What Is the Benchmark Portfolio for Canadians?
Summary
Most advisors describe risk with a simple stock/bond split (40/60, 60/40, 80/20). The harder question is what happens inside those buckets. This post outlines a practical way to estimate the Canadian “benchmark” portfolio using allocation and balanced funds as a proxy, and explains why that baseline matters for disciplined deviations.
The Problem With 60/40 Labels
Advisors typically frame risk as:
- Conservative: 40% stocks / 60% bonds
- Moderate: 60% / 40%
- Aggressive: 80% / 20%
Those labels are useful, but they don’t tell us how portfolios are allocated within equities and fixed income. If we want to define a benchmark, we need a reasonable estimate of how the industry actually allocates capital.
A Practical Proxy: Balanced Funds
We can’t observe every advisor’s portfolio directly, but balanced and allocation funds are a reasonable proxy. The OSC Investment Fund Survey (2023) shows hundreds of billions in long‑focused balanced allocation funds, representing a meaningful share of Canadian investor assets. My broader dataset of balanced funds lands in the same ballpark, which suggests this is a defensible baseline.
Within those funds, the largest category by AUM is Global Neutral Balanced. Large platforms also dominate specific categories, which further concentrates the “benchmark” into a small number of allocation styles.
Two Allocation Categories
Canadian asset allocation funds generally fall into two categories:
Canadian Allocation Funds
Must invest at least 70% of assets in Canadian equities and Canadian‑dollar fixed income. Equity balanced funds are roughly 70% equities, neutral funds in the mid‑50s, and fixed‑income focused funds around 30%. Cash is a meaningful sleeve (typically a few percent).Global Allocation Funds
Hold less than 70% in Canada. These tend to be slightly more equity‑tilted in equity and fixed‑income categories, while neutral funds are slightly less equity‑heavy than their Canadian counterparts.
What’s Inside the Buckets
Fixed income:
- Portfolios skew toward investment‑grade credit.
- Corporate bond exposure is slightly higher than government.
- Duration tends to be mid‑range (roughly five to seven years).
- Cash and derivative sleeves are material.
Equities:
- Global portfolios track cap‑weights more closely.
- Canadian and neutral portfolios exhibit a strong North American bias.
- Home‑country bias is pronounced, especially in Canadian‑focused funds.
For global funds, the equity mix tends to be roughly half U.S., around a quarter to a third Canada, with the remainder international.
Why This Matters
This gives us a practical baseline for what “market‑like” actually means in Canadian portfolios. From there, we can evaluate any deviation as tracking error — a cost that must be justified.
In our approach, the default is to match a broad global market allocation, and we treat deviations as intentional choices. One example of a justified deviation is wider international diversification. Over long horizons, equities across countries should deliver similar returns, so broader international exposure can reduce concentration risk without relying on short‑term forecasts.
Closing Thought
There’s plenty more to explore — duration positioning, credit quality, factor tilts, and the “other” sleeves — but the balanced‑fund baseline is a reasonable starting point. It tells us what most investors implicitly own, and sets a clear benchmark for how and why we choose to be different.
Citation
@misc{dale_koepke2026,
author = {Dale Koepke, Brandon},
title = {What {Is} the {Benchmark} {Portfolio} for {Canadians?}},
date = {2026-03-02},
url = {https://finitemoment.com/posts/canadian-benchmark-portfolio/},
langid = {en}
}