Diversifying beyond Canada via ETFs can help build a resilient portfolio because the Canadian market is heavily concentrated in three sectors—Financials, Energy, and Materials—which collectively represent over 60% of the S&P/TSX Composite Index. Since Canada accounts for less than 3% of the world’s total equity market, relying solely on domestic stocks (a common “home country bias”) leaves investors vulnerable to localized economic downturns and causes them to miss out on the other 97% of global opportunities. ETFs provide a low-cost, liquid gateway to essential high-growth industries that are underrepresented at home, such as Information Technology, Healthcare, and Consumer Discretionary.
The first fund we’re recommending today is currently a “recovery play.” After years of stagnation, its industrials are trading at attractive valuations while undergoing a massive transformation. With inflation abating and real wages rising, the domestic consumer is finally re-emerging as a growth driver. For investors, this ETF offers a high-quality portfolio of “Global Champions” at a forward multiple that remains competitive compared to expensive U.S. tech.
The other fund offers a different profile: high yield and inflation protection. Its economy is anchored by a “big four” banking oligopoly and a world-class resource sector. Its heavy weighting in materials makes it an excellent hedge against global inflation, as the country remains the preferred provider of raw materials to a still-growing Asia-Pacific region.
ISHARES MSCI GERMANY ETF (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. Through its holdings, it aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable to foreign investors; that’s partly due to limitations on foreign ownership.
Regardless, this ETF offers investors exposure to Germany’s top stocks: Siemens (engineering), at 11.4% of assets; SAP (software), 10.5%; Allianz (insurance), 8.4%; Siemens Energy, 6.6%; Deutsche Telekom, 6.1%; Reinmetall AG (defence), 4.8%; Munich Reinsurance, 3.9%; Deutsche Bank AG, 3.6%; and Infineon Technologies (chips), 3.2%.
The fund began trading in 1996. Investors pay a reasonable 0.49% MER.
The German economy grew 0.2% in 2025—rising for the first time since 2022.
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Going forward, the government is spending more than $1 trillion on defence and infrastructure projects. That’s already paying off—factory orders and industrial production rose for three straight months ending November 2025. Military hardware spending drove that winning performance.
All in all, the country’s longer-term outlook is sound, especially when global economic growth picks up.
iShares MSCI offers plenty of commodity upside
ISHARES MSCI AUSTRALIA ETF (New York symbol EWA; buy or sell through brokers) exposes you to 54 of Australia’s major stocks.
The ETF’s top holdings are BHP Group (mining) at 12.9% of assets; Commonwealth Bank of Australia, 12.6%; National Australia Bank, 6.7%; Westpac Banking, 6.7%; ANZ Group Holdings (finance), 5.5%; Wesfarmers (conglomerate), 4.8%; CSL Ltd. (biotechnology), 4.4% and Macquarie Group (financial services), 3.9%.
By industry, the fund’s holdings break down as Financials, 40.4%; Mining, 22.7%; Health Care, 7.2%; Consumer Discretionary, 6.8%; Real Estate, 5.4%; Industrials, 5.4%; Energy, 3.6%; Consumer Staples, 3.3%; Telecoms, 2.0%; Utilities, 1.6%; and Information Technology, 1.4%.
The iShares MSCI Australia ETF started up March 12, 1996, and investors pay a reasonable 0.50% MER.
The Australian economy remains steady, amid continued international demand for minerals and its recovering tourism market.
The overall outlook for 2026 is positive, although economic growth will likely remain somewhat muted. The main threats are still-high inflation, which is hurting consumer spending, as well as sluggish global growth and high interest rates.
Meantime, though, solid global demand for commodities will boost exports. That should help to offset risks such as the ongoing tension between the U.S. and China (both key export markets), as well as a shortage of skilled workers and rising labour costs in the service industry.
Recommendation in Canadian Wealth Advisor: iShares MSCI Germany Fund & Australia ETF are both buys.
