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CanadaWOULD THE WORLD’S BEST SOCCER TEAM HAVE ONLY CANADIAN PLAYERS?
Another Kick at the Can(ada)
If you could build the ultimate soccer team, chances are you’d choose the best players from around the world.
So why do so few of us do that with our investments? The best opportunities—like the best players—come from different countries. Is Home County Bias holding you back?
This is the latest in Franklin Templeton’s series, “Behavioural Finance for Everyday Investors”, where we describe common investment barriers – so you can overcome them.
Home sweet home
Where we live has a big influence on our everyday lives. From our favourite foods to the teams we cheer for, we tend to prefer what’s nearby. For investors, the tendency to stay in our own backyards can result in portfolios that lack true diversification.
Canada makes up less than 3% of the world’s economy – and yet almost three quarters of the average Canadian’s equity holdings are in Canadian stocks. It’s that old adage about eggs and baskets. By sticking so close to home, Canadians may be missing out on opportunities offered by foreign investments.
POTENTIAL FOR GREATER DIVERSIFICATION
Are Canadian equities over-represented in Canadian portfolios?As of December 31, 2018
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
Sources:
- Bloomberg, as of December 31, 2018. 2. Investor Economics as of December 31, 2018
Investor Behaviour
Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.
