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Worried About The Election? Then Consider Canadian ETFs

Thursday, October 20, 2016 8:49
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Canada flagInvestors worried about how domestic markets will react to next month’s election can instead look north to Canadian equities, which are easily accessible in the ETF space.

Sometimes, we will even hear of more than one celebrity mentioning their wish to “move out of the country,” if a certain party’s candidate is elected. More than once, Canada has been mentioned as a potential destination for said disenfranchised celebrity.

So today we made an executive decision to revisit Canada’s equity market as represented in ETF land. Canada of course from a country standpoint is tracked by the well tenured EWC (iShares MSCI Canada, Expense Ratio 0.49%) which debuted way back in March of 1996 and is currently the largest “Canada Equity” based ETF in the U.S. listed marketplace by a mile with $3.04 billion in assets under management presently.

The underlying portfolio of EWC has a substantial weighting to Financial Services (36%), followed by lesser exposures to Energy (22%), Basic Materials (11%), Industrials (9%), among lower weightings to other industry sectors. From an individual equity standpoint we see the top holdings in the fund as follows: 1) RY (7.73%) 2) TD (6.90%), 3) BNS (5.34%), 4) CNI (4.27%), 5) SU (3.87%), 6) BMO (3.53%), 7) ENB (3.42%), 8) TRP (3.18%), 9) CNQ (2.94%), and 10) CM (2.56%).


Interestingly, even though EWC has proven itself over time to be formidable in terms of being able to hold several billion dollars at a time in assets under management as an ETF, there are only five other competing ETFs in the “Canada Equity” space, and all of them can likely be considered “niche” strategies in terms of their methodologies and investment objectives. The second largest fund after EWC in terms of asset size hones in on the Energy sector specifically, and is the $30 million ENY (Guggenheim Canadian Energy Income, Expense Ratio 0.71%). This ETF holds twenty-nine individual Canadian domiciled companies that are specifically involved in the “Canadian royalty trust market” and the “Oil sands producers.”

As one might note here, there is a significant drop-off in terms of the AUM size of the second largest fund here ENY, as compared to the largest fund EWC, and this trend continues throughout the list of remaining Canada Equity funds currently listed:

  • QCAN (SPDR MSCI Canada Quality Mix, Expense Ratio 0.30%, $18.5 million in AUM),
  • CNDA (IQ Canada Small Cap, Expense Ratio 0.69%, $11.1 million in AUM),
  • HEWC (iShares Currency Hedged MSCI Canada, Expense Ratio 0.51%, $10.8 million in AUM), and
  • FCAN (First Trust Canada AlphaDEX, Expense Ratio 0.80%, $7.1 million in AUM).

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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