By Bhawana Chhabra
The Canadian stock market has been woefully underperforming its U.S. counterpart, but the reason has more to do with sector concentration — Canada is filled with banks and resource-related stocks while the United States is replete with technology and health care — than any commentary about how Corporate Canada is really doing.
If the TSX/S&P composite index enjoyed the same growth orientation in terms of sector shares as is the case with the U.S., the performance gap would be far less dramatic. For investors in the Canadian market, this means that until such time as value stocks begin to outpace the growth universe, the prudent thing is to overweight the smaller sectors with better growth and valuation profiles (technology, staples, industrials and health care) and underweight the rest.
We analyzed the contribution of each sector to the headline index and how it would have looked had the S&P/TSX…
