Home Country Bias

Spring 2021, by the CIO office (NBC)


It is more prudent to invest most of your portfolio in companies domiciled at home and thus of greater familiarity than to "risk it" with foreign corporations. 


While predominantly investing in domestic equities might seem sufficient and feel comforting, such a portfolio could, in fact, be just the opposite. Do not confuse familiarity with safety. 

For instance, Canada's stock market's high concentration in some of the most cyclical sectors and its relative lack of growthoriented companies poses a risk that can result in unpleasant surprises if left undiversified.

The good news is that there are plenty of opportunities abroad to complement for such risks. After all, Canadian stocks only represent 3% of the global equity investment universe... a far cry from the ~45% they account for in Canadians' portfolios*. Home bias indeed!

 *Estimate base on an average from "Coordinated Portfolio Investment Survey" for 2014-2018.

 (data via Refinitiv)

The information contained herein was obtained from sources we believe to be reliable, but is not guaranteed by us and may be incomplete. The opinions expressed are based on our analysis and interpretation of this information and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed herein are those of the author and do not necessarily reflect those of National Bank Financial.


The securities or investment sectors mentioned herein are not suitable for all types of investors. Please consult your investment advisor to verify whether the securities or sectors suit your investor's profile as well as to obtain complete information, including the main risk factors, regarding those securities or sectors. This document is not a research analysis produced by the Research Department of National Bank Financial.


National Bank Financial is a subsidiary of National Bank of Canada. National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

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