The Toronto Stock Exchange (TSX) is like Canada's version of the New York Stock Exchange. In this manner, the TSX Venture Exchange (TSX-V) is like the NASDAQ Small Cap or OTCBB exchanges.
The TSX Venture Exchange serves as a public venture capital marketplace for emerging companies. Canada's rich natural resource sectors spawn many new ventures that become listed on the TSX. Before 2001, the exchange was known as the Canadian Venture Exchange (CDNX), but the TSX Group purchased the exchange and renamed it.
The TSX Venture Exchange deserves a closer look if you are in the U.S. and looking for a foreign exchange to invest in. The TSX has many companies involved in a number of industries, but most are in mining and energy.
- The TSX Venture Exchange serves as a public venture capital marketplace for new companies, particularly in Canada's rich natural resource sectors.
- If you're in the U.S., you can purchase stocks traded on the TSX-V directly using brokerage accounts that support such foreign trades.
- Many TSX-V companies are dual-listed in the U.S. as American depository receipts (ADRs), which lets you purchase them on U.S. exchanges.
- The most popular stocks on the exchange are an index known as the TSX Venture 50—a group of strong performers from clean energy, mining, and other sectors.
Who Lists on the TSX Venture Exchange
There are over 1,600 companies listed on the TSX Venture Exchange. Nearly 400 of them are included in the S&P/TSX Venture Composite Index. Companies listed in the composite index are primarily mining (57%) and technology (10%) companies. The majority of them are located in British Columbia, Alberta, and Ontario, where these industries have prominent operations.
In 2020, trading on the exchange amounted to 52.1 billion shares traded with a value of $23.3 billion Canadian. There were 300 new exchange listings, and companies raised nearly CA$42.8 billion in capital. Primarily, they raised funds through a combination of private placements and supplementary public offerings.
Updated monthly and yearly, you can find TSX-V exchange listings statistics on the Market Intelligence Group's section of the TMX website.
How to Invest in TSX Venture Exchange Stocks
If you're in the U.S., Canada's stock markets are relatively easy to access, given the countries' close ties with each other. Moreover, Canada and the U.S. have tax treaties that prevent problems commonly associated with international investing, such as double-taxation. You'll need to apply for the foreign tax credit or deduction on Form 1040 or 1116 with the IRS if you want to trade on the TSX.
There are two primary ways to invest in TSX Venture Exchange listed companies:
- You can purchase stocks traded on the TSX-V directly using brokerage accounts that support such foreign trades. Many online brokers in the U.S. support trading on the TSX and TSX-V without additional added expenses.
- Many TSX-V companies are dual-listed in the U.S. as American depository receipts (ADRs), making it possible for you to purchase them on U.S. exchanges. However, you should be aware that these ADRs (a certificate from a bank for a share purchased on a foreign exchange) may be less liquid than your TSX-V counterparts.
You should also be aware of the risks associated with investing in TSX-V exchange-listed companies. These risks are the same as those associated with small-cap (small market capitalization) companies in the United States, including a lower margin of safety than large-cap (large market capitalization) companies and less liquidity that can make it more difficult to buy or sell the stock quickly.
Popular Stocks on the TSX Venture Exchange
With the number of companies listed on the TSX Venture Exchange, you have many options to choose from when selecting investments. The most popular stocks on the exchange are grouped into an index known as the TSX Venture 50—a group of strong performers from clean energy, diversified industries, mining, oil/gas, and life science sectors.
The components of this index are selected based on several criteria. They must have a market capitalization of greater than CA$5 million, a closing share price of greater than CA$0.25, be listed for more than one year, and have a share price of at least CA$0.10 the year before.
Some of the most popular stocks on the TSX-V include:
- Storm Resources Ltd. (SRX)
- Gold Standard Ventures Corp. (GSV)
- Tidewater Midstream & Infrastructure (TWM)
- Gold Reserve Inc. (GRZ)
Some Final Thoughts
The Toronto Venture Exchange—or TSX-V—is Canada's version of the NASDAQ Small Cap Index of over-the-counter markets. If you're an international investor looking for riskier investments, particularly in the materials and energy sectors, you may want to take a closer look at the exchange as a way to diversify your portfolio abroad.