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Dale Jackson

Your Personal Investor

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This week of uncertainty is sure to stretch into several weeks of uncertainty, and that could have a lasting impact on your investments and ultimately your retirement.

These are the times when good advisors reach out to clients with reassurance, and warnings of the perils of knee-jerk reactions.

These are also the times when well-diversified portfolios can cushion the blow of what’s to come, and be ready to seize the next big opportunity.      

If fear and greed drive markets, fear is definitely in the driver’s seat. A new Angus Reid poll finds 57 per cent of Canadians say incoming U.S. President Donald Trump will hurt trade relations between Canada and the United States.

As an exporting economy Canada cannot afford to hunker down and be isolated from the world, and neither can Canadian investors.

Canadian publicly-traded equities only account for less than three per cent of publicly traded global equities. Of that tiny sliver of Canadian equities, roughly two-thirds are limited to commodity or financial stocks.   

How much of a portfolio should be allocated outside Canada is up to the individual investor and should be determined with the help of a qualified advisor.

Here are a few ways to get global exposure:

  • Global equity funds or exchange traded funds (ETF) will hold baskets of stocks from around the world. Global equity mutual funds are actively managed by a portfolio managers while ETFs track indices on a global level or in individual regions. Professional management costs more, so mutual fund fees are usually much higher than ETF fees. Most foreign funds come in versions hedged and unhedged to the Canadian dollar. Whether or not you want to hedge the loonie is something you should discuss with an advisor.    
  • International equity funds or ETFs hold stocks from anywhere outside Canada or the United States. Like global funds, international equity funds can be based on a single international index or different regional indices.    
  • U.S. equity funds or ETFs hold U.S. listed companies. No portfolio is complete without exposure to the world’s largest economy. U.S. ETFs usually track the S&P 500 or the Dow Jones Industrial Average.
  • U.S.-listed stocks may seem like U.S. stocks but many multinational corporations grow their revenue globally. Some big familiar companies offer a great opportunity to get global exposure with limited global risk.