It’s a slightly weird phenominon that people (and I would say especially Canadians) are in love investing in their home country.
This could be for many reasons including wanting to be patriotic, not being comfortable with companies or markets they don’t understand, avoiding currency risks, avoiding accounting standard changes between countries, or many other reasons.
The problem with this approach is that Canada is approx 4% of the worlds economy, meaning that there are a lot of opportunities outside of our borders.
In an article done on Advisor.ca (found here) David Graff (of Accuvest Global Advisors – and spoke at the latest Investment Management Consultants Association meeting for 2012) states that “A country-focused approach to a global equity mandate that includes exposure to both developed and emerging markets can enhance performance.”
Even though we’ve seen stock markets that are moving in the same direction day in and day out there are still many differences within those economies that an investor can take advantage of. For instance, Canada is very resource heavy so you need to look for other countries that compliment that.
By no means am I stating you need to take on the extra risk by investing in countries with large economic risks such as troublesome elections, or a lack of credible information but there are a lot of opportunities outside of Canada and a trained manager can find those opportunities for you without drastically increasing your risk exposure.
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