Since the days of Viet Nam, Canada has been a good place to hide from trouble. ETF Global® has not been around that long but since we began ranking and rating ETFs last summer, we have noticed today’s 5th place iShares MSCI Canada Index Fund (EWC) has also been a good place to hide when bullets were flying around the US market. That was the case last fall when we were fighting fiscal cliff fears and it has been the case over the past month when the S&P 500 has lost over 3%. Since its inception in 1996, the fund has matched the S&P’s gains but since the big bottom in 2009 it has lagged. Could we be due for a reversion to the mean?
One result of lagging the market is a strong 79.2 Fundamental Score built on high 90s price/cash flow and price/book value scores. The Canadian market may not be doing well but their economy has been doing fine which is also reflected in an upward trending Global Theme Score at 69 today. Investors seem to notice because EWC’s sentiment readings average out to a middling score of 58.9 as the bears get bullish on this name. Its recent outperformance contributes to a better 67.6 technical score which is off its highs but not far from its 73.1 peak on July 30th. Nobody doubts Canadian quality and EWC’s Quality Score comes in at 80.3 helped by good liquidity and a strong sponsor in iShares. It shines similarly in our Diamond models with a strong 8.42 Green Diamond Reward Rating and a low 3.27 Red Diamond Risk Rating. High reward and low risk are appealing attributes in our recently turbulent international equity markets.
There are two ways EWC could close its performance gap with the S&P since that 2009 low, either it goes up, our market comes down, or a combination of the two. Investors haven’t made much money with it over the past few years but they haven’t lost money either. If you have to be long in a turbulent environment, EWC fits the bill nicely. With financial market combat heating up, we hope that performance gap closes in the good way and we thank you for checking in with ETFG Daily Perspectives for the latest messages from our proven models. Please send any questions to firstname.lastname@example.org.