Thinking of investing in exchange-traded funds (ETFs)? Read the ETF Facts first!
Take the time to read the ETF Facts to find out more about the ETF before you invest.
Since December 2018, your dealer (the firm) is required to deliver the ETF Facts to you no later than midnight on the second business day following the purchase of ETF securities. You can also consult the ETF Facts on the website of the company offering the fund, or simply ask your adviser for a copy.
What is the ETF Facts?
The ETF Facts is a four-page document that summarizes key information about an ETF in a simple, accessible and easily comparable format. It is designed to help you make an informed decision about your investment by including information such as a fund’s investments, risk rating, past performance and the costs associated with owning it.
The ETF Facts are an opportunity to have a conversation with your registered investment adviser about your investments. You may want to discuss how a particular ETF would fit within your portfolio or how certain features of the ETF, such as its fees and expenses, compare to other ETFs.
What Information is in the ETF Facts?
Here are a few sections of the ETF Facts you should pay attention to:
Quick Facts:
Includes information such as the start date and size of the fund, as well as the ETF’s management expense ratio. The management expense ratio, or MER, is a combination of an ETF’s management fee and its operating expenses.
Trading Information:
Provides information about the stock exchange where the fund is traded, the ticker symbol used to identify it and the currency in which it is traded.
Pricing Information:
This section provides quick information about the price of the ETF units.Theaverage bid-ask spreadis the difference between the price that a buyer is willing to pay and the price that a seller is willing to accept.
What does the ETF invest in?
This section provides a snapshot of how the ETF’s investments are allocated. It may also detail the particular index it is attempting to replicate. You will be able to quickly see the fund’s current top ten investments as well as the investment mix of the ETF’s investment portfolio. This information can help give you a sense of how diversified the ETF is. Depending on the type of the fund, this breakdown can be by industry, asset class or geographic location.
Distributions:
If the ETF makes money, it may make payments to investors called “distributions.” The ETF Facts document will tell you how often distributions are made. Talk to your adviser to discuss how to manage any distributions you may receive (including interest, dividend or capital gains).Distributions are not guaranteed.
How risky is it?
All investments have a risk rating ranging from low to high. An ETF with a low risk rating can still lose money. ETFs do not provide any guarantees of future performance. As with any investment, you might not get back the money you invested. An ETF’s risk rating can change over time. It’s important to understand the risks and circ*mstances that could affect the ETF’s performance so that you can choose an ETF that is suitable for you. Additional information about the risk rating and risk factors is included in the ETF’s prospectus.
How has the ETF performed?
This section shows how the ETF’s units have performed in each of the past 10 years (or in each of the years that have elapsed since the ETF’s start date, if the fund is less than 10 years old).
Trading ETFs:
This section explains how ETFs are traded and includes information about pricing and orders. ETFs have two sets of prices: market price and net asset value (NAV). They buy and sell on exchanges at market prices that can change throughout the trading day. Market price can be affected by supply, demand and the value of ETF investment holdings. NAV is calculated after the close of each trading day and reflects the value of an ETF’s investments at that point in time.
Who is this ETF for?
This section explains what types of investors may be suited for the ETF. You and your adviser should consider its holdings, performance and risks to help determine if the fund is suitable for you.
How much does it cost?
This section shows a more detailed breakdown of the fees and expenses you would pay to buy, own and sell units of the ETF. For example, you may have to pay your brokerage firm a commission every time you buy or sell ETF units.
The ETF pays management fees and operating expenses. While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns.
If you don’t fully understand the ETF Facts, talk to your registered investment adviser. Make sure you understand the investment before committing to it.
FAQs
The ETF fact sheet provides information on the fund's historical performance, including returns and volatility. The returns are typically presented as the average annual returns over the past one, three, five and 10 years.
When must an ETF facts document be provided to investors? ›
Take the time to read the ETF Facts to find out more about the ETF before you invest. Since December 2018, your dealer (the firm) is required to deliver the ETF Facts to you no later than midnight on the second business day following the purchase of ETF securities.
Where can I find fund facts? ›
The Fund Facts is a document that highlights key information for investors about a mutual fund or an exchange-traded fund (ETF). You can consult the Fund Facts on the website of the institution offering the fund, or simply ask for a copy.
What are the characteristics of ETFs in Canada? ›
ETFs and mutual funds also offer professional management, so you don't have to keep track of every security the fund owns. However, ETFs are different in that they can be traded throughout the day on an exchange at a market-determined price, providing additional flexibility and efficiency.
What is the difference between a fund facts document and an ETF facts document? ›
Your mutual fund dealer must deliver Fund Facts to you before you buy a mutual fund. Exchange-traded funds (ETF) have a similar plain-language document named ETF Facts. Your dealer must deliver an ETF Facts to a client within two days of a purchase.
What is the ETF facts document? ›
An ETF Facts document is a disclosure document required for Canadian exchange-traded funds, in addition to other regulatory disclosure documents such as the Prospectus.
Are fund factsheets a regulatory requirement? ›
The rules require a fund manager to prepare a report and to send it to unitholders on request, but there is no regulatory requirement to publish it, although in practice many firms publish annual reports on their website.
Why is it important that an investor receive a copy of the fund facts document when buying a mutual fund? ›
Fund Facts
It contains key information about a mutual fund, including what the fund invests in, how the fund has performed, the risks involved, and the costs of investing. The Fund Facts document is available for every class and series of a mutual fund.
What is the difference between fund facts and prospectus? ›
While the Fact Sheet provides recent performance data, the Prospectus often includes a more extensive history of the fund's performance, allowing you to see how it has performed over various market conditions.
What items are disclosed in the fund facts documents? ›
This includes the basic information on the background of the fund, including the date the fund started, its total value at the time the Fund Facts was produced, the fund's management expense ratio (MER), the name of the fund manager and portfolio managers, the fund's distributions and the minimum investment needed to ...
Fund facts documents are required to be updated every year and any time there's a material change to the fund. It's important to understand how a particular fund fits into your overall financial plan and with your other investments.
What is the purpose of the fund facts? ›
Using the Fund Facts document, you'll be able to find important information about charges and expenses like the fund's management expense ratio (including trailing commissions) and trading expense rating, as well as other fees. The management expense ratio, or MER, is a combination of a fund's management fee.
Who regulates ETFs in Canada? ›
How are ETFs regulated? Like mutual funds and other investments, ETFs in Canada are regulated by the securities commissions within each province or territory.
What is the structure of ETF in Canada? ›
In Canada, ETFs are legally organized as a mutual fund trust with the trust units listed and traded on stock exchanges like an individual stock.
What is ETF fund in Canada? ›
A guide to purchasing ETFs from Canadian fund companies
An exchange-traded fund, or ETF, is an investment product that contains a portfolio of diversified assets, such as stocks and bonds or a mix of both.
Do ETFs have financial statements? ›
The financial statements of the WRS have been prepared by ETF in conformity with generally accepted accounting principles (GAAP) for government units as prescribed by the Governmental Accounting Standards Boards (GASB).
Do ETFs have boards? ›
In addition, ETFs are subject to oversight by boards of directors. An ETF (like a mutual fund) must calculate its NAV (the value of all its assets minus all its liabilities) every business day, which is done typically at the close of the New York Stock Exchange.
Do ETFs have annual reports? ›
U.S. ETFs. The annual and semiannual ETF reports for the U.S. ETFs cover the one-year and six-month periods ended December 31st and June 30th, respectively, and are available within 60 days of the indicated period-ends. All investments involve risk, including possible loss of principal.
Do ETFs issue tax statements? ›
Annual tax statements
If your Betashares investment has paid a distribution during the last financial year, an annual tax statement will be issued. You may receive your statements separately if you invest in multiple funds. Statements are now available via Link Market Services' Investor Centre.
