance bias. Investing a temporary cash position in ETFs reduces the likelihood of such performance shortfalls.

 

Points to consider

  • Equities and/or fixed income investments could underperform cash during the transition period.
  • Trading costs may offset some of the potential advantages.

Basics

Learn the basics of ETFs, including their history, how they compare to mutual funds, what types are available and more.

Management

Learn about the different types of exchange-traded products, how index and active ETFs are managed and more.

Trading

Learn about ETF trading, common order types, premiums and discounts, liquidity considerations and more.

Commissions, management fees, and expenses all may be associated with investment funds. Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; please read it before investing. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. Vanguard funds are managed by Vanguard Investments Canada Inc. and are available across Canada through registered dealers.

This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial and/or tax advisor for financial and/or tax information applicable to their specific situation.

All investment funds, including those that seek to track an index are subject to risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market. While the Vanguard ETFs are designed to be as diversified as the original indices they seek to track and can provide greater diversification than an individual investor may achieve independently, any given ETF may not be a diversified investment.

All monetary figures are expressed in Canadian dollars unless otherwise noted.