When investors talk about diversification, the terms global equities and international equities are often used carelessly. They are not the same thing. For Canadian and U.S. investors, understanding the distinction can materially improve clarity, discipline, and long-term results. What is the difference between global equities and international equities? And, why does it matter?
Global Equities vs International Equities
Global equities represent the full universe of publicly listed stocks around the world, including the investor’s home country. For Canadian investors, international equities mean everything outside Canada and the US; for a U.S. investor, they mean everything outside the United States. This structural difference drives how portfolios are built, benchmarked, and managed over time.
The reason for this distinction is that most Canadian investors use Canadian equity and US equity as core asset classes. And most Canadian investors also hold US equities. So, investors already holding Canadian and US equity would see lots of overlap when they also hold global equity (since global equity also contains Canadian and US equity).
What’s the Difference in Practice
In practice, global equities are typically used as a single, comprehensive allocation, while international equities are used as a complementary sleeve alongside Canadian and US stocks. A global equity allocation answers the question, “How much equity do we own worldwide?” An international equity allocation answers a different question: “How much of our equity exposure sits outside our home country?” Confusing these two approaches often leads to unintended overlaps and unclear exposures.
Implications for Canadian and American Investors
Because the United States represents roughly 60% of global equity market capitalization, the experience of holding a global equity portfolio differs dramatically by country. For U.S. investors, a global portfolio still feels heavily domestic. For Canadian investors, a true global portfolio sharply reduces Canada’s weight to roughly 3–4%. This contrast explains why Canadians often feel overexposed to the U.S. when following global benchmarks, while Americans often underestimate how concentrated their portfolios already are.
Home Bias for Canadian Investors
Canadian investors tend to exhibit significant home bias, often holding far more Canadian equities than global benchmarks would suggest. Some home bias feels reasonable. Canadian dollars fund Canadian spending, and domestic companies are familiar and tax-efficient (because of things like eligible dividends and TFSAs). However, excessive home bias concentrates portfolios in a narrow market dominated by financials, energy, and materials. Understanding global versus international equities helps investors distinguish between intentional home bias and accidental concentration.
What Are Global Benchmark Allocations
Global equity benchmarks weight countries by market capitalization. Over the long-run, this has resulted in approximate weights of about 60% U.S., 25% international developed markets, 10–15% emerging markets, and only 3–4% Canada. Global equity funds and ETFs generally follow these proportions unless they are deliberately tilted.
What Are International Benchmark Allocations
International benchmarks remove the home country entirely. For U.S. investors, international benchmarks consist of developed and emerging markets excluding the U.S. For Canadian investors, international benchmarks usually exclude the U.S. too. These benchmarks are most useful when investors want exposure to equity markets outside Canada and the US.
Should You Use Global Equities or Separate Canadian, U.S., and International Allocations
In most cases, it is one approach or the other—not both. Global equities already include Canadian, U.S., and international stocks. Holding global equities alongside separate regional equity sleeves often results in overlapping exposures, unclear benchmarks, and unnecessary complexity. A clean global-equity structure prioritizes simplicity and governance. A regional-equity structure prioritizes control and intentional home bias. Mixing the two frameworks usually undermines both.
Bringing It All Together
Global equities and international equities are not competing asset classes; they are organizational tools. The real decision is whether a portfolio is built around a single global equity allocation or around separate regional sleeves with explicit targets. Clarity at this level reduces behavioural risk, simplifies reporting, and makes portfolios easier to manage across generations.
