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section header ETF fundamentals

subsection header Strategies

Portfolio completion

Portfolio completion may be used strategically or tactically to fill a gap in a portfolio.

For example, an investor may have little or no exposure to certain asset classes, market segments or sectors. Rebalancing to diversify the portfolio or transitioning into a model portfolio may not be possible because of trading restrictions or other issues.

In these cases, ETFs can be used to fill gaps until the portfolio can be rebalanced to the desired allocation. In the illustration, a value ETF fills a gap and increases the diversification of a portfolio that's heavily weighted toward growth equities.

 

Source: Vanguard. This hypothetical investment or portfolio strategy is shown for illustrative purposes only and shall not be construed as a recommendation to buy or sell any security or financial instrument, or an offer or recommendation to participate in any particular trading or investment strategy.

 

Point to consider

  • Greater diversification introduces the possibility of underperformance relative to a concentrated portfolio, but it also means less risk.

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.