At Investing Daily, we’ve long been bullish on Canada’s economic prospects, for reasons that go well beyond the country’s well-documented oil wealth.

Below, we’ll take a look at a Canadian ETF that’s well-positioned to gain from Canada’s improving economy, but first, here are a few factors that make our northern neighbor’s future so bright.

Canada continues to be in solid financial shape, and its federal budget is slated to return to balance just two years from now, in 2015. The country also managed to avoid the subprime-lending-driven credit bubble, and its banks mostly steered clear of the risky lending practices that brought down U.S. giants like Lehman Brothers during the financial crisis.

Bloomberg Markets magazine recently ranked the world’s banks, and four of Canada’s big five banks—all of which are held in the Canadian ETF we spotlight below—landed in the top 10, with CIBC (NYSE: CM, TSX: CM), Royal Bank of Canada (NYSE: RY, TSX: RY), Bank of Nova Scotia (NYSE: BNS, TSX: BNS) and Toronto-Dominion (NYSE: TD, TSX: TD), sitting in third, fourth, seventh and eighth, respectively.

Canada’s economy is projected to pick up speed in 2014, with the IMF estimating 2.2% GDP growth, while TD Economics forecasts a 2.5% rate, up from 1.7% this year. Oil-rich Alberta continues to be a bright spot, with an expected 3.6% rate of expansion in 2014, according to TD.

Why Stock Investing Still Beats a Canadian ETF

In our Canadian Edge newsletter, which spotlights investment opportunities for U.S. investors in Canada, we recommend that investors build their portfolios with individual stocks rather than ceding control to someone else through a mutual fund, or to an index, as is the case with a Canadian ETF.

“There’s the very real question of whether your interests and those of management truly align,” our research team wrote of mutual funds in a January 2013 Canadian Edge article. “Managers, for example, are strictly evaluated on how fund performance matches up with certain benchmarks. How the fund stands at the end of the year when performance is measured is paramount.”

“By contrast, income investors make their money buying and holding companies that are growing their businesses and, by extension, dividends. Rising payouts push up share prices over time, delivering substantial capital gains.”

Exchange traded funds also have their drawbacks: “ETFs typically own the good, bad and ugly of the sector they represent,” we wrote. “As such, they make useful benchmarks and possible tools for hedging large portfolios. But they’re poor substitutes for diversified portfolios.”

Tap Into Northern Growth With This Canadian ETF

However, if you want to make a generic bet on Canada’s prospects, the iShares MSCI Canada ETF (NYSE: EWC), a Canadian ETF that’s one of the 150 investments we track in our Canadian Edge How They Rate universe, offers an easy way to do so.

The Canadian ETF aims to provide a return that generally corresponds to the performance of publicly traded Canadian companies, as measured by the MSCI Canada Index. The Canadian ETF holds 96 stocks with an average market cap of $30.9 billion.

The fund is heavily weighted toward the financial sector (37% of assets) and energy (26%). From largest to smallest, its top 10 holdings consist of Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Suncor Energy, Canadian National Railway, Bank of Montreal, Canadian Natural Resources, Enbridge, TransCanada Corp. and Valeant Pharmaceuticals.

The ETF has an expense ratio of 0.50%. It yields around 2.5%.