Thought Leadership

Shopping with CAD

In the month of March, Canadian investors funneled $11.8 billion into U.S. Equities. These strong flows followed $12.3 billion of U.S. equity purchases in February[1]. Canadian investors have long-appreciated the U.S. equity market for a multitude of reasons; the depth and breadth of the market, diversification benefits, and geographically reducing the age-old ‘home-bias’. As we continue to march toward the end of COVID-19 as we know it, there is another factor making the US market very attractive to Canadian investors – currency.

Since its most recent high in March 2020, the USD has depreciated approximately 17% against the CAD. As movement in foreign exchange rates is a complex matter, we will focus on the key takeaway: the Canadian dollar is currently strong relative to its US counterpart, which we believe presents a great opportunity to go shopping for high quality US companies.

As we progress through COVID-19 as a society and come out on the other end of the resulting recession, we are beginning to see signs of a strengthening US economy. During periods of economic strength, interest rates tend to rise as money supply tightens. All else being equal, this can result in the USD marching higher.

In the chart below we have highlighted the currency movements of USD/CAD through the great financial crisis and the subsequent recovery.

Investors with Canadian Dollars can view this as a very attractive opportunity to purchase US securities, which are denominated in USD. With a stronger purchasing power in CAD, investors would not only gain access to the deepest and most liquid market, but they also can benefit from a strengthening USD as we return to a ‘pre-pandemic’ state.

Reference Dates and USD/CAD Prices: yahoo finance
$1.2895 – March 11, 2009
$.9432 – July 27, 2011
$1.4578 – January 18, 2016
$1.45 – March 20, 2020
$1.20 – May 25, 2021

[1] Source:

Important Disclosures

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This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at

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