The fieriest venture capitalist in The Dragons' Den warns that many advisors have “sorely misrepresented” clients by keeping them tied to Canada’s low-yield investments.
"I have 50% of my portfolio now outside of Canada – because that is where opportunities are,” Kevin O'Leary told KMI Media in an exclusive interview this month. “If you did not have any money in the US market or in Asian markets, you have been sorely misrepresented in terms of appreciation.”
The star of CBC's hit show pulls no punches in telling advisors to encourage clients to follow global investment flows to faster-growth markets in the Far East and the developing Southern Hemisphere.
“I am a fund flow guy – for the last 20 years now, there has been one direction of fund flows and it has all been going east and south...so people pursue GDP growth,” he said. “I don’t care whether you call China 11% or 6.5%, it is still three times faster than Canada or America.”
O’Leary’s views echo those of emerging market-focused advisors who say that Canadians suffer from home-country bias and are missing out on opportunities.
“I am always encouraging Canadians to look beyond Canada and the United States," he said. "It’s a very difficult task as most people don’t feel comfortable investing outside their own domestic market.
"However over the last three years, Canada has so underperformed compared to rest of the world that they have begun to realize now that we are 25% behind capital appreciation in just 36 months."
As emerging markets can be highly volatile, O’Leary recommends investing in more liquid assets. For instance, while he is bullish on Cambodian property, he selects real estate investment trusts (REITs) rather than directly buying properties.
“I usually use REITs…as I am not going to buy a building myself in a market that I do not have any physical representation" he told KMI Media. "There are plenty of great managers to do that…for example, some of the French do REITs in Cambodia.”
What do you think about O'Leary's comments – his criticism. Add your comment below.