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Loonie’s Affect on Equity Funds? Solutions?

The fall and dramatic rise of the Canadian dollar over the last 12 months is a prime example of the volatility that currency adds to Canadians’ global investments. What does this mean for financial investments? Put simply, the dollar increase meaning foreign investors a) would like to invest into Canadian funds because of the hot economy, however, b) the dollar is expensive which may scare some investors away. Higher demand for Canadian currency means shorter supply and higher prices.


The loonie has also strengthened significantly against other key currencies, currently its strength pegs it slightly above the Greenback. The strengthening of our dollar typically takes a bite out of the value of Canadians’ global portfolios as many investments are held in foreign currencies.

Foreign investors may seek Canadian funds, however, driving up price, as the relative strength of the dollar is sometimes a health indicator for the domestic economy. Canadian firms can also think about purchasing foreign equities since their dollar goes a bit further.

A solution for those unwilling to ride out the tide include investments like currency-hedged global solutions to provide Canadians with an opportunity to invest outside of Canada while taking changes in global currencies largely out of the mix. The original Criterion Currency Hedged Funds have helped smooth the currency roller coaster ride for investors over the last 12 months.

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