Brandes Investment Partners & Co.

Brandes Investment Partners & Co.

May 18, 2011 08:48 ET

Affluent Canadians Hold Only 15 Per Cent of Their Equities in International Markets According to New Study from Brandes Investment Partners & Co.

Global Investment Study Finds That 95 Per Cent of Affluent Canadian Investors Don't Know Foreign Content Rules

TORONTO, ONTARIO--(Marketwire - May 18, 2011) - Canada's affluent investors are not feeling compelled to seek out international investment opportunities, according to a new Global Investing Study commissioned by Brandes Investment Partners & Co. (www.brandesinvestments.ca)

Canadians with more than $250,000 in investable assets hold only 15 per cent of their equity portfolios in international markets, compared to 85 per cent in Canada and the U.S. Conducted earlier this year, the Study cites key reasons for this home-market bias: a belief in supporting Canadian companies, a feeling that Canadian markets offer enough diversification and comfortable familiarity, and a confidence that Canada will continue to outperform global markets. The Survey finds that 95 per cent of affluent investors do not know there are no longer foreign content limits within RRSPs. The exploration into home bias investing was conducted by Environics Research Group.

"You would of course expect Canadians to have a home-market bias, but when two-thirds of their equities are here, along with their real estate and jobs, that's putting a lot of eggs in one Canadian basket," says Oliver Murray, President and Chief Executive Officer of Brandes' Canadian operation.

Of the 1,000 affluent Canadian investors who were interviewed, 79 per cent think Canada offers enough diversification, while a similar proportion say they are more familiar with Canadian investments.

The Study also finds that two-thirds of those surveyed believe Canadian markets will outperform international markets (67 per cent), while a similar proportion of respondents feel that global markets are riskier. Few cited prior bad experiences with foreign investments as a reason not to invest outside Canada.

According to Murray, many affluent investors are confused when it comes to foreign content rules. "Yes, Canada has been a great place to invest, but there is virtually no awareness or education about foreign content rule changes. If 95 per cent of affluent Canadian investors don't know there are no longer foreign content rules, a red flag should go up. This number is surprising, given that over half the Study respondents rank their investment knowledge high."

Almost one-third of affluent Canadian investors say they check international business news daily and almost all receive some financial advice. Even so, there is still a strong belief that Canada will always outperform global markets, "but," says Murray, "always is an imprudently long time when you consider that Canada is the most resource-heavy stock market in the world."

All respondents (100 per cent) say they have exposure to Canadian Markets. Almost two-thirds have exposure to the U.S. (64 per cent), and 57 per cent have exposure to international markets. On average, Canadian markets account for two-thirds of investors' total portfolios (66 per cent) as well as their equity portfolios (64 per cent). U.S. markets (19/20 per cent) and international markets (15/16 per cent) account for smaller shares. "The low proportion of foreign content in the portfolios of affluent Canadians are token holdings and not indicative of properly diversified portfolios," says Murray.

Brandes Investment Partners & Co. commissioned the Global Investing Study to validate "what we're hearing anecdotally," adds Murray. "We are concerned that affluent Canadian investors are focused entirely on how good Canada is now and are not properly diversified for the long run. Investors should use their strong Canadian dollars to take advantage of global investment opportunities and at the same time get a bit better diversified."

About Brandes Investment Partners & Co.:

In 1974, Charles Brandes launched the firm that bears his name, Brandes Investment Partners, L.P. (Brandes LP) in San Diego California, with absolute devotion to Benjamin Graham's Value Investing principles, successfully adapting Graham's methods to the realities of today's global marketplace. The corporate culture at Brandes Investment Partners & Co., the Canadian operations of Brandes LP, is grounded in teamwork, rooted in shared beliefs, has a single well-defined process, and is based on a commitment to working together. The organization is characterized by low professional turnover, high morale and stability in our business practices. Brandes' desire to exceed expectations, both in terms of performance and service, drives everything the company does. Brandes Investment Partners & Co. offer Canadian retail and institutional investors a variety of investment vehicles, each managed with the value investing philosophy of Benjamin Graham and David Dodd.

ATTENTION EDITORS: A copy of The Global Investing Study is available at
http://www.brandesinvestments.ca/site/brandes/assets/pdf/Brandes_Global_Investing_Study_February_2011.pdf

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