Investors looking for opportunity with exchange traded funds tracking ex-US developed markets do not have to look far because Canada’s equity markets look primed for more upside. For example, the iShares MSCI Canada ETF (NYSEArca: EWC) is up 3.4%.
That is after a recent decline, one many market observers believe Canadian stocks will rebound from. Oil prices play into the equation because Canada is one of the world’s largest oil producers.
Canada’s oil production could either lift or weigh on the economy, depending on the energy market. Canada is one of the largest non-OPEC producers in the world.
EWC and Canadian stocks got a boost from the production cut announced earlier this month by the Organization of Petroleum Exporting Countries. OPEC plans to diminish output to a range of 32.5 to 33.0 million barrels per day from its current estimated output of 33.24 million barrels per day. While Saudi Arabia, OPEC’s biggest producer, has agreed to reduce output, Iran, Libya and Nigeria might not follow suit.
Other Canada ETFs include the First Trust Canada AlphaDEX Fund (NYSEArca: FCAN), SPDR MSCI Canada Quality Mix ETF (NYSEArca: QCAN) Guggenheim Canadian Energy Income Fund (NYSEArca: ENY) and the IndexIQ Canada Small Cap ETF (NYSEArca: CNDA).
The CurrencyShares Canadian Dollar Trust (NYSE: FXC). FXC, which tracks the movements of the loonie against the U.S. dollar, has also recently been solid among developed market currency ETFs.
“The Loonie has slumped for years. Ever since the end of the last gold bull market. That’s not a coincidence. Mining is VERY important to the Canadian economy,” according to ETF Daily News. “In fact, mining accounts for 19% of Canada’s total exports. Canada ranks in the top five countries in the global production of potash, uranium, nickel, cobalt, aluminum, platinum, sulphur, tungsten, diamonds, graphite, gold and more!”
The $3.2 billion EWC, the largest Canada ETF trading in the U.S., allocates about a third of its combined weight to energy and materials stocks. Financial services names represent 42.3% of the ETF’s weight.
Canada’s GDP is growing faster than that of the U.S. and at a solid rate for a large developed market.
“Canada is growing at around 2.6% to 3%, according to the Bank of Canada. The U.S. is growing at around 1.9%, after 1.6% last year. And some forecasters put U.S. growth lower,” according to ETF Daily News.
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.