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What Countries Should Investors Focus on For 2023?

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Investing is something that can truly be done globally today. Nowadays you can own pieces of assets in pretty much any country you’d like, which is great news considering how many opportunities exist around the world. But before you go running to invest your money into the country you think will be likely to grow the most in 2023, it’s important to understand just how random global stock market returns are and how difficult it can be to predict exactly which countries will outperform in the future.

Take a look at the chart below which looks at stock market returns for 22 developed markets over the last 20 years.  Each colour represents a different country and each column is organized top down by the highest performing country, to the lowest.

What is something you notice right off the bat?

If you’re like most, you’ll have noticed just how random the colours are and just how much they change year to year. This supports the idea that predicting which countries will outperform is very difficult to do.

Some other considerations based on the data include:

• Austria posted the highest return in 2017 followed by the lowest return the next year.

• The US ranked in the top five countries over the entire 20-year period but finished first in the rankings once over that period. In 9 calendar years, it was in the lower half of performers.

So, what should we learn? In conclusion, trying to predict which country will have the best stock market returns is a futile exercise. The chart above demonstrates the randomness and volatility of stock market returns across different countries. Instead of focusing on trying to predict which country will outperform, investors should aim to have a globally diversified portfolio. This way, they can capture higher returns where they appear, offsetting lower returns in other markets, leading to more reliable outcomes over time. A globally diversified portfolio will help mitigate the risks associated with investing in a single country and will increase the chances of long-term success.

Brandt Butt, Associate Portfolio Manager / Investment Advisor, CIM®

Brandt is an Associate Portfolio Manager / Investment Advisor and part of an award-winning team at Endeavour Wealth Management with iA Private Wealth. Brandt’s focus is working within incorporated physicians and dentists between the ages of 35-45 who are looking to set themselves up on the right financial path in hopes of reaching a point where they are choosing to work, instead of having to.

This information has been prepared by Brandt Butt who is an Investment Advisor / Associate Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained here in may not apply to all types of investors. The Investment Advisor/ Associate Portfolio Manager can open accounts only in the provinces in which they are registered.

iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

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