ETF Trends
ETF Trends

Canada-related exchange traded fund (ETFs) are experiencing an uptick in activity as the economy expands on growing global demand.

Canada’s economy grew 3.3% in the fourth quarter as increased exports, higher global demand for industrial metals and crude oil, consumer spending and stable inflation have helped pushed the economy along, writes Greg Holden for ForexYard. [Canada ETFs: An Indirect Commodity Play.]

Additionally, higher oil prices have fueled the rise in the Canadian dollar, or “Loonie” – the USD/CAD pushed below its 23.6% Fibonacci level, a low last seen in Feb. 2008. The Loonie is also stable pricing against the Japanese yen and the Swiss franc.

Still, a few economists are concerned that Canadian exports will experience challenges brought on by currency growth and weaker output in industrial production. If the currency growth rate persists, exports could be dampened over the next two quarters.

As the Canadian economy improves, Bank of Canada Governor Mark Carney feels confident about raising interest rates later this year, reports Greg Quinn for Bloomberg. Carney is urging companies to boost investment to regain lost competitiveness. He also believes that the recovery will be led by exports and business investment over the next few years. Canada’s total output grew 3.1% for 2010.

The Canadian Venture Capital and Private Equity Association stated that Canada’s private equity will show another strong year in 2011 on deal making in its midmarket and improving fund-raising environment, reports Pav Jordan for Reuters. So far, more private equity capital has been raised in 2011 than all of 2010 – around $5 billion in private equity was invested in Canada last year. Companies in the mid-market range, or between $100 million through $500 million, will likely experience the most attention this year as the economy builds up momentum.

For more information on Canada, visit our Canada category.

  • iShares MSCI Canada (NYSEArca: EWC)
  • IQ Canada Small-Cap ETF (NYSEArca: CNDA)
  • CurrencyShares Canadian Dollar Trust (NYSEArca: FXC)

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.