Mar 14, 2026
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Canadian investors currently allocate more than half of every dollar towards Canadian assets. In fact, the average investor held 55.6% of their equity exposure in domestic companies, according to a 2024 Vanguard Investments Canada report (1). Given that the Canadian equity market represents approximately 2.7% to 3.4% of the global equity market (2), this means investors hold roughly 15 to 18 times the global allocation of Canadian equities.
"Canadians are showing greater appetite for global equities which is positive and follows a global investing trend to favour international markets," explains Sal D'Angelo, head of products for Vanguard, in the report. "However, the rate of overexposure to domestic securities is still relatively high. Lack of diversification in your portfolio can lead to sector concentration, greater volatility and less efficiency with your investments, all of which can contribute to higher risk."
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There is a silver lining. According to data from Vanguard, the bias towards domestic firms and holdings dropped from a high of 67.0% in 2012 to 55.6% in 2024 (3). Still, investors need to heed sound investment strategy and consider how best to diversify their investment portfolio — and not just in terms of sectors, but geographical exposure as well.
Why home bias is more dangerous now
For Canadian investors navigating the volatile 2026 markets and beyond, the case for global diversification has become even more compelling. Ongoing trade policy uncertainty — including the impact of U.S. tariffs on Canadian exports — has added a new layer of risk to domestic-heavy portfolios. Sectors like energy, materials and manufacturing are particularly vulnerable to cross-border economic tension, meaning investors who are overweight in Canadian equities could face amplified volatility at precisely the wrong time.
The risk is structural, too. The Canadian equity market is significantly concentrated in energy and financials, while being underdeveloped in technology, health care and consumer sectors.
The top 10 Canadian holdings make up almost 37% of the domestic equity market, compared to just 16% of the global market — what Vanguard analysts call an idiosyncratic risk.
As a result, when those dominant sectors face headwinds, if an investor holds a Canada-heavy portfolio, there are few places to hide.
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Canadians' home investment bias
According to Vanguard research, the current bias towards domestic holdings is approximately 16 times overweight relative to Canada's share of global markets (4). This can pose significant problems, including:
- Portfolios overweighted in Canadian stocks tend to be more volatile
- Overexposure to the Canadian equity market can lead to less efficient portfolios with security and sector concentration risk
- Allocating too much of your investments to one country can lead to greater portfolio volatility and a bumpier ride for investors
How much exposure should investors aim to hold
Investing close to home is a sound strategy — if that exposure is moderate. According to Vanguard’s D’Angelo about a third of an investor’s portfolio should be invested in their home country. "Based on our research, we see a reasonable equity balance of around 30% home bias in Canadian securities and 70% invested in non-domestic markets."
That 70/30 split between global and Canadian equities gives investors meaningful domestic exposure — including the currency hedge that comes with holding Canadian-dollar assets — while capturing the growth potential and stability of the broader global market.
Read more: The ultra-rich are bailing on volatile stocks right now — these 4 shockproof assets are their new safe havens
What you can do right now
If you suspect your portfolio is too Canada-heavy, here are three practical steps to consider:
Review your current allocation
Log in to your investment account and calculate what percentage of your equity holdings are in Canadian companies or Canadian-focused funds. If it's significantly above 30%, that's a signal to rebalance.
Consider a global exchange-traded fund (ETF)
Low-cost global ETFs — including those that track broad international indexes — are one of the most efficient ways to add geographic diversification. Many are available through Canadian discount brokerages with no transaction fees.
For instance, as a Questrade investor, you don't pay any commission fees when you buy or sell Canadian or U.S. listed stocks or ETFs. Open an account using code MONEY26 and get $50 cash back.
Talk to a financial adviser
If you hold your investments inside a registered retirement savings plan (RRSP), a tax-free savings account (TFSA) or a registered retirement income fund (RRIF), a licensed adviser can help you rebalance in a tax-efficient way and make sure your allocation reflects your risk tolerance and time horizon.
Ultimate goal
The goal isn't to abandon Canadian stocks — it's to ensure your portfolio reflects the world you're actually investing in.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Vanguard Investments Canada (1, 2, 3, 4)
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Romana King is the Senior Editor at Money.ca. She writes for various publications, and her book -- House Poor No More: 9 Steps That Grow the Value of Your Home and Net Worth -- continues to be an Amazon bestseller. Since its publication in November 2021, this book has won five awards, including the New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award in 2022.
