Canadian investors keeping cash within our borders: poll

Blame it on Olympic fever. It seems nothing is immune to the wave of Canadian pride sweeping the nation, not even how we choose to invest our money.

A new poll from CIBC Asset Management found the majority of Canadians, though primarily interested in long-term growth, remain reluctant to stray too far from home when it comes to investing our retirement portfolios.

Indeed, 68 per cent of Canadians surveyed said they plan to invest mainly in Canada this year.

Most, 59 per cent, plan to invest primarily in GICs or other guaranteed investments, savings accounts, bonds or bond funds; while 35 per cent plan to invest mainly in stocks or equity funds.

The so-called home-country investment bias not is unreasonable. It wasn't so long ago that Canada was considered a haven amid global economic chaos.

There is a comforting familiarity with companies whose brands we know and see regularly in our city streets.

Foreign investment can also seem more complicated and volatile, especially given the recent turmoil in emerging markets.

But a lot has changed in the world since 2008, and financial experts now say we could be missing out on valuable opportunities if we aren’t willing to consider at least some global exposure.

"There are 40,000 stocks that trade on global markets, versus less than a tenth of that on Canadian markets,” said Luc de la Durantaye, managing director, asset allocation and currency management, at CIBC Asset Management,

“Diversifying a portfolio across geographic regions and sectors offers many opportunities that are not available domestically," he said.

You don’t necessarily have to go too far from home. The U.S. market is considered a solid bet with strong productivity and innovation driving some of the world’s leaders across sectors including health care, technology and manufacturing, said de la Durantaye.

Long-term investors might also want to look farther abroad to emerging markets such as such as India, Turkey, Phillipines, Vietnam and Mexico where the combination of young populations and a relatively low debt structure is fueling more promising growth prospective than that of Canada, the U.S. or Europe.

Shawn Cohen, director of relationship management with MFS Investment Management Canada Limited, said it's important for investors to consider investment timeline and when they'll require access to the money they invest.

Where you want to take a more diversified global perspective is early on in your career, so you can ride out any volatility created by currency fluctuations, he said. As you approach retirement, however, you'll want more exposure to the Canadian market place, be that fixed income or equity.

Cohen and de la Durantaye agree it's worth working with an advisor to find the right portfolio mix.

“It does take some know-how,” said Cohen. “The data and information is available, but it may be a little bit more difficult to find the information on certain companies as you are looking at them worldwide, so, yes, trust in your advisor is key.”

The CIBC poll suggests there is also a generation gap in how and where Canadians are investing.

Nearly half (48 per cent) of Canadians between the ages of 18-34 plan to invest in global equities or mutual funds, with that number declining sharply to 30 per cent for those between the ages of 35-44, a demographic that is typically in their primary wealth-building years.

CIBC Asset Management recently issued its 2014 outlook stating that flat commodity prices would likely see Canada's equity markets continue to under-perform relative to certain international markets this year.