Canadians continue to focus their investments on U.S. securities and foreign markets.
According to Statistics Canada, Canadians bought $17.5 billion worth of foreign securities last November compared to $5.4 billion in October, accelerating a trend that has seen investment dollars flow out of the country since the start of the global pandemic.
The bulk of those Canadian dollars - $7.4 billion - went toward purchases of U.S. shares with a focus on big technology companies, and funds that track broad market indices such as the benchmark S&P 500.
Canadian investors also purchased $4 billion in non-U.S. foreign shares in November.
The massive flow of foreign investments were made by Canadian businesses, governments and big institutional investors, but also include individual retail investors either directly or through pensions, mutual funds or exchange traded funds (ETFs).
In the first 11 months of 2021, Canadians spent a record $82 billion on U.S. securities. Last year, the S&P 500 advanced 27% compared with a more modest 22% gain for Canada’s benchmark S&P/TSX Composite Index.
Factoring total returns over the past 20 years, the S&P 500 has surged in value by 516%, compared with the TSX’s 372% climb. That translates into an average annual compounded rate of return of 9.5% for the S&P 500 compared to 8% for the TSX.
Most Canadians have easy access to buying U.S.-listed stocks directly, which can also provide exposure to the rest of the world since the U.S. dollar is the global standard. Roughly 50% of all publicly traded companies in the world are based in the U.S. and many operate on globally.
