The Canada Day weekend feels like a good time to address a never-ending investment question: What is the right balance in your portfolio between Canadian and foreign stocks?
This topic usually comes up when Canadian stocks are doing particularly well or poorly relative to those in other markets. Recently, it surfaced because of the federal government’s push for large pension funds to allocate more capital to Canada (domestic stocks generally make up a tiny part of their public equity allocation).
Before exploring the question, we need some facts.
The Canadian stock market is relatively small. It accounts for 3 per cent of world indexes.
In it are many world-class companies, the largest of which are either global leaders or domestic giants operating in the friendly confines of an oligopoly.
The industry sector weightings of the S&P/TSX Composite Index are skewed toward a few industry sectors – financial services, energy and materials….
