Canadian Equity Allocations in Institutional Portfolios

This report examines the evolution of Canadian equity allocations within institutional portfolios over the past decade. It highlights a significant shift towards global equities, with many Canadian institutional investors reducing or completely eliminating their allocations to Canadian equities. The report argues for a reconsideration of this trend, suggesting that the outlook for Canadian equities is favorable compared to global equities, particularly U.S. equities. It presents historical performance data, indicating that Canadian equities have experienced periods of both outperformance and underperformance relative to global counterparts, influenced by sector composition and currency effects. The report also discusses valuation metrics, noting a current valuation gap that may present an investment opportunity. Additionally, it addresses the impact of currency fluctuations on returns and concludes with a forecast of expected returns for Canadian equities over the next decade, suggesting a potential for stronger relative performance compared to global equities.