What is Investment Strategy?

Strategy Types

• Index (passive) — Replicates a benchmark. Low fees (0.03%-0.25%). E.g., VFV.TO (S&P 500), XIC.TO (TSX).
• Active — Human portfolio manager. Higher fees (0.50%-1.5%). Aims to beat the market.
• Factor — Targets a return factor (value, momentum, quality, size). E.g., VVL.TO (value), XMTM.TO (momentum).
• Currency-hedged — Eliminates USD/CAD currency risk. E.g., VSP.TO (hedged S&P 500).
• Covered call — Sells options to generate income. Caps upside potential. E.g., ZWB.TO.

Key Takeaway

For beginners, index ETFs offer the best return-to-fee ratio. Active and factor strategies add complexity without guaranteeing better results.