Do Canadian Investors Need Global Bonds?

A Canadian investor might view a global bond allocation as a kind of insurance against a national economic downturn—a housing market decline, a fall in natural resources prices, or some unforeseen shock

Dan Lefkovitz 2 September, 2021 | 1:15AM
Facebook Twitter LinkedIn

Diversification Suitcase

When it comes to equities, it’s not hard to make the case for global diversification to Canadian investors. Canadian stocks represent just 3% of global market capitalization. The market is heavy on the big banks and natural resources companies and light on healthcare and technology (beyond Shopify). Canadian equities have appreciated by less than half the level of the U.S. market over the past 10 years.  

What about bonds? Investors unhappy with the current 1.5% yield to maturity on the Morningstar Canada Core Bond Index could be forgiven for looking abroad for bigger income streams. Emerging markets bonds offer far higher yields. But that boost comes with much more risk.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

Do You Want To Take Control Of Your Finances?

Find The Best Tools Here

Facebook Twitter LinkedIn

About Author

Dan Lefkovitz

Dan Lefkovitz  Dan Lefkovitz is a strategist for Morningstar's Indexes group.

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy