In an era marked by rising tariffs, global uncertainty, and renewed national pride, more Canadians are looking for ways to keep their dollars at home – not just in what they buy but also in how they invest.
While “Buy Canadian” is easy to spot on store shelves, the investment landscape offers no such guidance. Public companies don’t come with a “Made in Canada” label. And, even if they did, what makes one company more Canadian than another?
To help answer that, Kun Huo, Ivey Business School Assistant Professor of Managerial Accounting and Control, along with Emma Coelho, HBA ’21 and David Hickey, HBA ’25, developed a new way to measure the “Canadian-ness” of a stock. The results of which? May upend how Canadians think about investing at home.
Is your double-double truly Canadian?
If you were to ask the average Canadian to name a homegrown company, you'll likely hear familiar brands like Tim Hortons, Canadian Tire, or RBC. But when it comes to investing, the story isn’t so straightforward.
“Many of the companies we think of as Canadian are deeply global in structure,” explained Huo. “That makes it hard to know where your investment dollars are really going.”
Take Tim Hortons, for example. While it’s iconic in Canada, it’s owned by Restaurant Brands International (RBI) – a publicly traded company that also owns Burger King and Popeyes. RBI is headquartered in Toronto and Miami, is listed on stock exchanges in both countries, and has a Brazilian investment firm as its largest shareholder. In 2024, the company earned more revenue in the U.S. ($3.8 billion) than in Canada ($3.7 billion).
“The case of RBI is a clear example of the challenges of identifying Canadian companies,” said Huo. “Patriotic investments, if there is such a thing, can be easily misplaced without a working definition of what a Canadian company means.”
The maple leaf metric
Using data from public security filings, Huo and team developed a seven-part score sheet to assess the "Canadian-ness" of a publicly traded company. Their model included:
- The company’s reporting currency
- Whether it’s dual-listed (on both Canadian and U.S. stock exchanges)
- The location of its headquarters
- The percentage of revenue earned in Canada
- The percentage of employees based in Canada
- The percentage of taxes paid to the Canadian government
- The percentage of capital assets located in Canada
Armed with this framework, the research team applied it to the Vanguard FTSE Canada Index ETF (VCE), a fund that tracks some of the country’s largest publicly traded companies. They compared the fund’s six largest holdings (including Royal Bank, Shopify, and Enbridge) with its six smallest (such as Imperial Oil, Great West Life, and Hydro One).
Their scoring system brought one trend into sharp focus: smaller companies consistently scored higher in Canadian-ness. While the largest firms averaged between 40 – 44 per cent, the smallest companies scored closer to 60 per cent.
The study also revealed a sectoral divide. Large-cap companies (those big in size and value on the stock market) tended to be concentrated in financial services, while the more Canadian smaller-cap firms were rooted in energy and natural resources.
“When you dig into the data, the most Canadian companies aren’t the biggest brands, they’re the smaller ones quietly powering the local economy,” said Huo. “It’s a paradox, really. When a company that is founded in Canada becomes more successful, it will likely outgrow the size of its local market. In that process, it becomes less Canadian.”
Backing Canada with your portfolio
While investors can apply the research team’s scorecard directly to their portfolio, its findings also have the potential to shape policy at the institutional level.
“More Canadians are asking whether their dollars can do more for Canada. To answer that call, the government could offer the guidance they need to invest with intention,” said Huo.
But what options are available to Canadians who want to invest in their country today?
To start, Huo suggests that such investors consider an equal-weight Canadian market index fund. Unlike the more popular market-weighted index funds, such as VCE, which allocate more money to large-cap companies like banks and multinationals, equal weighting gives each company the same influence, regardless of size. This naturally boosts exposure to smaller, often more Canadian-rooted firms.
Huo said: “Investing used to be about generating the highest returns, but more and more people feel it is important to ‘invest according to their values’. We have seen this phenomenon with ESG investing, and there has been a ‘home investment bias’ that researchers have been trying to explain for decades. The recent events just took things up a few notches. It’s hard to predict how long this will last, but if investing Canadian is important to you, smaller-cap stocks and equal-weighted index funds get you closer to that goal.”
