For years, it was easy for many Canadians to treat “global equities” as shorthand for the United States. The S&P 500 was delivering strong returns and U.S. mega-caps dominated global benchmarks. Investing in the world’s largest economy felt like diversification in and of itself.
Today, the investment backdrop is different. Trade policy is affecting markets in ways investors can’t ignore. When broad U.S. tariff moves hit in 2025, the immediate market reaction was a reminder that cross-border commerce isn’t just a macro talking point—it can show up quickly in equity volatility.1
At the same time, developed markets such as Europe and parts of Asia have begun to attract renewed attention, helped by valuation differences and shifting investor interest after a long stretch of U.S. outperformance.
With all this in mind, let’s look at the “why now” case for international equities and why some investors are seeing upside in developed markets outside North America.
Why Consider International Equities?
A starting point is simple arithmetic: Canada is a small slice of the global equity market (about 3%), yet many Canadians overweight domestic equities relative to our country’s global market weight.2
That’s not inherently “wrong.” Home bias in investing—the favouring of domestic stocks—exists everywhere, for reasons that range from familiarity to currency considerations. But it is high relative to levels of home bias in other nations, and it has two practical consequences for Canadian investors.
The first is concentration risk. Canada’s market is heavily tilted toward sectors like financials and energy, and it’s more concentrated in a relatively small number of large issuers than global benchmarks.3 The top 10 holdings in Canada, for example, account for almost 37% of securities investments.4
And the second is a limited opportunity set by investing primarily in Canada. International developed markets offer more industrial leaders, healthcare giants, consumer multinationals, and manufacturers that simply aren’t represented at scale in Canada’s index mix.
International equities are therefore one way to diversify what a portfolio owns and what it depends on for returns.
Tariffs Are Pushing Investors to Look Beyond North America
Tariffs don’t just affect trade volumes. They can influence input costs, margins, demand, currency moves, and corporate guidance, often unevenly across sectors and countries. And they can have unexpected ripple effects far from the border.
The Bank of Canada, for example, has noted that U.S. tariffs can reduce demand for exports in regions like the euro zone and contribute to counter-tariff that raise import prices and slow domestic demand. And Canadian economists have similarly framed tariff uncertainty as a drag on business investment and growth expectations.5
This tariff-driven uncertainty can motivate investors to revisit a basic risk question: how much of my equity exposure is tied to one region’s politics, one region’s currency, and one region’s market?
Investors who feel overly exposed to North American policy risk may seek regions where the drivers of growth, fiscal policy, and sector leadership differ.
Why Add Developed-Markets Exposure to a Portfolio?
International equities are having a moment again. Not because Canada or the U.S. suddenly became “uninvestable,” but because concentration, valuation gaps, and trade-policy uncertainty have pushed diversification back to the top of the agenda.
Developed markets outside North America (Europe, Japan, the U.K., Australia, and other established economies) can shift a portfolio’s mix in a few ways.
First, they can offer a broader set of sector exposures. One challenge presented by home bias in investing is the concentration- and sector-specific risk that a focus on Canada can present to a portfolio. 6 Canada’s equity market has historically been dominated by financials, materials, and energy, with relatively limited weight in technology (~9.9%) and health care (~0.3%), for example, compared with other developed markets.7 This structure can leave portfolios underweight in areas that have become more important globally. Global allocations can reduce such risks and broaden the number and kind of sectors investors have open to them. 8
And second, developed markets outside North America often reflect different sector mixes, policy settings, and stages of the economic cycle.
European and Asia-Pacific markets tend to have greater exposure to industrials, exporters, financials, and manufacturers, whose earnings are more sensitive to global trade flows, currencies, and capital investment. As a result, earnings growth and valuation adjustments can occur on a different timetable than in North America.
These asynchronous cycles can matter when growth shifts. Periods of slowing earnings momentum in one region don’t always coincide with downturns elsewhere. While this does not eliminate risk, it can reduce reliance on a single market’s valuation or earnings remaining dominant over time.9
Introducing INTY: Evolve International Equity UltraYield ETF
Against this backdrop, Evolve Funds Group is excited to add to its UltraYield lineup with the Evolve International Equity UltraYield ETF (INTY).
INTY seeks to provide attractive income and long-term capital appreciation by investing in a portfolio of leading international equity securities. To enhance yield, INTY will employ a covered call option, the level of which may vary based on market volatility and other factors and intends to pay distributions twice per month.
For more information on this fund, visit evolveetfs.com/inty/.
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ENDNOTES
- Smith, F., “TSX posts biggest decline in five years on US tariff shock,” Reuters, April 3, 2025; https://www.reuters.com/markets/tsx-futures-fall-trumps-tariffs-stir-recession-fears-2025-04-03/
- “MSCI ACWI Index (USD),” MCSI, December 31, 2025; https://www.msci.com/documents/10199/8d97d244-4685-4200-a24c-3e2942e3adeb
- “Beyond Canada: How global diversification strengthens resilience,” Yahoo Finance, December 1, 2025; https://ca.finance.yahoo.com/news/beyond-canada-how-global-diversification-strengthens-resilience-162028718.html
- Dobyns, K., “Why we are separating Canada from the US within our global equity framework,” LSEG, October 07, 2025; https://www.lseg.com/en/insights/ftse-russell/why-we-are-separating-canada-from-the-us-within-our-global-equity-framework
- “Global Economy Monetary Policy Report—April 2025,” Bank of Canada, April 16, 2025; https://www.bankofcanada.ca/publications/mpr/mpr-2025-04-16/global-economy/
- “Canadian investors reduce home bias, embrace global diversification” Wealth Professional, June 26, 2024; https://www.wealthprofessional.ca/investments/etfs/canadian-investors-reduce-home-bias-embrace-global-diversification/386266
- “Daily Trade Report SCP,” TSX Inc., December 16, 2025; https://www.tsx.com/files/trading/daily-trading-report/Daily_Trading_Report_2025-12-16.pdf
- “Investor Biases Unveiled: Home Bias and its Implications,” FasterCapital, April 10, 2025; https://fastercapital.com/content/Investor-Biases-Unveiled–Home-Bias-and-its-Implications.html
- “Global economy proves resilient but remains fragile,” OECD, December 2, 2025; https://www.oecd.org/en/about/news/press-releases/2025/12/global-economy-proves-resilient-but-remains-fragile.html
Disclaimers
Published January 16, 2026.
Evolve Funds Group Inc. is the investment fund manager and portfolio manager. The Evolve International Equity UltraYield ETF (“INTY”) is offered by Evolve Funds Group Inc., and distributed through authorized dealers.
Leverage increases risk.
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