As the trade war between Canada and the United States drags on, many Canadian investors are understandably uneasy about their exposure to U.S. markets.

Some have already begun shifting their portfolios away from U.S. stocks, opting instead for what feels like a safer, more patriotic move—investing in Canadian companies. But while this instinct may feel right, it could be doing long-term damage to their financial futures.

The persistent problem of home bias

Home bias, the tendency for investors to favour domestic assets, has long been a challenge for Canadians. In fact, the average Canadian investor held a disproportionately high percentage of Canadian equities in their portfolios before the trade war, often at the expense of global diversification. According to various studies and industry data, it's not uncommon for Canadian portfolios to have 50 per cent or more allocated to domestic equities, even though Canadian stocks represent only about three per cent of the global equity market.

This home bias........

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