More than two-thirds of Canadians aren’t protecting their investments from continued volatility in domestic equity markets, finds a poll from CIBC Asset Management.
Of those currently invested in equities, 31% plan to invest in foreign equities or mutual funds with a global mandate. The poll also finds that baby boomers are the least likely to invest abroad.
“We’re seeing a significant number of Canadians still not diversifying their portfolios, which can really expose them to swings in the domestic market,” says Steve Fiorelli, managing director, CIBC Asset Management. “With the Canadian market only accounting for approximately 3% of world market capitalization, diversifying by geographic region is one way for investors to strengthen their portfolio for the long-term.”
Over the past five years, the S&P/TSX Composite Index has delivered an annualized total return of 7.53% as of Dec. 31, 2014, compared to the S&P 500 Index, which has returned 17.78% in Canadian dollar terms.
“We’re likely to see volatility in the equity markets for some time until oil supply and demand imbalances resolve themselves,” says Suzann Pennington, CIO and Head, Equities, CIBC Asset Management.
In addition to geographic regions, investors should also consider a mix of balanced asset classes along with varying economic sectors to create a well-diversified portfolio, adds Fiorelli.
Key findings include:
- despite recent market volatility, 69% of Canadians that plan to purchase stocks or mutual funds intend to invest in Canada;
- the percentage is even higher among baby boomers, with 76% between 55 and 64 years old and 77% over 65 planning to invest in domestic markets;
- 17% say they’ve changed their investment plans as a result of recent market volatility; 22% are unsure whether or not to change; and 61% don’t plan to make changes.
Here are some more articles to help investors cope with volatility.