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portfolio strategy

Three years of glorious global stock market returns have not gone unnoticed by Canada's ETF companies.

In the past 18 months, they've added substantially to what was once a skeletal selection of funds offering exposure to international (the world outside North America) and global markets (international plus U.S. stocks). In this fourth instalment of The Globe and Mail ETF Buyer's Guide, we look at the newly bulked up selection of core international and global ETFs, as well as emerging market funds.

The ETF Buyer's Guide has already covered funds in the Canadian and U.S. equity categories, as well as bonds. (Still to come in the weeks ahead: A look at Canadian dividend and diversified income ETFs, followed by U.S. and international dividend/income funds.)

ETFs are a low-fee version of mutual funds that trade like a stock. Traditionally, ETFs tracked major stock and bond indexes; today, many funds follow more obscure indexes or have a manager who picks stocks. To invest in ETFs, you need a brokerage account. For help on that, consult my latest ranking of online brokers (online at tgam.ca/online-broker-survey).

And now for a quick word about currency hedging, which cuts the distortion in returns caused by our dollar's ups and downs versus global currencies. It's useful to have hedging when the Canadian dollar is rising, but you'll find it a drag on returns when our currency is falling. ETFs that are hedged typically have the term "CAD hedged" in their name, with CAD being an investment industry short-form for the Canadian dollar.

Here are some explanations of the terms you'll find in the guide.

Assets: Shown to give you a sense of how interested other investors are in a fund; unless they're new, the smallest funds may be candidates for delisting.

Management expense ratio (MER): The main cost of owning an ETF on an ongoing basis; as with virtually all funds, published returns are shown on an after-fee basis. The info here is up-to-date and may differ from backward-looking fee numbers published elsewhere.

Trading expense ratio (TER): The cost of trading commissions racked up by the managers of an ETF as they shuffle the portfolio to keep it in line with a target index; add the TER to the MER for a fuller picture of a fund's cost.

Dividend yield: Mainstream indexes can be a good source of dividend income.

Average 30-day daily trading volume: Trading of less than 10,000 shares a day on average tells you an ETF isn't generating much interest from investors.

Top three holdings: Some TSX-listed international and global funds have U.S.-listed ETFs as their main holding. If that's the case, then there are implications for the withholding taxes that may apply to your dividends. See our ETF tax primer for more information (tgam.ca/EHxP).

Click here for a printable spreadsheet

*management fee only; shown for newer funds that do not yet post a full MER (management fees are a component of MER);
Source: ETF company websites; globeinvestor.com

Click here to download an excel version of the table.