Investing in Canada: Beyond Energy
Canada’s economy is often associated with oil and gas production, but there’s more to the nation’s financial markets than hydrocarbons.
Services generated about 70% of Canada’s 2013 Gross Domestic Product, and within that space, financial services is widely perceived as rock-solid.
“Our financial institutions never really had a big problem” a half-decade ago, said Brendan Caldwell, president and chief executive of Toronto-based Caldwell Investment Management. “Our real estate market didn’t crash. Everything just sort of continued and we were reading about how the rest of the world was imploding.”
Canada’s financial-services stocks “haven’t had the huge rebound that U.S. companies had, they also don’t have the same problems as the U.S. ones do in the form of multi-billion-dollar penalties,” said Caldwell. “So where in the old days we would have put money aside for bad loans, they’re putting aside for fines right now.”
Some of the best-performing assets in Canada are those stocks and sectors that resemble the U.S. economy: health care, technology, consumer staples, consumer discretionary, and industrials. “Between them they make up less than 20% of our market, where any one of those sectors make up at least 15% of the U.S. market,” Caldwell said. “We’ve been doing very well investing in what stocks and sectors that the rest of the market has potentially overlooked.”
Caldwell will speak at a Trade Canada breakfast panel at Markets Media’s Global Markets Summit London on Oct. 16.
Canada’s energy industry, is the nation’s second-largest after financial services, and it is at somewhat of a disadvantage among world producers. Other than Norway, Canada is the only major oil exporter that’s not part of the OPEC cartel, a bloc of countries that, to put it mildly, are undemocratic.
“As long as ISIS is pumping out oil at $35 a barrel on the black market to fund its nefarious, murderous activities, Canada is going to be under some pressure,” Caldwell said.“We are the world’s largest and most normal petro currency. In terms of oil-exporting countries you’ve got Canada and Norway, and then the radical goes deep to Venezuela, Nigeria, and a bunch of countries that hate us and want to destroy us as a civilization.”
Efforts to build a transcontinental oil pipeline have been stymied by political resistance. “For reasons that are a little opaque, the President of the United States doesn’t want that pipeline,” Caldwell said. “So we’ve got a whole lot of oil locked up in what our critics call the ‘tar sands’ that isn’t going anywhere.”
Caldwell Investment’s customers are primarily high net worth individuals “and institutions that look and feel and sound and understand risk like high net worth individuals,” Caldwell said. “So we’ll look after people, but we’ll also look after the foundation they set up, the church they attend, the mutual insurance company that covers their farm, their labor union, Institutions that are really people driven rather than quant driven. Our whole understanding of risk has been about looking at things the way people do.”
Featured image via selensergen/Dollar Photo Club
Essentia analyses data to create behavorial “nudges” for fund managers' investment decisions.
With Adam Conn, Head of Trading, Baillie Gifford
The partnership will develop suite of U.S.-listed, physically backed, digital asset ETFs.
The addition of Essentia behavioral analytics solutions is an extension of Northern Trust Whole Office.
Upstart exchange has seen market share increase to near 4%.