section header ETF fundamentals
subsection header Management
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Why investment costs matter
Investment costs are a key driver of long-term performance.
The zero-sum game helps explain why. The theory states that the aggregate holdings of all investors in a particular market form that market. At any time, half of invested assets must outperform the average market return and the other half must underperform it. Once costs are subtracted, though, it becomes increasingly difficult to beat the average market return. This graphic helps tell the story.
Source: Vanguard
The zero-sum game provides a theoretical explanation for why costs are such an important influence on returns. It makes a case for keeping costs low, regardless of whether you choose an index or active strategy.
But it’s more than just theory. Research by Vanguard and others shows that what an investor pays for an investment can affect their net returns more than anything else.1
1 See the research: Vanguard's principles for investing success.
Basics
Learn the basics of ETFs, including their history, how they compare to mutual funds, what types are available and more.
Trading
Learn about ETF trading, common order types, premiums and discounts, liquidity considerations and more.
Strategies
Learn about strategic and tactical uses for ETFs, including asset and sub-asset allocation, portfolio completion, cash equitization and more.
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.
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.