Are Canadian investors souring on U.S. stocks? Forget it
The exchange-traded fund that pulled in the most money last month invests in the S&P 500 stock index.
The Canadian boycott of U.S. travel definitely has some traction, and commitment to buy Canadian in retail stores seems to be holding. But investors in this country remain open to U.S. stocks, particularly in light of their sharp price decline in the past two months.
A report from National Bank Financial shows the top performing ETF sector in April was international equity ETFs, which took in $3-billion in assets. U.S. equity funds had flows of $1.5-billion, and Canadian equity funds took in $577-million.
The ETF with the overall largest in-flows in April was the Vanguard S&P 500 Index ETF (VFV-T) – it took in $665-milllion. The currency hedged version of this ETF – the ticker symbol is VSP – made the best-selling list as well with in-flows of $151-million, while the more diversified Vanguard U.S. Total Market Index ETF (VUN-T) took in $152-million.
Some readers I've heard from in the past few months said they're avoiding U.S. stocks because they disapprove of President Donald Trump's tariffs and comments about Canada becoming the 51st state. They also worry that Mr. Trump's policies will hurt the performance of U.S. stocks.
In fact, U.S. stocks have underperformed Canadian and international markets for the year to date. But longer-term numbers favour U.S. stocks decisively. The 10-year annualized return for the S&P 500 stock index to April 30 was 11.2 per cent, compared to 7.2 per cent for the MSCI EAFE Index and 8.3 per cent for the S&P/TSX composite index.
When the U.S. market falls, it can go down hard. There were three consecutive losing years in the early 2000s after the tech bubble exploded, and the loss in 2008 was a monster at close to 37 per cent. But the U.S. market is essential for a diversified portfolio, along with Canadian and international stocks. The April ETF sales figures suggest investors don't disagree.
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