With Glowing Hearts, Canada ETFs Rise

ETF Trends

While we’ve been distracted by our own earnings hits and misses, Canadian stocks and related exchange traded funds are also pushing toward record highs on better-than-expected earnings results.

The iShares MSCI Canada ETF (EWC) has increased 12.9% year-to-date, trading near its highest level in three years. Meanwhile, the First Trust Canada AlphaDEX Fund (FCAN) , which employs growth and value screens to select holdings, is up 6.7% so far this year.

The lower performance in FCAN may be attributed to its heavier allocation to falling energy prices. The energy sector makes up 40.3% of the fund’s portfolio. In contrast, EWC tilts toward financials at 37.1%, followed by energy 25.6%.

The Standard & Poor’s/TSX Composite Index traded as high as 15,495.47 Tuesday and closed at a record high on July 25, reports Eric Lam for Bloomberg. [Canadian Dollar ETF Strengthens on Rate Bets as Inflation Rises]

“We’re going to keep bouncing along here until something upsets the apple cart,” David Cockfield, managing director and portfolio manager at Northland Wealth Management, said in a Reuters article. “There’s still money on the sidelines that seems to be coming in.”

However, valuations seem a little pricey, with the equity index hovering around 21.2 times earnings, the highest level since 2010. EWC shows a price-to-earnings ratio of 16.8, FCAN has a P/E of 17.1 and QCAN has a P/E of 15.7.

Canadian shares were strengthening on WestJet Airlines (WJA) and Norbord (NBD) earning beats

Looking ahead, investors will be watching the U.S. Federal Reserve’s next policy decision on July 30 – the U.S. is Canada’s largest trading partner.

Investors interested in the Canadian markets can also take a look at the recently launched SPDR MSCI Canada Quality Mix ETF (QCAN) , which has increased 3.7% since June 12. QCAN tracks a group of Canadian stocks based on value, quality and low volatility. [State Street Takes Quality Approach to Country ETFs]

iShares MSCI Canada ETF

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For more information on Canada, visit our Canada category.

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. 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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