Skip to main content

Featured

Ottawa Backs Down on Digital Tax Dispute Amid Pressure from Trump White House

Canada has reportedly agreed to delay its planned digital services tax (DST) following pressure from former U.S. President Donald Trump’s administration, according to a recent statement from the White House. The tax, which was originally slated to target tech giants like Amazon, Meta, and Google, had been a major sticking point in U.S.-Canada trade discussions. The White House claimed Canada “caved” to U.S. demands after months of negotiations, with Trump’s team arguing the tax unfairly targeted American firms. The Canadian government, however, framed the delay as a strategic move to preserve economic stability and avoid retaliatory tariffs. Critics within Canada argue that the government’s decision reflects a growing trend of yielding to U.S. economic influence, while others say the delay is pragmatic given ongoing global talks about a coordinated approach to taxing digital revenues. The issue remains contentious, and observers are watching closely to see whether Canada will revive th...
Post a Comment
Read more

article

Labels

Investors Shift Focus: Canadian Mutual Funds and ETFs in the High-Interest Rate Era

 

Amid high interest rates and market volatility, Canadian investors have made significant adjustments to their investment portfolios. The spotlight is on both mutual funds and exchange-traded funds (ETFs) as they navigate this challenging landscape.

Over the past year, Canadian mutual funds experienced a rollercoaster of net redemptions. Investors pulled billions of dollars out, creating a trend that persisted for 11 consecutive months. The pattern began when the Bank of Canada initiated a series of interest rate hikes in March 2022. With short-term product rates reaching nearly six percent, many investors shifted toward more conservative investments. Additionally, market volatility played a role, affecting their willingness to invest in stock and bond funds.

Some notable net outflows from mutual funds include:

  • June 2022: A net withdrawal of $10.4 billion
  • September 2022: A net withdrawal of $9 billion
  • October 2023: A net withdrawal of $12.5 billion

In contrast to mutual funds, Canadian ETFs have maintained a more stable trajectory. While sales of ETFs have also slowed during this interest rate cycle, they have remained net positive. In 2023, ETFs saw net sales of $37.6 billion, slightly up from 2022 but down from their peak of $58.3 billion in 2021. These figures come from the Investment Funds Institute of Canada’s 2023 investment funds report.

The move from mutual funds to ETFs reflects a broader trend seen not only in Canada but also in the United States. Investors are shifting from more expensive mutual funds to the cost-effective alternative of ETFs. The appeal lies in the efficiency and flexibility of ETFs, which offer exposure to a diversified portfolio of assets at a lower cost.

As the high-interest rate era continues, investors will likely keep adjusting their strategies. The rise of ETFs and their ability to provide cost-effective diversification will remain a key factor in shaping the investment landscape.


Labels:

Comments

Post a Comment