Why go global

By: Sound Choices • June 4, 2019 • Personal Finance

Global diversification allows investors to find opportunities and sectors that may not always be present in their domestic market.

Canada's role on the world stage

The Canadian market represents less than 4% of the world’s market capitalization1 and of the top 500 companies in the world – only 12 are in Canada2.

Canadian market

1 Source: AGF Investment Operations. MSCI (Developed) World Index, as at December 31, 2018.

2 Fortune Global 500 (companies ranked by revenue as at March 31, 2018, fortune.com/global500).

MSCI World is used as a proxy for the “Rest of the World” as Canada represents only 3.3% of the Index.


...with as much as 70% of the Canadian marketplace concentrated in only three sectors, out of the 10 driving global markets.3

Canada concentration

3 Source: AGF Investment Operations. S&P/TSX Composite Total Return Index, as at December 31, 2018.

4 Source: AGF Investment Operations. MSCI (Developed) World Index, as at December 31, 2018.

MSCI World is used as a proxy for the “Rest of the World” as Canada represents only 3.3% of the Index.


 

Diversification across various countries can be an optimal way to reduce risk and improve overall performance

Elements that drive the performance of one market may not for another. In Canada’s case, market performance is closely tied to the resource sector, which has historically had cyclical performance.

country-jellybean

Source: AGF Investment Inc., Bloomberg – top-performing countries 2014-2018 on a calendar-year basis as determined by the regional contribution to the performance of the MSCI All Country World Index. As of December 31, 2018.


 

Discover more about global investing here and talk to your financial advisor about how this investing strategy fits with your financial portfolio.


 

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