Managing Director and Head of Canada explain why they see active driving alpha as Canadian investors flood into global equities
Canadian investors are demanding access to global developed markets. Performance has been a driving factor. The MSCI EAFE index, which captures large and mid-cap equities across 21 global developed markets excluding the US and Canada, returned 31.22 per cent in 2025, beating the MSCI World index by over 10 per cent and the S&P 500 by roughly 15 per cent. After lagging for decades, those global developed markets have been buoyed by new fiscal spending in Europe, investor-friendly policies in Japan, and a global shift towards more attractive valuations.
The read from JP Morgan Asset Management is that Canadian demand for this massive market segment will continue. They just launched a new actively managed ETF in Canada tracking international developed markets under the ticker JIDE. Travis Hughes, Head of Canada for JP Morgan Asset Management explained why his firm sees an opportunity for this market segment now. Anjali Balani, Managing Director and US Head of the international equity group, explained how JP Morgan seeks to capture this opportunity for Canadian investors now.
“Our product strategy is driven by two things. Demand by clients is the number one consideration. Number two is marrying that demand with where we think we have a true competitive advantage, this strategy ticks both boxes,” says Hughes. “There is demand from both institutional and retail clients and we happen to have a very strong high-conviction strategy that we’re super excited about.”
Balani notes that the investable universe covered by the new ETF is incredibly broad, requiring huge infrastructure to research, analyze, and navigate appropriately. Her firm’s approach begins with what they call a currency, valuation, sentiment (CVS) process. International markets, she notes, are benefitting from local currency catch-up against the US dollar which is prompting investors to diversify asset exposure to help with currency risk. Valuations outside the US, especially US large-caps, remain very attractive even after returning over 30 per cent last year. Sentiment, she notes, is being unlocked by a host of macro forces across these geographies.
Pro-investor corporate governance in Europe and Japan, Balani says, is one such catalyst. Companies in these geographies are taking a page from the US corporate playbook, initiating share buybacks and sparking belief that their stocks have room to run.
Fiscal spending has been a catalyst, too, most notably in the lifting of Germany’s debt cap which is unlocking about one trillion euro in infrastructure and defense spending, which should impact a market that has struggled with austerity for over a decade.
Shifting consumer preferences, Balani notes, have also driven some unexpected market booms. Where sports and activewear were once the domain of US and European companies like Nike, Addidas, and Puma, new Japanese names like Asics for sportswear and Uniqlo for fashion have become consumer and investor darlings.
Active management, Balani argues, is advantageous when navigating these massive markets, especially for a firm of JP Morgan’s scale. She explains that the team boasts over 200 professionals conducting fundamental research as well as 80 career research analysts covering 2,500 global stocks that represent over 95 per cent of global market capitalization. That expertise, along with the scale of their quant teams, gives them the means to make high-conviction calls in the space.
Balani explains how her team incorporates certain macro forces through the example of German defense stocks, which benefitted from renewed fiscal spending last year. The obvious play might be to gain exposure through a stock like Rheinmetall, which more than doubled in the past 12 months but now trades at a P/E ratio of 88.43. Balani says her team sought better value exposure through two names. Bilfinger, a mid-cap German civil engineering company, offered targeted exposure to defense and infrastructure spending. At the same time an investment in Siemens offered broad-based exposure though a huge industrial conglomerate. She notes that her team is now seeking similar advantages through access to Japanese retailers.
“The edge that we have is, that we have analysts on the ground in these markets around the world that can really point us in the right direction in terms of which companies we want to own,” Balani says.
That is not to say Balani and her team aren’t cognizant of the risks in these markets. She notes, though, that the risks in global developed markets can play off the risks in US markets. Where US markets are more concentrated in growth sectors like tech, global developed markets can diversify away from that risk. That also means an index like the EAFE can underperform. There is also some exposure to risk of consumer deterioration, Balani says, with the recent example of a Chinese consumer pullback to draw from. Geopolitical shocks remain a significant risk, too, but that cuts across many global markets.
For Canadian advisors now looking to add more international and global exposure, Balani says that the case is relatively straightforward, holding to the old adage of diversification.
“When you go to a supermarket, do you just shop in every odd aisle, or do you actually shop in every single aisle?,” Balani asks. “The way I think about this is you want to give, give as much exposure to the entire opportunity set across equities as possible, and by limiting yourself to certain countries or certain regions, then you're ignoring the other half of the supermarket, where you could find some very delicious things.”
