Focus Put On Companies, Not Countries

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    As investors move away from home country bias and into emerging markets, they need to focus on companies, not countries, says Martin Connaghan, a senior investment manager at Aberdeen Asset Management. In the ‘Panel Discussion: Trends and Best Practices in Global Investing’ at its ‘Outlook For Global Investing’ session, he said their approach is to remove labels to encourage clients to not think about the countries they are investing in. Patrick Maldari, also a senior investment manager at Aberdeen Asset Management, said it is more challenging with fixed income. Here, the home country bias is around 90 per cent. However, the world is changing and global indices are starting to show more and more activity outside the U.S. Still, in this environment, there is a decent opportunity, he said, because the yield curve is so flat. This means there is an opportunity move down credit spectrum in emerging markets instead of investing in developed markets where yields are so low. Janet Rabovsky, a director at Towers Watson, said in bonds it make sense for pension funds to own Canadian bonds because this country is only a small part of the global market and its economy is based on areas like oil and natural resources. From an equity perspective, the trend is away from Canadian equities with the average allocation at plan levels of about 16 per cent, down from 30 some odd per cent. This is due, in part, to the fact there are now true global products Canadian investors can use and the correlation between Canadian and emerging markets equities is increasing.