Over the past several months, CFA Society Toronto informally surveyed a large sample of institutional equity sales professionals working for U.S. investment banks. Each of these experts serves both U.S. and Canadian clients, so we asked for their observations on the key differences between equity investors on both sides of the border. Here are their conclusions.

1. Surprise! Canadian investors are more risk averse. Virtually every conversation with our sales professionals started with some variation on the idea that Canadian equity investors are less willing to take risks than their U.S. counterparts. This probably comes as no surprise to our CFA readership. And, while it can’t be proven with any scientific certainty, the distinction probably boils down to a cultural difference in attitudes about risk. Americans are simply more comfortable taking it.

One way in which this difference manifests itself is in the ability to make a final investment decision to buy a new security position. Our experts say that even the most conservative, long-only U.S. funds are willing to commit to a final decision in the absence of complete information. Canadian investors, by contrast, will attend multiple meetings, spend hours on the phone, and generally do more research, yet they often remain unwilling to pull the trigger. One theory proposed to explain this difference is that Canadian investors are more focused on investing for the right reasons and being methodical; U.S. investors tend to take action.

2. Americans follow a results-oriented philosophy. Investors in New York, Boston, and other U.S. investment centres are very focused on the end result of the investment process: Did the decisions make money? In Canada, investor philosophy is generally more focused on whether the underlying investment process is sound. In action, Canadian investors are forgiven if they’re wrong, as long as the work was completed thoroughly (no laziness) and the research process was robust. In the U.S., if you’re wrong, you’re wrong, and you have to be accountable for the outcome, regardless of the process you followed. Several interviewees suggest this focus on results, rather than process, drives more “short-termism” in U.S. markets, as the tolerance for short-term underperformance is much lower.

3. Different views on growth. Several of the sales professionals mentioned that growth is paramount in the U.S. In Canada, meanwhile, return of capital (usually dividends) is preferred. One interviewee recounted an interesting tale of a chief financial officer of a mature American business that conducted an investor roadshow in 2014 in both the U.S. and Canada. The company’s growth opportunities in the U.S. had matured, so it faced a strategic decision about whether to search for new growth by expanding internationally or simply returning cash to shareholders. Not surprisingly, the U.S. investors pushed for international expansion while Canadians wanted their capital back. Americans took on risk to expand internationally; Canadians played it safe.

4. Canadians are big on dividends. There’s a clear preference among Canadian investors for dividends. Said one interviewee, “The one difference we witness on a consistent basis is that U.S. investors tend to be more open to buybacks. There is no one right answer on return of capital taking the form of dividends or buybacks, but Canadian investors tend to have an affinity for dividends.”

5. Canadians focus on the long term and shy away from momentum strategies. The fact that Canadians tend to focus on the long term was often repeated by the experts. Another interviewee said, “Investor time horizons are longer in Canada, and portfolios are more concentrated.” Part of this difference may be explained by style preference, as “Canada tends to be dominated by value and GARP investors. You do find some concentration in these two styles in the U.S. as well, but not to the same extent.” Along the same lines, momentum or trend strategies are noticeably less popular in Canada. “These strategies don’t tend to work well in Canada. A prerequisite for success is having access to a top-tier international desk where you get the first call, and that’s not as easily available in Canada,” the interviewee said.

6. U.S. investors are more willing to discuss their investment ideas. Canadians play it close to the chest regarding their best ideas; Americans are much more vocal in broadcasting their views. A critical aspect of this difference, said one interviewee, is that it gets to the value of discussion and debate. “The tendency not to reveal their best ideas means Canadians can be less susceptible to group think.

But the trade-off is that ideas are far less battle-tested. A U.S. investor will have defended a thesis many more times to internal teams and external salespeople, and they benefit from the feedback generated in that process.”

These six points are neither exhaustive nor fully conclusive regarding the differences between U.S. and Canadian investors. They are, however, still significant, given that they reflect the views of cross-border experts who have many years of collective experience with, and observation of, each investing culture.

In their wisdom, these experts have furthered us toward the principle advanced by American Benjamin Franklin: “Observe all men, thyself most.”