It May Be Time to Head South With This ETF

United States House Republicans have decided to delay the tax reform bill for one more day to apply “finishing touches”. As the Canadian economy enters into a slower period, exemplified by the dip in GDP in August, it may be time for investors to look south.

The iShares Core SP Total US Market ETF (TSX:XUU) offers some of the best exposure to U.S. markets. The ETF was down 0.08% in early afternoon trading on November 1st. The fund has climbed 9.9% in 2017 and 18% year over year.

U.S. economic growth was revised up to 3.1% in the second quarter of 2017, but is expected to slow as we head into the fall and winter months. When elected, President Trump had ambitions for over 3% growth, expected to be produced with new policies and the aforementioned tax reform.

In late September analysts at Royal Bank of Canada projected that the tax plan could boost GDP growth by at least 0.5% per year and broadly lift stocks. The bank also predicted that the Federal Reserve would be forced to lift interest rates at a quicker rate due to higher GDP and lower unemployment.

Whatever the case, the windfall generated by the 15% drop in the corporate tax rate will likely serve as a huge boon over the next few years. As the Canadian economy slows investors should look to this ETF to increase their U.S. exposure at a time when the stock market south of the border may be ready for another surge, assuming this legislation successfully passes.