Asset allocation ETFs
Asset allocation ETFs provide all-in-one portfolio solutions. By way of one low-cost comprehensive ETF, you can hold a globally diversified investment that is managed and rebalanced for you. These ETFs are available at various levels of risk.
Thematic ETFs
With thematic ETFs, you can invest in transformational new technologies and other very specific themes or niches. There can be incredible opportunities, but thematic ETFs can also carry additional risks. And, while the ETFs reduce single-stock risk, they still leave investors exposed to the risks of a sector.
Sector ETFs
You can purchase ETFs that only hold stocks from a certain sector. For example, you can own financial-, energy- or technology-focused ETFs, to name a few. These ETFs allow you to shape your portfolio’s sector allocation to be more aggressive, more conservative or more prepared for certain economic conditions, such as using consumer staples for a more defensive tilt.
Dividend and income ETFs
This type of ETF allows investors to focus on income generated by way of generous dividends and higher bond yields. Enhanced yield can also be created by way of covered call or put writing ETFs.
Active and factor ETFs
Most ETFs track an index and are passively managed. For active ETFs, portfolio managers take a different approach: Instead of following the market, they attempt to beat the market, and they may also seek better risk-adjusted returns.
Factor ETFs are rules-based. They use a set of guidelines and rules for equity or bond selection.
Cryptocurrency ETFs
Canada was the first country to offer true bitcoin ETFs—other bitcoin-sharing investments have been available elsewhere, including a trust from Greyscale. You’ll now find bitcoin and ethereum ETFs available from several providers. It’s an exciting asset class that’s gaining more widespread acceptance. But the risks are still great. Be prepared for incredible volatility. Given that, you might consider a very modest allocation, like 1% to 5%.
Cash ETFs
Many investors carry cash balances as they add new money to their accounts. Dividend and bond income can accumulate as well. Through cash ETFs, you can earn at least a little something as you wait to put that money to work.
