Invest in a Variety of Geographic Regions
Foreign bond and stock markets aren't necessarily in-sync with each other. Canadian and North American markets may, for example, slow down while European, Asian and other markets are in a growth phase. Investing in different foreign markets may be an excellent way of diversifying your holdings and balancing your portfolio.
Two good reasons to have foreign content
There are at least three good reasons to make room in your portfolio for foreign equities or mutual funds.
- Canada represents about 4%* of the world's market capitalization
The United States, represents 30%* of world market capitalization, Europe, Africa and Middle East 28%* and the Asia/Pacific region 32%*. If you invest exclusively in Canadian products, you are depriving yourself of potential gains in those global markets. Consider adding some foreign content to your portfolio.
*Information as at October 2010.
An internationally-diversified portfolio presents lower risk and greater long-term stability
Would you go out right now and invest all your money in a single equity? Of course not, that would be too risky. The same applies to putting all your money into Canadian investments. By adding foreign content to your portfolio, you diversify and you reduce risk.