But before we get into the analysis of the assets themselves, let's look at the evolution of the Canadian dollar exchange rate against the euro and the Czech koruna over the past five years. The exchange rate between the Czech koruna and the Canadian dollar has been relatively stable, hovering around 17 koruna to the Canadian dollar for most of the period under review.*

A similar trend can be observed for the Canadian dollar against the euro. For most of the five-year period, the exchange rate was in the range of 1.4 to 1.5 Canadian dollars per euro. However, after the start of the Russian aggression against Ukraine, the Canadian dollar strengthened against the euro to as high as $1.3 per euro. By the end of 2023, however, the exchange rate had returned to its previous corridor, but closer to the 1.5 Canadian dollar per euro level. This return can be explained in part by the fact that European Central Bank interest rates began to rise, narrowing the interest rate differential between the euro area and Canada.*

Currently, the Canadian dollar appears to be stable against both the Czech koruna and the euro. This is good news for foreign investors, as they can expect lower exchange rate risk when investing in dollar assets than was the case just a year or two ago. Nevertheless, it is advisable to continue to monitor the development of interest rate policy by the ECB, the CNB or the Bank of Canada.

If you are considering investing in Canadian company stocks, then again, investing in a stock index through an ETF appears to be the easiest and least demanding option. The main stock index in Canada is the Toronto Stock Exchange's TSX index, or TSX60, with the TSX60 being an index that includes so-called blue chip stocks.

The TSX60 index is 34.6 per cent made up of stocks of companies in the financial sector, 18 per cent is taken up by energy titles, 13.5 per cent by stocks of industrial companies, and less than ten per cent by information technology. The TSX60 Index has appreciated nearly 32 percent over the past five years.*

There is also the option to select a portfolio by sector. Over the past five years, technology companies have clearly been the best performers, with the sector as a whole up nearly 98 per cent on the Toronto Stock Exchange. This was followed by industrial companies (76.26 per cent), consumer goods companies (56.85 per cent) and raw materials and supplies companies (49.7 per cent). On the other hand, the worst performers were pharmaceutical companies and firms in the health care sector in general, which experienced an aggregate decline of 56.52 per cent. Telecommunications (down 21.33 per cent) and real estate firms (down 8.05 per cent) also declined, while the smallest increase was recorded by utilities firms (8.56 per cent).*

If you are looking to invest directly in individual stocks traded on the Toronto Stock Exchange, we recommend focusing on the Top 10 largest companies within the TSX60 index. Essentially, this is sort of the crème de la crème of Toronto-traded stocks.

The best-performing stock of the Top 10 companies in the TSX60 Index over the past five years is the information technology company Shopify Inc. An investment in this stock has appreciated 217.36 per cent (as of 4/24/2024). This is followed by energy company Canadian Natural Resources with an appreciation of 160.87 per cent, while the third best performing stock boasts industrial company Canadian Pacific Kansas City, which has appreciated 87.43 per cent over the past five years.*

David Matulay
Analyst
InvestingFox

Source: TSX.com

Five-year evolution of the TSX60 index

Source: google.com *

Five-year development of Shopify Inc. share value (in CAD)

Source: google.com *

Five-year development of Canadian Natural Resources share value (in CAD)

Source: google.com *

Five-year share value development of Canadian Pacific Kansas City (in CAD)

Source: google.com *

* Past data is not a guarantee of future returns.

- Warning! This marketing material is not and should not be considered investment advice. Past performance is not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.