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Home Country Bias Still Prevalent

Home country bias continues to be prevalent in all markets including Canada, where investors’ weights in domestic equities far outpace the equivalent portion allocated in most broad global equity indices, says Morningstar, Inc.’s inaugural ‘Global Investor Portfolio Study.’ In Canada, the typical allocation fund has around half of its assets in equities, which is relatively high especially in contrast to markets like Japan where more than 50 per cent of households’ assets are sitting in cash or deposits, despite more than two decades of close to zero interest rates. Canadian households tend to have small portions of their financial assets in cash like investments, preferring to stay invested. This appetite for risk-taking is not surprising considering that the Canadian pension system is moving from a defined benefit focus to a greater reliance on defined contribution plans. Direct equities are the most popular financial instrument in Hong Kong and Singapore and is also in the top three products in eight other markets including three European markets; three Asia Pacific markets including Australia, New Zealand, and Japan; and Canada and the U.S. in North America. Though the most crypto-friendly investors seem to be in Singapore, Canada was one of the first jurisdictions to allow cryptocurrencies to be held and traded within discount brokerage platforms and hosts the world’s first crypto exchange-traded fund. Polls seem to indicate that Canadians are more likely to be invested in crypto than American, Australian, or British households.

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