Market Overview

Canada ETFs: Beyond EWC


Did you know that ice hockey is not the only national sport of Canada? Hockey, the sport for which are our northern neighbors are most known, is the national winter sport of Canada while lacrosse is the country's national summer sport.

Fun fact #2: The iShares MSCI Canada ETF (NYSE: EWC), the largest Canada-specific ETF by a wide margin, is not the best-performing ETF tracking this steady, materials-rich developed market. Similar to the situation we highlighted regarding Brazil, EWC's nearly $4.8 billion in AUM might lead some investors to believe size equals success.

Yes and no. Yes, EWC is up year-to-date, but no, that doesn't mean its the best of Canada ETF lot. In fact, comparing EWC's returns to five other Canada ETFs lands the iShares offering right in fourth place. That's not even a bronze medal.

Before rushing north of the border, consider the options beyond EWC.

IndexIQ Canada Small Cap ETF (NYSE: CNDA) When an ETF is as heavily weighted to materials and energy stocks as CNDA is (those sectors represent 73% of the ETF's weight) it's going to endure some tough times in years like 2011. Translation: CNDA is a risk on ETF and that has helped the ETF jump almost 12% this year, which is far superior to what EWC has offered.

Energy and materials are two of the most important sectors to Canada's economy, but they account for less than half of EWC's weight meaning CNDA might be the more accurate representation of the Canadian economy.

Global X S&P/TSX Venture 30 Canada ETF (NYSE: TSXV) Talk about materials and energy, the unheralded Global X S&P/TSX Venture 30 Canada ETF allocates almost 80% of its weight to those sectors. Not even a year old, TSXV isn't winning any popularity contests among Canada ETFs, but the fund is up almost 27% year-to-date. That's way better than EWC and CNDA.

Guggenheim Canadian Energy Income Fund (NYSE: ENY) The Guggenheim Canadian Energy Income Fund has slightly trailed EWC year-to-date, but ENY does feature a yield of 2.71% compared to 1.98% for its larger rival. If ENY can notch some closes above $18, which is in the area of its 200-day moving average, that might be the recipe to stoke some fresh buying.

Global X Gold Explorers ETF (NYSE: GLDX) Here's a tip: There's much more the world of gold mining ETFs than just the Market Vectors Gold Miners ETF (NYSE: GDX). And here's a disclaimer: The Global X Gold Explorers ETF is not a Canada-specific ETF. With over 85% exposure to Canada, it might as well be though. A resurgence in gold mining shares has helped GLDX to a year-to-date gain of better than 14% and that has come without the help of standard gold mining fare such as Barrick (NYSE: ABX) and Goldcorp (NYSE: GG). GLDX's 27 holdings are far more obscure, but thus far in 2012 that hasn't mattered.

Global X Canada Preferred ETF (NYSE: CNPF) The first ETF devoted to Canadian preferred issues has done alright for itself since its May 2011 debut. Yield-hungry investors have poured over $12.6 million in cash into the ETF and CNPF is up year-to-date though has lagged EWC. Looking at the chart, CNPF might be a buy above $15.25.

Posted-In: Long Ideas News Sector ETFs Short Ideas Specialty ETFs Small Cap Analysis Futures Technicals Best of Benzinga


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