The Canadian economy is highly dependent on the U.S. economy.It is often said that if U.S. sneezes Canada catches cold. However Australia’s economy is not highly tied to the U.S. economy. Australia is dependent on China. Australia is the major exporter of natural resources such as coal, iron ore to China. As the Chinese economy has cooled in the past few years Australia has been adversely impacted.

In terms of the iShares country ETF for Canada and Australia, the Canadian ETF has outperformed the Australian in the short-term including year-to-date and five years. It is surprising that even over the 10-year period the Canadian ETF beat the Australian as shown in the chart below.

a) iShares Canada vs. Australia ETF performance – year-to-date:

Click to enlarge

b) iShares Canada vs. Australia ETF performance – 5 years:

c) iShares Canada vs. Australia ETF performance – 10 years:

Source: Google Finance

Related ETFs:

• iShares MSCI Canada ETF (EWC)
  iShares MSCI Australia ETF (EWA)

Disclosure: No Positions