Canadian elections could herald new investment direction

A seismic shift in the federal elections in Canada overnight could herald a significant shift in the investment environment in Canada as the country has moved left of centre after a decade of right of centre led politics.

Canada is the focus of some of Europe’s oldest collective investments, such as the UK listed Foreign & Colonial Investment Trust, which launched in 1868, and which has some 44% exposure to North American assets in its holdings today.

Justin Trudeau, scion of maverick 1970s Canadian prime minister Pierre Trudeau, is now set to lead a new Liberal Party government in Ottawa.

He campaigned on an anti-austerity platform to counter encumbent Conservative Party prime minister Stephen Harper, but in key sectors has sought to clearly distance himself from ongoing government policy, particularly with reference to the Keystone XL project to ship hydrocarbons via a new pipeline to the US market and refineries. Keystone has been blocked on the US side by the Obama administration, and Trudeau has made much of needing to ‘reboot’ Canada’s relationship with its biggest trading partner and ally.

His message clearly echoed with voters, as his party gained over 47% more seats than during the last election.

Data from FE identifies some 710 funds with over 10% exposure to Canada

Over three years, the top performer was an IT sector focused ETF, but there are also other growth and small cap focused funds that have performed well over the period.

However, the impact on both Canada’s overall economy and asset classes linked to commodities have taken a hit.

For example, leveraged ETFs investing in gold mining companies have suffered, along with those invested in precious metals more broadly, but also those focused on exploration as much as extraction.

Top performers 3-years

iShares S&P/TSX Capped Information Technology Index TR in EU-1.20-5.51-12.4241.19151.44
National Trust Company Economic Investment Trust Limited TR in EU-21.57-27.581.9730.89119.69113.8783.09
TANAKA Growth R TR in EU-0.43-11.15-5.5733.67108.67125.1985.20
Oberweis International Opportunities TR in EU1.74-7.69-3.9429.1797.90146.22
Suncorp Optimum Professional Savings Lazard Global Small Cap in EU-0.28-5.42-9.5029.6589.37

Bottom performers 3-years

Customise Columns1m3m6m1yr3yr5yr10yr
Direxion Daily Gold Miners Index Bull 3X Shares TR in EU32.67-14.16-62.00-73.86-99.32
Direxion Daily Gold Miners Bull 3x Shares TR in EU18.4316.65-94.08
ProShares Precious Metals UltraSector ProFund Investor TR in EU22.09-11.98-41.16-42.69-80.67-83.60-79.60
Market Vectors Junior Gold Miners ETF TR in EU2.99-2.30-16.66-24.30-72.59-76.42
Ahead Oak Tree Junior Mining & Exploration R in EU4.42-14.80-26.09-23.07-71.61-79.85-64.58

Source: FE, rebased in euros

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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