Canadians are boycotting U.S. travel, food, and consumer goods. I have not seen any indications that we’re also avoiding American investments, although there have been a few hints that some people are thinking about it.
For example, I received an email last week from a subscriber to my Internet Wealth Builder newsletter that read: “I would like to see more international recommendations that are not U.S. I realize that this may mean forgoing some gains, but ‘Elbows Up’. – James B.
The obvious difficulty with requests like this is that world trade is in total disarray due to U.S. President Donald Trump’s chaotic tariff policies. Until some clear rules are put into place, we have no way of knowing which countries will emerge with preferred access to the U.S. economy. That privilege would greatly improve a country’s trade potential, which in turn would boost its GDP.
With that caveat, here are two foreign EFTs that are holding their own in the current environment and are worth a look for those who want to increase their geographic diversification. Both are recommendations of my newsletter.
BMO MSCI India Selection Equity Index ETF
Originally recommended on April 10/17 at $22. Closed May 2 at $50.18.
Ticker: ZID-T
Background: This ETF invests in a portfolio of large-cap companies that is designed to track India’s “nifty fifty” index.
Performance: The fund gained 6.78 per cent in the year to April 30. The 10-year average annual compound rate of return to an investor was 11.55 per cent to that point.
Key metrics: The fund was launched in January 2010 and has about $352-million in assets under management. Its MER is 0.67 per cent.
Portfolio: The fund holds 56 positions, but about 46 per cent of the assets are tied up in just four stocks. They are HDFC Bank (17.35 per cent), Reliance Industries (13.29 per cent), Infosys Ltd. (7.86 per cent), and Bharti Airtel (7.45 per cent).
Distributions: Payments are made once a year, in December, and are usually small. The 2024 distribution was 14.3 CENTS per unit, most of which was treated as foreign income for tax purposes.
Risks: India is still classified as an emerging market, which means the shares of its companies may be more volatile. Investors should also consider the potential impact of U.S. tariffs, although Mr. Trump has said he is close to reaching a trade deal with New Delhi.
Summary: The units have more than doubled in value since being recommended and India appears to be on a strong growth trend.
Action now: ZID is a buy for aggressive investors.
iShares MSCI EAFE Index (CAD-Hedged)
Originally recommended March 18/13 at $19.68. Closed Friday at $37.86.
Ticker: XIN-T
Background: This ETF is the Canadian dollar hedged version of a U.S. fund (EFA-N) that tracks the MSCI EAFE Index. That index covers Europe, Australasia, and the Far East. Most of the fund’s assets are invested in the U.S. version of this ETF.
Performance: The fund is having a decent year, up 3.88 per cent to date. The 10-year average annual compound rate of return is 6.58 per cent.
Key metrics: The fund was launched in September 2001 and has about $1.4-billion in assets under management. The MER is 0.49 per cent.
Portfolio: This ETF is highly diversified with 697 underlying positions and is more-or-less equally weighted. Japanese stocks make up about 22 per cent of the assets, with about 15 per cent in the UK.
Distributions: They are paid semiannually, in June and December. The December payment last year was 42.9 cents per unit.
Outlook: Here again, much depends on tariffs. Trump has already imposed heavy duties on European cars, but we’re a long way from understanding the full picture.
Action now: We rate this a tentative buy for long-term growth. Keep a close watch on the impact U.S. tariff policies on these economies.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
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