Lexicon Financial Group Weekly Update — January 21, 2026
“ETFs are fundamentally a technology. They are mechanisms to achieve a certain goal, like phones. Traditional mutual funds were rotary phones. ETFs are smartphones: They do the same thing but are in a better package.”
From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel
ISSUE 212
Looking Around
Exchange Traded Funds (ETFs) have been available to investors for more than 30 years. Initially, ETFs were best known for providing investors direct access to large indices – the S&P 500 and the TSX.
The first ETF was traded in the United States (U.S.) in 1989. It was called the Index Participation Shares (IPS) and was an S&P 500 proxy that traded on the American Stock Exchange and the Philadelphia Stock Exchange. This new investment product was so new and misunderstood that the Chicago Mercantile Exchange filed a lawsuit to stop the sale of IPS in the U.S.
In 1990, ETFs were introduced in Canada via the Toronto Index Participation Shares, which started trading on the Toronto Stock Exchange (TSE). The shares, which tracked the TSE 35 index and later the TSE 100 index, became immensely popular. This popularity became the catalyst for U.S. based markets to allow index funds. By 1993, the United States Security and Exchange Commission allowed the sales of ETFs by U.S. exchanges. (1)
Since then, the ETF market has matured, strengthened, and grown considerably. According to ETFGI, a leading independent research and consultancy on global ETF industry trends, assets invested in the ETFs industry globally reached a new record of US$18.81 trillion at the end of September 2025. (2)
A lot of research and analyses goes into identifying ETFs for use in our client investment portfolios and you can read about this by clicking on the link below:
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Economic Growth Is Forecast to Drive a ‘Modest’ Rise in European Stocks This Year
Consumer sentiment in Japan improves for two straight quarters
Looking Back
Thanks to a rise in the price of oil (which supported energy shares) and a trade deal between Canada and China, the S&P/TSX Composite Index (TSX) crept up to another record high last Friday. For the week, the index was up 1.3 per cent lifting its gain since the beginning of the year to 4.2 per cent. Canada and China have struck an initial trade deal that will slash tariffs on electric vehicles and canola, and both nations promised to tear down trade barriers while forging new strategic ties. (3)
U.S. stock markets ended last week mixed. Small-cap and value stocks added to their year-to-date lead over large-cap and growth-oriented shares. Earnings season kicked off during the last week with several big banks reporting fourth-quarter results, which were met with mixed reactions from the markets. Shares of JPMorgan Chase and Citigroup declined after both banks reported a drop in quarterly profits, while shares of Morgan Stanley and Goldman Sachs rose on results that topped analysts’ forecasts. The contract chip manufacturer Taiwan Semiconductor Manufacturing reported a jump in fourth-quarter profits, which boosted investor sentiment around artificial intelligence-related stocks.
Several political and trade-related headlines also drew attention last week. These included President Donald Trump outlining plans for a 10 per cent cap on credit card interest rates and a proposed 25 per cent tariff on imports from countries doing business with Iran. Then there was also the news that the Department of Justice was investigating Federal Reserve Chair Jerome Powell over his congressional testimony about renovations to the Federal Reserve (Fed) headquarters. This reignited some investor concerns around Fed independence.
On the inflation front, core consumer prices rose at the slowest annual pace in December last year, according to the Bureau of Labor Statistics (BLS). The core consumer price index (CPI) - which excludes volatile food and energy costs -increased 0.2 per cent month over month and 2.6 per cent year over year, which is below estimates for 0.3 per cent and 2.7 per cent, respectively. In other economic news, housing data beat estimates amid declining mortgage rates and slowing price growth. The National Association of Realtors (NAR) also reported that existing home sales rose 5.1 per cent in December to a SAAR of 4.35 million, ahead of estimates for around 4.18 million. Month-over-month home sales increased in all regions as mortgage rates continued their recent downward trend, with the average 30-year fixed rate approaching 6 per cent toward the end of last week, according to data from Freddie Mac.
The pan-European STOXX Europe 600 Index ended 0.77 per cent higher, supported by resilient economic data and earnings results. Other major European stock markets were mixed. The economy in Germany grew for the first time in three years in 2025 as households and the government increased spending. Official data showed that GDP expanded 0.2 per cent in the fourth quarter and for the full year. Meanwhile, after 25 years of talks, European Union countries provisionally endorsed a free trade agreement with South America’s Mercosur bloc - Argentina, Bolivia, Brazil, Paraguay, and Uruguay. This agreement will see the gradual elimination of tariffs on more than 90 per cent of bilateral trade.
Japanese stock markets advanced strongly over the week and hovered around record highs on news that Japan’s Prime Minister Sanae Takaichi is preparing to call a snap general election in early February, seeking a majority for the ruling Liberal Democratic Party. Investors anticipate that a Takaichi victory would provide greater certainty over political direction and clear the way for more aggressive fiscal stimulus, reviving what investors have dubbed the “Takaichi trade,” which has boosted areas of the market centered on artificial intelligence, nuclear energy, and defense.
Chinese stock markets declined after regulators tightened rules on margin financing for domestic stock investors. Under these new margin rules, investors must provide margin equal to the full value of the securities they buy on credit, up from a previous 80 per cent. The new rules apply to investors in China’s three stock exchanges in Shenzhen, Shanghai, and Beijing and reflect officials’ growing unease with the pace of the market’s recent gains and the amount of outstanding loans taken out by investors to buy stocks, which hovered near a record. Despite an ongoing property market downturn and persistent deflationary pressures, Chinese stocks have rallied sharply in the past month, driven by artificial intelligence trades and optimism about homegrown tech startups.
China reported that exports surged 6.6 per cent in December, its fastest pace in three months, and its trade surplus hit a record USD 1.2 trillion in 2025. The shows that the combined increase in exports to Southeast Asia and Europe outweighed a tariff-driven slump in exports to the U.S. Although the data highlighted China’s manufacturing prowess and ability to withstand U.S. tariffs, it also risks raising tensions with its trade partners as its exports flood into Africa, Latin America, and other markets. (4)
The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.
A brief history of ETFs, Pat McKeough, TSI Network, December17, 2015
Global ETF Assets Reach Record High of US$18.81 Trillion at end of September according to new research from ETFGI, Press Release, October 16, 2025
TSX adds to weekly gain as energy shares rally, Fergal Smith, Reuters, January 16, 2026
Global markets weekly update - U.S. core consumer prices rise at slowest pace since 2021, T. Rowe Price, January 16, 2026
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Looking to Learn?
If you want to know more about some of the topics we wrote about this week, just click on the links below:
Video: ETFs, Explained | Big Take – Bloomberg Podcasts