Considerations for Global Diversification and Home Country Bias

When investing globally, it's crucial to consider costs, taxes, and local consumption hedging. These factors often lead to a phenomenon called home country bias, where investors tend to hold a disproportionate amount of their portfolio in their home country's stocks. For Canadian investors, owning Canadian stocks is low cost and tax efficient, but foreign stocks may be more expensive to own and have complex tax treatment. Additionally, Canadian stocks can serve as a hedge for local consumption goods, and investing in them reflects positive economic conditions. It's important to be aware of home country bias and the benefits of global diversification to ensure a well-balanced and efficient investment portfolio.

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