Rising trade tensions between the U.S. and Canada, along with new tariffs impacting key industries, have introduced uncertainty into the Canadian market. While Canada’s economy remains resilient, ongoing disputes over tariffs on energy, lumber, and manufactured goods could weigh on growth and investor sentiment. However, with a well-regulated financial sector and strong domestic demand, Canada continues to offer investment opportunities, particularly in banking, energy, and materials.
For investors looking to diversify internationally while navigating these shifting trade dynamics, Canadian equities remain an option worth considering. Below we highlight two funds that provide broad exposure to the Canadian stock market.
iShares MSCI Canada ETF (ticker: EWC)
This exchange-traded fund holds 85 stocks, with approximately 66.39% of the portfolio concentrated in three sectors: Financials (37.29%), Energy (17.47%), and Materials (11.63%). Its top three holdings are Royal Bank of Canada (8.03% of net assets), Shopify Inc. (6.58%), and Toronto-Dominion Bank (4.64%). As of February 28, 2025, its year-to-date return is 2.59%, and its three-year return is 6.20% annualized.
Fidelity Canada Fund (FICDX)
This traditional mutual fund holds 60 stocks. Its sector allocation includes Financials (28.41%), Energy (17.17%), and Industrials (13.97%). FICDX’s top three holdings are Royal Bank of Canada (8.67% of net assets), Constellation Software Inc. (5.82%), and Canadian Pacific Kansas City Limited (5.44%). As of January 31, 2025, its one-year return is 12.05%, with a three-year return of 6.20% annualized.
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Disclosure: The information provided in this blog is for informational and educational purposes only. MoneyLetter® does not purport to provide legal, tax, or individual investment advice. While carefully screened, the accuracy of the statistical data in MoneyLetter® cannot be guaranteed. Past performance does not ensure future results. All investments carry risks, including the loss of principal. Readers should carefully review investment prospectuses before investing.