Canada is suffering from a weak economy; however, the country’s assets are handing investors the most impressive returns in seven years.
Combined gains from the Canadian dollar and total returns for Canadian government bonds and stocks hit 26 percent this year. This is the Canadian economy’s best performance since 2009, according to Bloomberg.
The assets increase comes among the slowest two-year pace of growth outside a recession in up to 60 years. This underperformance is due to a collapse in oil prices, a struggling manufacturing industry and an overheated real estate market.
“People see Canada right now as a bank account, an area of wealth preservation,” said Hans Albrecht, Options Strategist at Horizons ETFs Management Canada Inc. in Toronto. His firm manages $5.79 billion in exchange-traded products. “They’re doing it with real estate, why not with our equity market? Why not with every facet of investments in Canada? It’s a big backstop to our economy because people are buying real estate here.”
“All markets are dislocating a bit from reality, and that’s an effect of extremely low rates,” Albrecht said. “It’s pushing investors further on the risk spectrum than ever before and it’s pushing up all asset classes. You take what you can get in a low-growth environment. Plug your nose and just go for it because the guy beside you is going to do it.”
Canada’s economy is looking positive as the outlook for the global economy stays weak in Europe, Asia and US.
Source: [Financial Post]