The Index Finger Moves on – Shrinking TSX and Declining Index Effect

The Shrinking TSX
Another ones bites the dust. As I noted last year, the TSX Composite Index has been shrinking for years. That seems to be continuing, though at a slower pace. When Enerflex Systems Income Fund (EFX.UN) leaves the index next week as the result of a buyout (see Standard & Poors press release) the TSX Composite will be down to 210 companies, a third fewer than a mere nine years ago. One would have thought equity markets should expand over time, not shrink.

When one considers that the largest US all-company index the Wilshire 5000 Total Market Index contains about 5000 companies, it is apparent how small and thin the Canadian market is. All the more reason to diversify outside Canada in my opinion.  Read More…

This article has 4 Comments

  1. Reinaldo

    There are all kinds of factors that are causing the tsx to take a tumble. One of which is the competitiveness that similar US companies pose against canadian counterparts and free trade agreements we have with them.

  2. Harold

    Is it no wonder most investors are now looking to funds that carry mostly US and other international companies? We need growth and the government is sitting on their hands about it all.

  3. Ishaan Detrick

    TSX index is in bad shape and with new news of more hitting the curb we can expect even more of a decline for the coming months.

  4. Danny

    The Canadian market selection is so thin and getting thinner that one can’t help but look to US companies for relief. Here’s hoping for a better year for Canada.

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