5 reasons why you should consider some
U.S. holdings as part of a well balanced portfolio.DiversificationThe Canadian equity markets account for
roughly 4% of the world market in terms of capitalization. By
contrast, the U.S. accounts for over 35%. Given the relative size
of the U.S. equity markets, the number of quality investments
available is significantly larger. As well, the Canadian economy is
predominately resource based, whereas the U.S. economy is more
broadly based. Access To InformationWith the close geographic proximity of
Canada to the U.S., Canadians have the advantage of easy access to
information on companies south of the border. There are a whole
host of independent sources that provide information on U.S.
companies including: research reports, newsletters, newspapers,
earnings estimates and real-time data. The sheer volume of
information available may actually make researching and evaluating
a U.S. company easier than a comparable Canadian company. Participation In Foreign MarketsFinding good quality companies to invest in
overseas can be both time consuming and costly. The differences in
accounting practices and disclosure requirements make evaluating
company performance very difficult. As well, foreign market
transaction costs can be significantly more expensive than in the
U.S. By investing in large U.S. multinational corporations that
generate revenue from sales overseas, you can gain exposure to
foreign markets without having to research and trade foreign
companies directly. Liquidity & Market EfficiencyThe U.S. equity markets are considered the
most efficient and liquid in the world. Many large U.S. companies
trade millions of shares per day. With volumes of this size, the
shares are efficiently priced with very narrow bid/ask spreads.
This provides investors with easier access to their funds in case
of a market downturn or if another buying opportunity presents
itself. OptionsThe U.S. option market is also the largest
and most liquid in the world. Many Canadian companies that are
interlisted on U.S. exchanges, have options listed in the U.S.
Because of the relative size of the U.S. market, it may make sense,
where possible, to trade options on Canadian companies in the
U.S. The above points are just a few reasons why Canadian investors
should consider tapping into the vast opportunities available in
the United States. At TD Waterhouse,
we offer our clients exclusive discounts on a broad selection of
research products to help them evaluate U.S. industries and
companies. And if you decide to invest in a U.S. security, you know
that
TD Waterhouse
will execute your trade quickly, efficiently and at a low
cost.
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