A recent global survey by investment firm Brandes found that Canadians with more than $250,000 in investable assets hold, on average, only 15% of their equity portfolio outside North America.
While the remaining 85% includes U.S. assets as well as Canadian, that still represents a significant overweight to North American markets. On average, Canadian markets account for 66% of investors’ total portfolios and 64% of their equity portfolios.
“When two thirds of their equities are here, along with their real estate and jobs, that’s putting a lot of eggs in one Canadian basket,” says Oliver Murray, president and CEO of Brandes’ Canadian unit.
Canada accounts for only 4% of the world capitalization.
Interestingly, a lot of people in the survey believe the old foreign ownership rules still apply. The 30% foreign content rule was removed six years ago, but only 5% knew there is no limit on foreign content, while 10% believed their RRSP had to be 100% Canadian.
Canada has certainly been a great place to be the past decade because of the commodity and resources theme and demand by emerging markets. The TSX has outperformed the S&P 500 for the past 7 years. The strong loonie and weakening U.S. dollar has also benefited domestic investors. However, the trend may be shifting. Year to date, the TSX is up 1.4%, whereas the S&P 500 is up 6.8%, and the DOW is up 8.9%.