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Canadian investors looking for hot ETFs shouldn’t be fooled by winter’s frosty temperatures. This season brings favourable sectoral trends and is also expected to offer some timely plays in regional ETFs.

The Globe asked three experts in seasonal and technical investing for the sectors and regions they expect to perform well in these cold winter months, with some top ETFs picks in each.

Brooke Thackray, research analyst at Horizons ETFs Management (Canada) Inc.

The Horizons Seasonal Rotation ETF (HAC) looks for solid plays in sectoral indexes in different periods of the year, says Mr. Thackray, who has written guides to seasonal investing. The fund has no long-term positions, jumping in and out of ETFs that capture seasonal influences and other trends. “You want to be in before everybody gets in, and when everybody gets in, you get out,” he says.

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The pick: Energy

The summer driving season, when the greatest consumption of oil takes place, is far off, but in winter, refineries are changing over to produce the gas that consumers will need when they get behind the wheel. The sweet spot for energy investments can start in late December but is typically from Feb. 25 to May 9, Mr. Thackray says.

His research shows that the sector has outperformed the S&P 500 by an average of 3.4 per cent over the last 25 years in this period. He likes the Horizons S&P TSX Capped Energy Index ETF (HXE), a general energy ETF invested in Canada that his fund has a position in. He also suggests the S&P 500 Energy Sector SPDR (XLE), a broad-based ETF representing big U.S. energy companies.

The pick: Gold

Gold is a popular seasonal trade, with trends related to periods of consumer demand. The biggest is in late summer and early autumn, when it’s made into jewellery to be given at Diwali, the Hindu festival of lights in November.

Gold is also increasingly popular in winter for gifts to celebrate Chinese New Year. “You can buy gold bars in vending machines in China,” Mr. Thackray says. This brings momentum for gold bullion from Dec. 27 to Jan. 26 and gold miners from Dec. 23 to Feb. 13. Gold SPDR (GLD) is a U.S. ETF that holds bullion, “which is cheaper and more convenient than owning it yourself,” he says. He also likes the BMO S&P TSX Equal Weight Global Gold ETF (ZGD), an equally weighted fund that invests in global gold miners’ stocks.

Keith Richards, president and chief portfolio manager at ValueTrend Wealth Management

This winter, Mr. Richards is excited about plays in European and emerging markets. He considers the U.S. overbought and sees “smart-money” institutional buyers getting cautious about investments there. Markets abroad, meanwhile, remain well below 2018 highs, he says. “They’re still trying to play catch-up.”

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The pick: Emerging markets

With China representing a good percentage of emerging-market ETFs, the apparent easing of the trade war with the U.S. is good news, Mr. Richards says. The softening U.S. dollar also helps countries that use it to buy raw materials to make things on the cheap. He suggests the BMO MSCI Emerging Markets Index ETF (ZEM), a broad index play. South Korea “has really good upsides,” so he likes the South Korea iShares MSCI ETF (EWY), but he cautions that it’s a high-risk trade, given tensions in the region.

The pick: Europe

Greater certainty will help markets in Europe, Mr. Richards says, with leaders pushing monetary policies to stimulate growth and the fact that Brexit looks to be resolving. Markets have been recovering since a trough in early 2019, “and we still have some room to go.” With “monstrous potential” in Germany, Mr. Richards likes the Germany iShares MSCI ETF (EWG). He also expects good things for the broad-based Europe 350 iShares ETF (IEV).

Jon Vialoux, associate portfolio manager at Castlemoore Inc.

Mr. Vialoux, who executes a seasonal strategy for client accounts at Castlemoore, also runs EquityClock.com, a subscription-based service for seasonal investment profiles. Its database has just expanded to include ETFs, which he notes are “still a relatively emerging investment class.” He agrees that in these winter months, the better opportunities and valuations are outside of North America.

The pick: Consumer discretionary

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With retail sales in the U.S. in 2019 running about 6 per cent above average, “the consumer is solid, in the driver’s seat and flourishing,” Mr. Vialoux says, “and we are starting to see global consumer coming around as well.” The consumer discretionary sector historically outperforms the market by 1.68 per cent between Feb. 4 and May 15, he says, pushed by big-ticket purchases from clothing and furniture to building materials. As a broad sector play, he leans toward the Global Consumer Discretionary iShares ETF (RXI). He also suggests that cars are a good specific ETF to focus on, through the Nasdaq Global Auto Index Fund FT (CARZ).

The pick: Financials

People buying things at this time of year are borrowing to do it. Indeed, increased consumer, residential and business loans make financials ramp up between Nov. 22 and April 13, Mr. Vialoux says. And there’s a tendency for interest rates to rise in the first four months of the year, he says, which improves margins for financial institutions. He’s also keen on international ETFs here, with the Global Financials iShares ETF (IXG-A). Another compelling fund is the Europe Financials iShares MSCI ETF (EUFN-Q), he says, which should benefit from improvements in European economies.

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