Looking specifically at how Canadian institutional investors have been allocating their capital to Canada over the past decades, Knowles noted 80 per cent of quarterly periods have seen outflows from Canadian equities and 60 per cent for Canadian fixed income. In the mid-2000s, when the foreign property rules were changed, there was a trickle down of diversification, he said, but the macro-environment of lower interest rates in the past few years has also led investors to seek out additional diversification.
Read: Expert panel: Weighing the benefits, pitfalls of investing in Canadian equity
The Canadian dollar also adds diversification, said Knowles. “The interesting part when talking about currencies, instead of bonds or individual stocks, is the fact that it’s generally a relative game. It’s growth in one market relative to another market, so you get a lot more idiosyncratic variables that come into…
