TRSM Research Seminar by Dr. Bates, K. and Dr. Samarbakhsh, L.

Title: Removal of the Foreign Property Rule and International Diversification: Evidence from Canadian Mutual Funds

Description: Between 1971 and 2005 Canadian investors in tax deferred savings plans were limited in the proportion of securities that could be held in non-Canadian securities. In 2005 the Foreign Property Rule (FPR) was eliminated, and investors were then free to internationally diversify their portfolios. This study examines performance and geographic allocation data for tax deferred plan-eligible mutual funds over time, and documents the results of this change on the international diversification of Canadian mutual funds, specifically the impact on the adoption rate of international diversification and return on investments.

The results show that despite the change in policy, the rate of adoption of international diversification has not dramatically increased, and that most international diversification was invested in the United States, an economy closely tied to the domestic economy. International investments were also concentrated in specific sectors: technology, healthcare, and infrastructure. These results indicate that the change in policy did not have as great an impact as anticipated.

Bio:

Dr. Kimberly A Bates is an associate professor at Toronto Metropolitan University, and Chair of the Entrepreneurship and Strategy Department in the Ted Rogers School of Management.  She has published in the fields of innovation, corporate governance, and manufacturing.  She is also interested in the challenges of educating university students in the post pandemic era.

Dr. Laleh Samarbakhsh is an associate professor and Chair of Finance in the Ted Rogers School of Management at Toronto Metropolitan University. Her research interests include corporate finance, empirical asset pricing, hedge funds, cryptocurrencies, derivatives, and financial crises. Her work has been published in top Finance journals as well as highlighted in Canadian media. She is the recipient of the Dean's Teaching Award of Excellence. Since 2019, Dr. Samarbakhsh has been appointed an associate editor of Global Finance Journal (external link) .