Funding Options

Funding your Foundation at TCN has never been easier!

One of the exceptional funding options that we recommend is Exchange Traded Funds (ETFS). ETFs are funds that track an index or sector. An ETF trades like a stock on the major exchanges. So this immediately gives you the best of both the stock and mutual fund characteristics. In fact, ETFs offer investors several advantages that give you more choice, more control, and more protection in your portfolio.

Flexibility. As opposed to a typical mutual fund or unit trust, which is priced only once each day, ETFs can be traded throughout the day on stock exchanges, similar in this way to a stock. This provides you with greater flexibility, allowing for limit orders and the ability to sell short.

Diversification. As stated earlier, ETFs permit you to purchase a basket of related stocks in just one share, thus allowing you to diversify your portfolio easily and reduce your risk.

Low cost and dependability. Quite simply, ETFs are index funds so they usually cost less to run than standard unit trusts. Investing in ETFs allows you to create your own well-diversified portfolio without sales loads, redemption fees and other common restrictions of unit trusts. Plus, as index funds, you know what you are getting and can choose which sector you want to invest in.

Tax Efficiency. One of the most annoying aspects of investing in no-load mutual funds is the dastardly distributions a fund is required to make, usually in December. You suddenly get a taxable distribution without buying or selling. It can be very annoying, and costly. Sometimes a fund can be hit with a taxable "gain" exceeding 20% of your investment.
With ETFs, however, distributions are rare. ETFs are currently all index funds, which usually have lower turnover than actively managed funds. Consequently, capital gains are limited unless you sell. In addition, since ETF investors trade shares on an exchange and not with the fund, ETF managers don't have to sell securities to pay off redeeming shareholders.

Global opportunities. If you want to invest in a certain country but don’t want the risk of owning a single stock, then ETFs are ideal. There are many ETFs that track foreign markets.

In Addition, investing internationally has become a huge trend, especially since a lot of the foreign markets are outperforming the U.S. markets and the U.S. dollar has fallen dramatically against a lot of major currencies.

Learn more about Exchange Traded Funds at Summit Trust.