MFS Investment Management Canada Ltd. has announced changes to its Canadian LifePlan Funds to address home-country investment bias.
The new Canadian LifePlan Funds are designed to help ensure that investors remain globally diversified, especially early in their investment careers, to help dampen country-specific risk while taking advantage of a broader pool of global investments.
“Many Canadian investors have significant exposure to local equity markets,” says Shawn Cohen, director of relationship management with MFS. “For young and middle-aged investors, this home-country bias can have a significant impact on retirement portfolios in the event of a local downturn, as we saw over the last decade.”
As investors approach retirement, the fund adjusts, shifting to a greater weighting in Canadian fixed income investments.
Cohen adds that as an investor nears retirement, a home-country bias centred on fixed income can actually help limit short-term volatility, minimize currency risks and provide a steady income stream.