With our lacklustre loonie showing no sign of bouncing back to parity anytime soon, many investors may be reluctant to even consider U.S. purchases. The bottom line, however, is that U.S. equities can be a smart part of any portfolio investment strategy.
Diversification by sector
The U.S. economy is buoyed by many global powerhouse companies and industry-leading titans. Not only that, but the U.S. market is much more broadly based than our domestic market. Here at home, the market is dominated by financials, energy, and materials stocks. South of the 49th, the biggest players include entertainment giants, pharmaceuticals, tech firms, and consumer brands that are instantly recognizable around the world.
Diversification by currency
Even when the exchange rate makes for an extra-expensive Disney holiday, your portfolio can still benefit from exposure to the U.S. dollar itself. For example, investors who currently hold U.S.-dollar-denominated assets purchased when our dollars were at parity are seeing their returns increase as the Canadian dollar declines.
It’s human nature to be more comfortable with things that are familiar to us. That’s why there is a tendency for Canadian investors to overload on our own domestic investments, a phenomenon known as “home country bias.” As your advisors, we can help you consider investment opportunities on their own merits, regardless of country of origin.
Follow us on Facebook.
Larry Kleinmintz, R.H.U., T.O.T., M.D.R.T.
This newsletter is sponsored in part by Dynamic Funds. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performances may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P.
This newsletter has been written (unless otherwise indicated) and produced by Ariad Communications.
© Ariad Communications. This newsletter is copyright; its reproduction in whole or in part by any means without the written consent of the copyright owner is forbidden. The information and opinions contained in this newsletter are obtained from various sources and believed to be reliable, but their accuracy cannot be guaranteed. Readers are urged to obtain professional advice before acting on the basis of material contained in this newsletter. Readers who no longer wish to receive this newsletter should contact their financial advisor. ISSN 1205-5840