As I’ve pointed out in many articles in the past, Canadian investors typically invest close to home - for good and bad.
This means that when the Canadian economy runs hot, so do the portfolios of many Canadians; of course, the flip side is also true. Diversification is an important thing, not only across economic sectors, but also by geography.
Picking global stocks to add to one’s portfolio to counterbalance a Canada-only, or Canada-mainly, portfolio is possible, though may be costly.
Each Canadian investing platform is different with respect to which indices an investor can choose from. Finding research material in English or French can also be difficult, making understanding global markets a problem.
I typically recommend that investors consider exchange traded funds (ETFs) for this reason, with a focus on as much diversification as possible.
One ETF I recently came across which should provide investors with all the global diversification they will ever need is iShores Core MSCI World ex-Canada ETF (TSX:XAW). This ETF comes as advertised- a truly global ETF with approximately 2,000 companies represented in this fund, all outside of Canada.
This ETF is truly global in nature, meaning investors will get exposure to each and every continent and most countries, allowing for vast diversification, the likes of which would be difficult to replicate on one’s own by buying individual ETFs and bundling them together.
I would recommend adding in a percentage of one’s portfolio into a global ETF like this one, to counterbalance any home bias which may exist.
Invest wisely, my friends.
