Active fund managers’ poor 2018 scorecard continues ‘long-term underperformance’



Link’s passive investment model reduces management fees, improves retirement outcomes

The gridiron Hail Mary. The hole-in-one from 200 yards. The desperation heave from the backcourt.

There’s a reason you don’t see these plays very often, and it’s because they are low-percentage gambits.

In the equity fund management arena, active managers play a similar game—they’re trying to beat the market. And according to the most recent data, they’re not having much success.

The latest scorecard from Standard & Poor’s Index Versus Active (SPIVA) Canada found that more than 75 percent of Canadian equity fund managers lagged behind the S&P/TSX composite index benchmark in 2018.

These are results that fly directly in the face of active management logic—which says that these non-indexed mutual funds perform better when markets are bumpy, as they were in late 2018.

“This highlights the fact that heightened market volatility does not necessarily lead to outperformance by active managers,” the report says.

Passive versus active funds. Why should it matter to you? The bottom line. That’s why.

Passive funds consistently outperform actively managed funds, and it’s due in large part to the absence of management fees.

At Link Investment Management, our team of experienced portfolio managers follows the passive investing model—essentially, a “buy, hold and rebalance” strategy—through low-cost, index-tracking Exchange Traded Funds (ETFs).

This means that we provide small to midsize employers and their workforce with simple, low-cost, liquid, outperforming (on average) investment solutions through our workforce equity, savings and health plans.

Whether it’s our defined contribution Alberta Link Pension Plan (ALPP), our Group RRSPs and TFSAs, our Employee Share Purchase Plans (ESPPs) or our Deferred Profit Sharing Plan (DPSP) options, your workforce can see better retirement outcomes, thanks in large part to a much lower and completely transparent fee schedule.

“With long-term Canadian yields remaining below their long-term average, income-seeking investors may want to remember the long-term underperformance of active equity income funds as they formulate strategic asset allocation,” says the most recent SPIVA Canada Scorecard.

Link’s investment strategies are steered by our proprietary “robo-advisor” algorithm, which creates prescriptive retirement portfolios tailored to an employee’s risk tolerance and investment objectives.

Combine this with Link’s innovative, cloud-based platform, and you’ve got a winning combination on the scoreboard. No Hail Mary required.
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