Can Canada ETFs Get Back on Track?

January 8th at 1:00pm by Tom Lydon

Canada’s exchange traded funds (ETFs) have been no strangers to the lackluster growth that has plagued developed markets of late, but that all could end soon.

Generally, the outlook on Canada is a positive one:

  • Canada lead all G7 nations in gross domestic product (GDP) growth in the initial stages of recovery from the global financial crisis. That’s largely thanks to stimulus and rising commodity prices.
  • Juliane Beltrame for CB Online reports that growth in the near future is fragile, however, the country does have a positive outlook. The IMF sited several “key risks” that could restrain the recovery and growth in employment, including an overheated housing market, high household debt and the weak recovery in the United States. [Canada ETF: The Case For Out Northern Neighbors.]
  • Unemployment, though still high, has declined over the last year. After topping out at 8.7%, it’s back down to 7.6%.
  • Alexandre Deslongchamps for Bloomberg reports that the Central Bank in Canada raised key rates to 1% and the quantitative easing the U.S. imparted for the second time may have a gradual positive effect upon the Canadian economy.

As the effects of government spending are waning, will the economy be able to sustain the growth it has notched so far? MDM Staff on Modern Distribution Management reports that Canada needs to deal with the pressures that face it in a timely manner if ETFs like iShares MSCI Canada (NYSEArca: EWC) and IQ Canada Small-Cap ETF (NYSEArca: CNDA) are to grow this year and beyond. [Canada's ETFs Are Plagued By Sluggish Growth.]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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