Canada’s 10 biggest companies make up almost 40% of our main stock index, the TSX. When they’re doing well, it’s great — but when they’re not... you can guess the rest. The TSX has been on fire this year, up about 23%. But here’s the catch: Canada’s stock market is heavily concentrated in just 10 companies, particularly banks (RBC, TD), which make up 38% of the TSX. While they’ve been doing well, especially with the finance sector up 30% and Shopify crushing it, putting all your eggs in the Canadian basket can be risky. When you focus too much on one country, you’re exposed to more risk if something goes wrong. Apart from banking, Canada’s market is especially top-heavy in energy and industrials. To avoid this, Vanguard Canada recommends keeping your portfolio balanced. It suggests limiting Canadian stocks to about 30% of your equity investments, and spreading the rest internationally.
