- Originally from our sister site, Advsior.ca
Canadian investors thoroughly recognize the strong growth potential of emerging markets. But when it comes to investing in these economies, few Canadians are taking full advantage of the opportunity, according to Franklin Templeton Investments Corp.’s latest national research.
The survey of 2,009 Canadians found that a significant proportion of respondents (38%) think emerging markets—in particular Asian nations such as China and India—represent the greatest investment opportunity over the next decade. Canada placed second (25%) followed by developed international markets such as the United Kingdom, Germany and Japan (6%). The United States was chosen by only 3% of respondents.
“Franklin Templeton’s research indicates Canadian investors are keenly aware of the promise and prosperity of the emerging market economies,” said Don Reed, president and CEO of Franklin Templeton Investments Corp. “These fast-growing economies are expected to drive global stock market returns in the years to come.”
However, few Canadians are taking full advantage of the emerging markets opportunity within their investment portfolios. A recent report from Morningstar Inc. indicated, as of June 30, about $8 billion was invested in emerging market equity funds in Canada while more than $199 billion was invested in Canadian equity funds.
Dollars invested in emerging market equities account for only 2.3% cent of the value of equity funds owned by Canadians, reports the Investment Funds Institute of Canada.
In comparison, emerging market equities account for 9.6% of all equities held by the forward-looking CPPIB, more than four times as much as Canadian retail investors.
When investors were asked what would make them more likely to invest in the emerging markets, 40% replied “getting more education about global investment opportunities” closely followed by 37% of investors who said “understanding investment options that reduce my risk.”