Only one-third of investors are looking beyond Canada's borders for growth
Toronto, Jan. 13, 2015 – As Canadians head into the RRSP season, the majority of them (69 per cent) aren't protecting their investments from continued volatility in domestic equity markets through global diversification, finds a new poll from CIBC Asset Management.
Of those currently invested in equities, less than a third (31 per cent) of Canadians plan to invest in foreign equities or mutual funds with a global mandate. The poll also finds that baby boomers are the least likely to invest abroad.
"We're seeing a significant number of Canadians still not diversifying their portfolios, which can really expose them to swings in the domestic market," says Steve Fiorelli, Managing Director, CIBC Asset Management. "With the Canadian market only accounting for approximately three per cent of world market capitalization, diversifying by geographic region is one way for investors to strengthen their portfolio for the long-term. It significantly broadens your investment options and helps to mitigate risk."
Over the past five years, the S&P/TSX Composite Index has delivered an annualized total return of 7.53 per cent as of Dec. 31, 2014, compared to the S&P 500 Index, which has returned 17.78 per cent in Canadian dollar terms.
"We're likely to see volatility in the equity markets for some time until oil supply and demand imbalances resolve themselves," says Suzann Pennington, Chief Investment Officer and Head, Equities, CIBC Asset Management. "With resources and financials the two biggest weights in Canada's equity markets, it's important that investors diversify their holdings to help them meet their long-term investment goals."
In addition to geographic regions, investors should also consider a mix of balanced asset classes along with varying economic sectors to create a well-diversified portfolio, adds Mr. Fiorelli.
Key poll findings:
Strategies for investors concerned with volatility:
Additional key poll findings:
Where Canadians plan to mainly invest - percentage by geographic region, by age:
|Canadian Equities, Funds||Global Equities, Funds|
|65 and over||77%||23%|
The results presented in this document were gathered through a Web survey conducted by Leger from November 21 to 25, 2014 among a representative sample of 1,505 English- or French-speaking Canadians, 18 years of age or older, who have an investment portfolio for retirement. Using data from Statistics Canada, the results were weighted according to gender, age, region, language spoken at home, education and whether or not children are present in the household to ensure a sample representative of the entire population under review. The margin of error—which measures sampling variability—is + / - 2.53%, 19 times out of 20. *Low sample size.
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