New cheap ETFs that cover the Canadian market and how negative interest rates offer opportunity in bank stocks: What you need to know in investing this week

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(Subscribers) New cheap ETFs that cover the Canadian market and how negative interest rates offer opportunity in bank stocks: What you need to know in investing this week

Investors who like their ETFs simple and cheap have some new choices for covering the Canadian market

The uncontested benchmark for the Canadian stock market is the S&P/TSX Composite Index, but as Rob CarrickTo save money, they’re tracking new or lower profile benchmarks such as the Solactive Canada Broad Market and FTSE Canada indexes. Big considerations in choosing ETFs are fees and popularity . But the underlying index matters, too. You want an index that is well diversified in both stocks and sectors.

Falling bond yields can be bad for bank stocks, especially if a recession is brewing. How should investors navigate through the current warnings coming from the bond market? Canadian and U.S. bank stocks are down from recent highs earlier this year, reflecting trade tensions, economic uncertainty and a remarkable decline in government bond yields.that the stakes are particularly high for bank stocks, which are economically sensitive and can see their lending margins crushed when rates fall.

“We tend to invest in a countercyclical way. We increase our risk when compensation is generous and decrease when value is negligible,” said Dagmara Fijalkowski, senior portfolio manager and head of global fixed income and currencies at RBC Global Asset Management, when asked to describe her investing style. “We hedge our currency exposure in order to reduce the volatility of the fund by protecting against changes in currency exchange rates.

Alan Greenspan, the former chairman of the U.S. Federal Reserve, said last week it is only a matter of time before the sub-zero rates in Europe and Japan spread to the United States. Jamie Dimon, chief executive of JPMorgan Chase & Co., the biggest U.S. bank, told an investment conference on Tuesday his company is already analyzing how to deal with zero interest rates, on the remote chance they do arrive.

 

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