TORONTO – Canadian investors are increasingly looking at putting their money to work outside the country despite the drop in the loonie, a CIBC poll suggests.
The survey found that 41 per cent of Canadians investing for retirement in stocks or mutual funds will invest mainly outside of the country. That result is up from 31 per cent in a similar poll last year.
The poll conducted in January, found 15 per cent of those surveyed said they planned to add to their U.S. investments, while another 15 per cent were investing in emerging markets.
Eleven per cent planned on stocks and mutual funds in developed markets such as Europe.
The online poll was done by Vision Critical from Jan. 20 to 22.
Much of the Canadian stock market is based in three key sectors — energy, mining and financials. The concentration meant last year that the S&P/TSX composite index suffered due to weakness in oil and other commodity prices.
“While it’s natural for investors to have a ‘home bias’ by overweighting your portfolio to domestic stocks, taking a Canada-only approach can hurt returns,” says Luc de la Durantaye, managing director, asset allocation and currency management, CIBC Asset Management.
“Canada accounts for only about three per cent of the world’s market capitalization, so diversifying geographically can strengthen your portfolio for the long-term.”
The Canadian dollar has come off highs of recent years to trade at its lowest level against the U.S. dollar in more than a decade earlier this year.
And while the drop in the loonie has made buying investments in the U.S. more expensive, it has also given a boost to U.S. stocks in Canadian dollar terms even with the relatively flat year for the S&P 500 in 2015.
The CIBC suggested that with the recent volatility on the stock market and the lower loonie, 22 per cent of investors are looking at “alternative asset” classes that include real estate or infrastructure.
Another 26 per cent said they wanted to learn more about alternative asset classes, the poll said.
The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error as they are not a random sample and therefore are not necessarily representative of the whole population.