The best of both worlds A look at the complementary nature of active and passive investing

Size: px
Start display at page:

Download "The best of both worlds A look at the complementary nature of active and passive investing"

Transcription

1 PART 1: Introduction The best of both worlds A look at the complementary nature of active and passive investing Although the active versus passive investing debate may continue in the media, 2013 proved to be an interesting year, and one in which the alleged debate may have come to its logical conclusion. So who won this so-called debate? Well, both investment styles. Far from a debate, research continues to show that active and passive investing are complementary approaches from a portfolio perspective. Why? Because different markets, at different times, behave in different ways. What was once efficient (ideal for passive) can become inefficient (ideal for active). This paper explains why the strongest investment portfolios from the perspective of diversification, performance and risk management have a healthy allocation to both active and passive investment solutions. And that having a manager, like Sun Life Global Investments (Canada) Inc., who can tactically maneuver between the two is akin to having the best of both worlds. And the winner is Nobel Prize awarded to contradictory theories Before getting into the hard data, here s a story that provides quick anecdotal evidence that for successful professional investors the active and passive debate is coming to an end. In an unexpected move, the 2013 Nobel Prize in Economic Sciences* was awarded to Eugene Fama and Robert J. Shiller, which at first glance seems ironic because the work of these two brilliant economists contradicts one another. Fama is considered by many to be the father of efficient market hypothesis, and his research supports the case for index investing. Shiller, on the other hand, has been working at showing the limitations of efficient markets theory. Clearly, that Fama and Shiller both won what is arguably the highest recognition for economic research and in the same year validates the argument for both investment approaches. * The Sveriges Riksbank Prize in Economic Sciences In Memory of Alfred Nobel is the actual name of the Nobel Prize in Economic Sciences.

2 PART 2: The Rotman study When active management pays New evidence from Canada and the U.S. A recent study out of the Rotman School of Management in Toronto and the David Eccles School of Business in Utah outlined where active and passive managers are effective and why. In the study Does Management Pay? New International Evidence *, the authors indicate that the view surrounding passive management is skewed as a result of: Using data from highly efficient markets (for example, the U.S. equity market) Not accounting for investor sophistication (professional money managers have a better record of choosing outperformers) Efficient versus inefficient markets Overall, the Rotman study s results suggest that the value of active management depends on the efficiency of the underlying market and the sophistication of the investor. As such, institutions use active management more frequently in non-u.s. markets. For example, sophisticated institutional investors benefited from active management over passive management in the Europe, Australasia and Far East (EAFE) and emerging markets regions between 1993 and 2008 by 50 basis points (bps) and 250 bps, respectively. How did they manage this? Institutional investors are more likely to gain alpha through active management as they provide oversight and have a greater amount invested in international relationships. In U.S. equity markets, which are generally highly efficient, active management has tended to underperform. This will be discussed in further detail in the following pages. The Rotman study, however, also found that active managers have outperformed in the U.S. equity space during down markets, providing evidence that active managers can offer reduced downside participation during volatile periods. For sophisticated institutional investors, active management outperforms passive management by more than 250 bps per year in emerging markets and by about 50 bps in EAFE markets over the 1993 to 2008 period. Karl V. Lins and Lukasz Pomorski * Karl V. Lins and Lukasz Pomorski, Does Management Pay? New International Evidence PAGE 2

3 PART 3: Examining historical returns A time for active and a time for passive Looking at active management across asset classes To build a deeper insight into the roles played by active and passive management in portfolio construction, Sun Life Global Investments analyzed the median manager of different asset classes (for example, Canadian equities and global real estate) against their respective benchmarks. The active manager s performance was compared to the benchmark over one-year time periods from December 31, 2004 to December 31, 2013, as well as the 10-year annualized rate of return ended December 31, The relative standard deviation and reward-to-risk ratio were also examined in a similar manner. The data revealed some interesting facts. Namely, that active management has consistently outperformed over longer time periods, while shorter-term returns are more mixed. The data also revealed that diverse market environments (for example, a period of heightened market volatility or a period of relative calm) will impact whether or not active or passive management outperforms. outperforms over the long term 10-year annualized returns (ended December 31, 2013) 1.50% 1.17% 1.00% 0.50% 0.62% 0.20% 0.36% 0.30% 0.44% 0.82% 1.02% 0.00% Canadian equity Canadian fixed income U.S. equity International equity Emerging market equity Global equity Global fixed income Global real estate ACTIVE-MEDIAN MANAGER VERSUS PASSIVE BENCHMARK Canadian equity Fixed income U.S. equity International equity Specialty equity PAGE 3

4 PART 3: Examining historical returns Canadian fixed income On an annual basis, the median active manager outperformed passive (as measured by the DEX Universe Bond Index) in 2006, 2009 and 2010, and again in 2012 and The Canadian bond market is unpredictable and inefficient, and whether an active or passive solution is the better approach depends on the overall economic and market environment. A talented professional investment manager can help ensure that a portfolio is benefiting from an appropriate allocation between the two. For example, during the 2008 financial crisis, corporate bond spreads increased dramatically. In 2009, as the markets recovered, the spreads started to narrow considerably. An active manager could have taken advantage of this and weighted their bond portfolio in favour of corporate bonds, leading to outperformance over the broad index, which typically holds a significant weighting in government bonds. In the coming years, interest rates and yields will be rising - not ideal conditions for Canadian bonds. This environment may seem to be favourable for active managers who can selectively choose appropriate bonds to help protect downside risk. Canadian equity Over the past 10 years, the median active manager outperformed the passive index as measured by the S&P/ TSX Capped Composite Index seven times on a one-year basis. In 2013, this disparity was made palpable as active outperformed passive by 5.1%. This is likely because of the economic environment. In 2013, the materials sector (which makes up a substantial portion of the Canadian equity market) significantly underperformed because of falling gold prices. An active manager could diversify out of the materials sector, while a passive investment is bound to that underperforming exposure. As witnessed in 2013, concentration issues in Canadian equities seem to be the biggest issue for being passive. When those few sectors outperform, however, passive managers shine. vs. passive Canadian fixed income 0.0% 0.1% 0.1% 0.2% 0.4% 0.3% 0.6% 0.5% 1.4% -median bond universe manager 2.9% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Based on monthly Mercer MPA Pooled Canadian Fixed Income gross returns from January 1, 2004 to December 31, is the DEX Universe. vs. passive Canadian equity 0.4% 1.2% 1.1% 1.0% 0.8% 1.0% 1.1% 1.3% 1.9% -median core manager 0.62% 5.1% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Based on monthly Mercer MPA Pooled Canadian Equity gross returns from January 1, 2004 to December 31, is the S&P/TSX Capped Composite. PAGE 4

5 PART 3: Examining historical returns vs. passive Global fixed income vs. passive Global real estate 0.1% 1.2% 0.7% 0.4% 1.3% 0.3% 2.5% -median global bond manager 6.5% 7.6% 8.3% 1.7% 9.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Based on monthly Mercer MPA Pooled Global Fixed Income (PFS) gross returns from January 1, 2004 to December 31, is the Citigroup World Broad Investment Grade Index (Citi WBIG). 2.0% Global fixed income management can outperform in the global fixed income space, as measured against the Citigroup World Broad Investment Grade Index. The median active manager consistently added value, outperforming in six of the past 10 years, and delivered substantial excess returns in 2009, 2010 and 2012 (9.7%, 6.5% and 7.6%, respectively). There are a number of reasons why active management tends to outperform in the global fixed income space, including the fact that this asset class is generally under-researched, making it somewhat easier for asset managers with effective research methods to find undervalued investments. Despite underperforming in 2008, and having benchmarklike returns in 2011, the chart below shows that the standard deviation was much lower than the benchmark (6.5% less in 2008). Therefore, on a risk-adjusted basis, active global fixed income managers added value. global fixed income standard deviation vs. the benchmark 2.00% 0.00% -2.00% -4.00% -6.00% -8.00% -median global fixed income manager relative deviation 0.7% 1.5% Based on monthly Mercer MPA Global Fixed Income (PFS) deviations from January 1, 2004 to December 31, is the Citigroup World Broad Investment Grade Index. 0.1% 0.3% 0.5% 0.4% 1.2% -median global real estate manager 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Based on monthly Mercer MPA Global Real Estate Securities (USD) gross returns from January 1, 2004 to December 31, is the FTSE NAREIT EPRA Developed. Global real estate The median active manager outperformed the FTSE NAREIT EPRA Developed Index in nine of the past 10 years. The excess return of active managers highlights the concept that in less liquid, less traditional asset classes, active management tends to add value. In an asset class that is traditionally less researched, active managers can add value through independent research and analysis. PAGE 5

6 PART 3: Examining historical returns Emerging markets equities The median active manager outperformed five of 10 years, which is likely because these regions tend to be under-researched compared to their developed market peers. An insightful active manager can generate alpha through both country and stock selection. They may also have the potential to avoid countries that are underperforming due to political and economic constraints, which is not possible with a passive instrument. What about the U.S.? It s important to return to the case of U.S. equities. management was less successful than passive management in U.S. equities, which lines up with the Rotman study s assumption that the U.S. equity market is generally quite efficient. However, in the last 10 years, the annual outperformance was evenly split between active and passive. Effective active managers can add value via in-depth research and cash flow analysis, especially in periods of heightened market volatility. In more efficient markets, there is always an opportunity for active managers to potentially add an additional layer of downside protection. Passive generally outperforms in U.S. markets Nevertheless, Sun Life Global Investments analysis found that the standard deviation of active managers was slightly higher than that of the passive benchmark, while the reward-to-risk results were relatively similar so even on a risk-adjusted basis, passive outperformed active in U.S. equity markets. vs. passive Emerging markets vs. passive U.S. equity 0.0% 0.3% 0.2% 0.6% 0.9% 1.0% 0.9% 1.3% 1.3% 1.7% 2.0% 2.0% 2.5% -median emerging markets equity manager 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Based on monthly Mercer MPA Pooled Emerging Markets gross returns from January 1, 2004 to December 31, is the MSCI EM. 2.0% -median U.S. equity manager U.S. equity standard deviation vs. the benchmark 1.2% 2.00% 1.5% 0.8% 0.00% 0.2% 2.1% -2.00% -median U.S. equity manager relative deviation Based on monthly Mercer MPA Pooled U.S. Equity gross returns from January 1, 2004 to December 31, is the S&P % 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Based on monthly Mercer MPA Pooled U.S. Equity gross returns from January 1, 2004 to December 31, is the S&P 500. PAGE 6

7 PART 4: Tactical active/passive PART 3: Examining Sun Life Granite historical Portfolios returns Sun Life Granite Managed Portfolios The best of both active and passive As previously discussed, asset classes efficient or inefficient perform differently in diverse market environments. For example, passive strategies may outperform during periods of market stability, whereas active managers may outperform during times of relatively high volatility and can potentially provide an additional layer of risk management through reduced downside participation. The performance of active and passive investing tends to depend on the asset class and the market environment. Ultimately, however, expert portfolio management can make the greatest difference. Take Sun Life Granite Managed Portfolios for example. Each are managed with the belief that, from an overall portfolio perspective, the active and passive investment approaches are complementary and have clearly defined roles. And it s the portfolio manager s responsibility to know when to tactically reallocate assets between active and passive strategies. Example: The underlying solutions in Sun Life Granite Target Date Funds The Portfolios fixed income, Canadian equity and U.S. equity exposures benefit from both active and passive managers, as each of these markets can be highly efficient at times, for better or worse. For example, the Canadian equity market is largely composed of three sectors financials, energy and materials and when one of these sectors begins to underperform (as the materials sector did in 2013), being able to actively diversify out of that sector is a considerable advantage for investors. When a market environment like this occurs, Sun Life Granite Managed Portfolios can rotate out of the passive solution and into an active one in order to reduce the risk of the portfolio. In less efficient areas of the market, including asset classes like international equities, global bonds or real estate, active managers can use their expertise to outperform or manage risk. Sun Life Global Investments has a rigorous manager selection process that closely examines track record, risk management, organizational structure, strength and strategy, investment philosophy and experience, to name just a few of the qualities that are looked for. Only after this thorough review process is a manager chosen to represent an asset class within Sun Life Granite Managed Portfolios. Fixed Income Sun Life Financial Money Market Sun Life BlackRock Canadian Universe Bond Sun Life Financial Universe Bond (Beutel Goodman) Templeton Global Bond RBC Global High Yield Bond Canadian equity Beutel Goodman Canadian Equity MFS Canadian Equity Growth Sun Life BlackRock Canadian Composite Equity U.S. equity TD Hedged Synthetic U.S. Index Sun Life MFS U.S. Growth International equity Sun Life MFS International Value Sun Life MFS International Growth Sun Life Schroder Emerging Markets Specialty equity Lazard Global Listed Infrastructure Invesco Global Real Estate Passive Passive Passive PAGE 7

8 PART 4: Tactical active/passive in Sun Life Granite Portfolios Sun Life Global Investments: Strategic views for Sun Life Granite Target Date Funds Asset class/ Strategic Investment Views Fixed Income Longest Maturity Fund shortest maturity fund Cash None 10% Bond domestic/foreign mix Domestic Bond active/passive mix Canadian equity Equity domestic/foreign mix Domestic Equity active/passive mix U.S. equity U.S. Equity active/passive mix (US$ hedged) International equity International (incl. Emerging Markets) specialty equity Specialty Equity Infrastructure & REITs 50% domestic 100% foreign /50% foreign Constant (50% active/50% passive) More Foreign (30% domestic/ 70% foreign) 100% active Constant (50% active/50% passive) Constant (100% active) 50% domestic /50% foreign 100% passive (hedged) 15% Constant 5% (100% active) Overall, 12.50% (longest maturity) to 31.25% (shortest maturity) is passively managed* Keys roles of active and passive Here is a quick look at why Sun Life Global Investments chooses active and passive managers for Sun Life Granite Managed Portfolios. managers are added to: Help manage portfolio risk Enhance potential returns through alpha Access diversifiers where affordable reduce volatility (vs. index profile) and seek to reduce downside capture help navigate through turbulent market environments overcome the fact that some standard passive indices are inefficiently constructed (e.g., infrastructure) Passive funds are used to: help gain efficient market exposure (e.g., where the potential value add from active management is expected to be lower or to provide low-cost exposure) Provide the ability to increase or decrease the portfolio s active/passive exposure depending on the outlook for performance of active managers control manager style risk * Subject to change based on tactical views. When it comes to constructing successful investment portfolios, Sun Life Global Investments believes investors should reject the active versus passive debate. Instead, investors should embrace a more holistic understanding of how active and passive investment management are complementary, and can be used to generate attractive riskadjusted returns over longer time periods. To learn more about how Sun Life Global Investments uses active and passive investing to build Sun Life Granite Managed Portfolios, please contact: Pat Leo Director, Institutional Business Development, Ontario and Western Canada Sun Life Global Investments Anne Meloche Regional Vice-President, Institutional Business, Quebec and Eastern Canada Sun Life Global Investments Sun Life Financial Target Date Funds are segregated funds of Sun Life Assurance Company of Canada, managed on a sub-advisory basis by Sun Life Global Investments (Canada) Inc. Sun Life Global Investments (Canada) Inc. is a member of the Sun Life Financial group of companies. Sun Life Global Investments (Canada) Inc., FOR INSTITUTIONAL USE ONLY

SUN LIFE FINANCIAL. Crafted with plan members in mind. For institutional use only

SUN LIFE FINANCIAL. Crafted with plan members in mind. For institutional use only SUN LIFE FINANCIAL Granite TM multi-risk target date funds Crafted with plan members in mind For institutional use only Sun Life Financial Granite multi-risk Target Date Funds Crafted with plan members

More information

A closer look at today s target date fund landscape

A closer look at today s target date fund landscape A closer look at today s target date fund landscape DC Investment Forum Toronto, Ontario September 26, 2014 Chhad Aul, CFA Portfolio Manager Sun Life Global Investments 1 ADVISOR USE ONLY Today s agenda

More information

SUN LIFE FINANCIAL GRANITE MANAGED INCOME PORTFOLIOS. Income-oriented solutions crafted with plan members in mind FOR INSTITUTIONAL USE ONLY

SUN LIFE FINANCIAL GRANITE MANAGED INCOME PORTFOLIOS. Income-oriented solutions crafted with plan members in mind FOR INSTITUTIONAL USE ONLY SUN LIFE FINANCIAL GRANITE TM MANAGED INCOME PORTFOLIOS Income-oriented solutions crafted with plan members in mind FOR INSTITUTIONAL USE ONLY SUN LIFE GRANITE MANAGED INCOME PORTFOLIOS NOT ALL INCOME

More information

University of Saskatchewan Academic Money Purchase Pension Plan

University of Saskatchewan Academic Money Purchase Pension Plan University of Saskatchewan Academic Money Purchase Pension Plan Investment Review Annual General Meeting Presentation February 2015 Prepared by Agenda Plan Objectives & Guiding Risk Philosophy Investment

More information

MACKENZIE PRIVATE WEALTH COUNSEL

MACKENZIE PRIVATE WEALTH COUNSEL MACKENZIE PRIVATE WEALTH COUNSEL PORTFOLIO ARCHITECTURE SERVICE INVESTMENT PHILOSOPHY Mackenzie Private Wealth Counsel Portfolio Architecture Service Investment Philosophy THE IMPORTANCE OF ASSET ALLOCATION

More information

ishares MINIMUM VOLATILITY SUITE SEEKING TO WEATHER THE MARKET S UP AND DOWNS

ishares MINIMUM VOLATILITY SUITE SEEKING TO WEATHER THE MARKET S UP AND DOWNS ishares MINIMUM VOLATILITY SUITE SEEKING TO WEATHER THE MARKET S UP AND DOWNS Table of Contents 1 Introducing the ishares Minimum Volatility Suite... 02 2 Why Consider the ishares Minimum Volatility Suite?...

More information

Statement of Investment and Administrative Policies & Procedures. Defined Contribution Pension Plan and RRSP for Nipissing University Employees

Statement of Investment and Administrative Policies & Procedures. Defined Contribution Pension Plan and RRSP for Nipissing University Employees Statement of Investment and Administrative Policies & Procedures Defined Contribution Pension Plan and RRSP for Nipissing University Employees Approved and adopted effective October 2008 Last revised:

More information

Exchange Traded Funds Tactical Asset Allocation Tools

Exchange Traded Funds Tactical Asset Allocation Tools Exchange Traded Funds Tactical Asset Allocation Tools Eleanor De Freitas, Catherine Barker 1 Barclays Global Investors Exchange traded funds (ETFs), combine the advantages of both index funds and stocks.

More information

Investment Benefits. Investment Objectives

Investment Benefits. Investment Objectives ALANCED The Funds Retirement Income Pooled Fund Trust 2020 Retirement 2030 Retirement 2040 Retirement 2050 Retirement Retirement Target Date Funds and Retirement Income Fund Investment enefits The Retirement

More information

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK 1 FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK By Michael McMurray, CFA Senior Consultant As all investors are aware, fixed income yields and overall returns generally have been

More information

FOREIGN SMALL CAP EQUITIES

FOREIGN SMALL CAP EQUITIES MEKETA INVESTMENT GROUP FOREIGN SMALL CAP EQUITIES ABSTRACT International equity investing is widely accepted by institutional investors as a way to diversify their portfolios. In addition, expanding the

More information

The Pinnacle Funds. Simplified Prospectus. December 11, 2009 Class A and Class F units and Class I units where noted. Money Market Fund.

The Pinnacle Funds. Simplified Prospectus. December 11, 2009 Class A and Class F units and Class I units where noted. Money Market Fund. The Pinnacle Funds Simplified Prospectus December 11, 2009 Class A and Class F units and Class I units where noted Money Market Fund Pinnacle Short Term Income Fund Bond Funds Pinnacle Income Fund Pinnacle

More information

Building a better bond portfolio

Building a better bond portfolio Global diversification Risk reduction, portfolio completion, and opportunity for return Catherine LeGraw, Director BlackRock Multi Asset Client Solutions (BMACS) April 7, 2011 Outline 1 2 3 Trends in asset

More information

The Master Statement of Investment Policies and Objectives of The Lower Colorado River Authority Retirement Plan and Trust. Amended June 16, 2015

The Master Statement of Investment Policies and Objectives of The Lower Colorado River Authority Retirement Plan and Trust. Amended June 16, 2015 The Master Statement of Investment Policies and Objectives of The Lower Colorado River Authority Retirement Plan and Trust Amended June 16, 2015 Introduction The Lower Colorado River Authority ( LCRA )

More information

Investment Portfolio Philosophy

Investment Portfolio Philosophy Investment Portfolio Philosophy The performance of your investment portfolio and the way it contributes to your lifestyle goals is always our prime concern. Our portfolio construction process for all of

More information

Enhancements to the BlackRock Canada LifePath and Balanced Index funds September 30, 2013

Enhancements to the BlackRock Canada LifePath and Balanced Index funds September 30, 2013 Enhancements to the BlackRock Canada LifePath and Balanced Index funds September 30, 2013 Plan sponsors may wish to consider whether this investment update has any implications for the investment options

More information

Investing 200: Behind the scenes on Western s two largest funds

Investing 200: Behind the scenes on Western s two largest funds Investing 200: Behind the scenes on Western s two largest funds Martin Bélanger Director, Investments November 20, 2015 Human Resources Disclaimer This presentation material was created to educate and

More information

Finding the Right Fit with Commercial Mortgages

Finding the Right Fit with Commercial Mortgages Finding the Right Fit with Commercial Mortgages Key Takeaways Mortgages provide strong risk-adjusted return potential Investors can implement mortgages as a stand-alone alternative or integrated bond exposure

More information

5Strategic. decisions for a sound investment policy

5Strategic. decisions for a sound investment policy 5Strategic decisions for a sound investment policy 1 An investment policy sets your course for the long term. Managers of billion-dollar pension and endowment funds know it s nearly impossible to beat

More information

Active and passive investing What you need to know

Active and passive investing What you need to know Active and passive investing What you need to know This guide has been produced for educational purposes only and should not be regarded as a substitute for investment advice. Vanguard Asset Management,

More information

Investment Portfolio Management and Effective Asset Allocation for Institutional and Private Banking Clients

Investment Portfolio Management and Effective Asset Allocation for Institutional and Private Banking Clients Investment Portfolio Management and Effective Asset Allocation for Institutional and Private Banking Clients www.mce-ama.com/2396 Senior Managers Days 4 www.mce-ama.com 1 WHY attend this programme? This

More information

When rates rise, do stocks fall?

When rates rise, do stocks fall? PRACTICE NOTE When rates rise, do stocks fall? The performance of equities and other return-seeking assets in rising and falling interest rate scenarios, January 1970 through September 2013 William Madden,

More information

Manager Structure Presentation

Manager Structure Presentation Presentation to the Tobacco Settlement Investment Board May 18, 2009 Millie Viqueira Senior Vice President Jay Kloepfer Executive Vice President Callan Associates Inc. 200 Park Avenue, Suite 230 Florham

More information

Institutional Investor Asset Management in a Low Return/High Risk World

Institutional Investor Asset Management in a Low Return/High Risk World Institutional Investor Asset Management in a Low Return/High Risk World Dr. Eliot Kalter President, E M Strategies Senior Fellow, The Fletcher School EKalter@EMStrategies.com Executive Summary I. Global

More information

Statement of Investment Policies and Procedures

Statement of Investment Policies and Procedures Effective July 1, 2015 Canadian Cancer Society Statement of Investment Policies and Procedures Background The Society wishes to invest funds in a prudent manner, with appropriate consideration given to

More information

Defensive equity. A defensive strategy to Canadian equity investing

Defensive equity. A defensive strategy to Canadian equity investing Defensive equity A defensive strategy to Canadian equity investing Adam Hornung, MBA, CFA, Institutional Investment Strategist EXECUTIVE SUMMARY: Over the last several years, academic studies have shown

More information

GIPS List of Composite Descriptions. Perkins Composites...11. Fixed Income Composites... 14. Global Macro Composites...19. Alternative Composites...

GIPS List of Composite Descriptions. Perkins Composites...11. Fixed Income Composites... 14. Global Macro Composites...19. Alternative Composites... GIPS List of Composite Descriptions Updated 6/4/2015 Janus Equity Composites...2 Perkins Composites....11 Fixed Income Composites... 14 Global Macro Composites...19 Alternative Composites.....19 Allocation

More information

Dimensional Fund Advisors

Dimensional Fund Advisors Dimensional Fund Advisors Putting Financial Science to Work for You Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Consider the investment

More information

Are Unconstrained Bond Funds a Substitute for Core Bonds?

Are Unconstrained Bond Funds a Substitute for Core Bonds? TOPICS OF INTEREST Are Unconstrained Bond Funds a Substitute for Core Bonds? By Peter Wilamoski, Ph.D. Director of Economic Research Philip Schmitt, CIMA Senior Research Associate AUGUST 2014 The problem

More information

INVESTING LIKE THE HARVARD AND YALE ENDOWMENT FUNDS JULY 2015. Frontiergottex.com

INVESTING LIKE THE HARVARD AND YALE ENDOWMENT FUNDS JULY 2015. Frontiergottex.com INVESTING LIKE THE HARVARD AND YALE ENDOWMENT FUNDS JULY 2015 Frontiergottex.com Introduction The US University Endowment Funds ( US Endowment Funds ), such as Harvard and Yale, have been leaders in diversified

More information

Morneau Shepell releases the results of its Performance Universe of Pension Managers Pooled Funds for the first quarter of 2014

Morneau Shepell releases the results of its Performance Universe of Pension Managers Pooled Funds for the first quarter of 2014 NEWS RELEASE Morneau Shepell releases the results of its Performance Universe of Pension Managers Pooled Funds for the first quarter of 2014 Pension funds see a good start to the year MONTREAL, QC, April

More information

CI LifeCycle Portfolios

CI LifeCycle Portfolios Portfolios Portfolios Portfolios are sophisticated multi-asset class, multi-manager target date retirement funds offered exclusively by CI Institutional Asset Management as an option for pension plan sponsors

More information

Public Equity Portfolio Overview May 29, 2013

Public Equity Portfolio Overview May 29, 2013 Public Equity Portfolio Overview May 29, 2013 Agenda Equity Markets Overview Portfolio Profile Portfolio Structure Activities/Accomplishments Global Equity Initiatives Hedged Equity Portfolio 2 General

More information

CalPERS 457 Plan Target Retirement Date Funds

CalPERS 457 Plan Target Retirement Date Funds CalPERS 457 Plan Target Retirement Date s September 30, 2015 Overview Target Retirement Date s (the "" or "s") are a series of diversified funds, each of which has a predetermined underlying asset mix

More information

THE FIXED INCOME DILEMMA: Rethinking Fixed Income with a Global Perspective AN NEI REPORT UPDATED AS AT JUNE 30, 2015

THE FIXED INCOME DILEMMA: Rethinking Fixed Income with a Global Perspective AN NEI REPORT UPDATED AS AT JUNE 30, 2015 THE FIXED INCOME DILEMMA: Rethinking Fixed Income with a Global Perspective AN NEI REPORT UPDATED AS AT JUNE 30, 2015 THE FIXED INCOME DILEMMA: Rethinking Fixed Income with a Global Perspective UPDATE:

More information

ANY GAS LEFT IN THE HIGH-YIELD MUNICIPAL TANK?

ANY GAS LEFT IN THE HIGH-YIELD MUNICIPAL TANK? May 9, 2016 ANY GAS LEFT IN THE HIGH-YIELD MUNICIPAL TANK? A favorable credit environment and technical factors have contributed to strong high-yield municipal performance. We see limited room for further

More information

Target Date Fund Selection: More Than Simply Active vs. Passive

Target Date Fund Selection: More Than Simply Active vs. Passive Target Date Fund Selection: More Than Simply Active vs. Passive White Paper October 2015 Not FDIC Insured May Lose Value No Bank Guarantee INVESTMENT MANAGEMENT Table of Contents Executive Summary 2 Introduction

More information

Good Practice Checklist

Good Practice Checklist Investment Governance Good Practice Checklist Governance Structure 1. Existence of critical decision-making bodies e.g. Board of Directors, Investment Committee, In-House Investment Team, External Investment

More information

Pax MSCI International ESG Index Fund:

Pax MSCI International ESG Index Fund: Pax MSCI International ESG Index Fund: ESG Factors Drive Stronger Returns with Lower Risk Over Its First 4 Years In January 2011, Pax World was an early mover in launching a strategy designed to provide

More information

Building and Interpreting Custom Investment Benchmarks

Building and Interpreting Custom Investment Benchmarks Building and Interpreting Custom Investment Benchmarks A White Paper by Manning & Napier www.manning-napier.com Unless otherwise noted, all fi gures are based in USD. 1 Introduction From simple beginnings,

More information

CPBI Saskatchewan Regional Council Alternative Investments - Worth the Effort?

CPBI Saskatchewan Regional Council Alternative Investments - Worth the Effort? CPBI Saskatchewan Regional Council Alternative Investments - Worth the Effort? PREPARED BY: Brendan George, Partner, George & Bell Consulting Inc. November 18 and 19, 2015 Agenda Current Economic Environment

More information

Managing Risk/Reward in Fixed Income

Managing Risk/Reward in Fixed Income INSIGHTS Managing Risk/Reward in Fixed Income Using Global Currency-Hedged Indices as Benchmarks In the pursuit of alpha, is it better to use a global hedged or unhedged index as a benchmark for measuring

More information

Investment Philosophies: Introduction

Investment Philosophies: Introduction Investment Philosophies: Introduction Aswath Damodaran www.damodaran.com Aswath Damodaran! 1! What is an investment philosophy? What is it? An investment philosophy is a coherent way of thinking about

More information

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1

PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 The unit investment trusts named above (the Portfolios

More information

Diversified Alternatives Index

Diversified Alternatives Index The Morningstar October 2014 SM Diversified Alternatives Index For Financial Professional Use Only 1 5 Learn More indexes@morningstar.com +1 12 84-75 Contents Executive Summary The Morningstar Diversified

More information

Bond Plus: A Risk Managed Approach to Return Enhancement

Bond Plus: A Risk Managed Approach to Return Enhancement Bond Plus: A Risk Managed Approach to Return Enhancement Key Takeaways Investors increasingly seek opportunities outside of core benchmarks Commercial mortgages offer a unique plus lever Portfolio benefits

More information

September 2013 Harvard Management Company Endowment Report Message from the CEO

September 2013 Harvard Management Company Endowment Report Message from the CEO Introduction For the fiscal year ended June 30, 2013 the return on the Harvard endowment was 11.3% and the endowment was valued at $32.7 billion. The return exceeded our benchmark by a healthy 223 basis

More information

The Power of Low-Correlation Investing. Wealth Strategies How to think about the core building blocks of your portfolio

The Power of Low-Correlation Investing. Wealth Strategies How to think about the core building blocks of your portfolio The Power of Low-Correlation Investing Wealth Strategies How to think about the core building blocks of your portfolio Smart Investing Begins with Planning Effective investment planning is concrete problem-solving.

More information

Alternative Investing

Alternative Investing Alternative Investing An important piece of the puzzle Improve diversification Manage portfolio risk Target absolute returns Innovation is our capital. Make it yours. Manage Risk and Enhance Performance

More information

Dynamic Diversified Growth Fund

Dynamic Diversified Growth Fund Dynamic Diversified Growth Fund with BlackRock Investment Management (UK) Limited Customer Brochure BlackRock is a truly global firm that manages assets for clients in Europe, North and South America,

More information

Five strategies for dealing with difficult markets

Five strategies for dealing with difficult markets When markets are volatile, it s natural to be worried about the impact on your portfolio. And when you re worried, you want to take action. Five strategies for dealing with difficult markets However, it

More information

Investment Philosophy

Investment Philosophy Investment Philosophy Our unique approach to investment management puts you at the heart of everything we do Wealth and Investment Management Discover a new side to your personality: your investment self

More information

Russell Low Volatility Indexes: Helping moderate life s ups and downs

Russell Low Volatility Indexes: Helping moderate life s ups and downs Russell Indexes Russell Low Volatility Indexes: Helping moderate life s ups and downs By: David Koenig, CFA, FRM, Investment Strategist February 2013 Key benefits: Potential downside protection and upside

More information

MANAGED PORTFOLIO SERVICE

MANAGED PORTFOLIO SERVICE When clients select our Managed Portfolio Service they expect us to take care of their wealth. Over the past decade we have been proactive and innovative in expanding our offering to meet the evolving

More information

What s in a Name: White-Label Funds in DC Plans

What s in a Name: White-Label Funds in DC Plans What s in a Name: White-Label Funds in DC Plans October 2014 Hewitt EnnisKnupp, An Aon Company 2014 Aon plc What s in a Name? That which we call a rose by any other name would smell as sweet. Much like

More information

Investor Profile Questionnaire. Client s Name: Advisor s Name: Date: Financial Goal: 4729-00A-JUNE15

Investor Profile Questionnaire. Client s Name: Advisor s Name: Date: Financial Goal: 4729-00A-JUNE15 Investor Profile Questionnaire Client s Name: Advisor s Name: Date: Financial Goal: 4729-00A-JUNE15 Questionnaire 1. When will you need access to this investment portfolio, whether by way of regular withdrawals

More information

Diversify portfolios with U.S. and international bonds

Diversify portfolios with U.S. and international bonds Diversify portfolios with U.S. and international bonds Investing broadly across asset classes such as stocks, bonds and cash can help reduce volatility and risk within a portfolio. Canadian investors have

More information

2013 INVESTMENT COMMITTEE ANNUAL REPORT

2013 INVESTMENT COMMITTEE ANNUAL REPORT INVESTMENT COMMITTEE ANNUAL REPORT Investment COMMITTEE Annual Report The Investment Committee oversees the City of Edmonton s investments, balancing the desire for maximum return with a prudent level

More information

Vote for growth, seize US equities potential. For professional investors

Vote for growth, seize US equities potential. For professional investors Vote for growth, seize US equities potential For professional investors Vote for growth, seize US equities potential I October 2012 I 2 Why US EquitieS at BNP Paribas Investment Partners? A strong history

More information

SunFlex Retirement Income

SunFlex Retirement Income SunFlex Retirement Income PERFORMANCE-LINKED INVESTMENT OPTIONS BOOKLET Life s brighter under the sun Contents Investment options Sun Life Granite Managed Solutions Sun Life Granite Conservative Portfolio...

More information

NorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com

NorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com NorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com NORTHCOAST ASSET MANAGEMENT An established leader in the field of tactical investment management, specializing in quantitative research

More information

Investment Fiduciary Governance Commission Outcomes Under the Current Governance Model

Investment Fiduciary Governance Commission Outcomes Under the Current Governance Model As part of its role in assisting the Commission, Hewitt EnnisKnupp (HEK) was asked to provide to the Commission for its consideration as background, an independent evaluation of the outcomes under the

More information

A Rebalancing Act. Estimating the Value Added through Portfolio Rebalancing. Abstract

A Rebalancing Act. Estimating the Value Added through Portfolio Rebalancing. Abstract Estimating the Value Added through Portfolio Rebalancing Abstract We compare the return and volatility of a Canadian portfolio under a no-rebalancing scenario and ten naive rebalancing strategies, over

More information

Evaluating Managers on an After-Tax Basis

Evaluating Managers on an After-Tax Basis Evaluating Managers on an After-Tax Basis Brian La Bore Senior Manager Research Analyst Head of Traditional Research Greycourt & Co., Inc. March 25 th, 2009 Is Your Alpha Big Enough to Cover Its Taxes?

More information

Index Solutions A Matter of Weight

Index Solutions A Matter of Weight Index Solutions A Matter of Weight Newsletter No. 11 Our current newsletter is about weight, or more precisely the weighting of equities in an index. Non-market capitalization weighted indices are at present

More information

to Wealth Management resources of one of the world s largest financial services firms. The Caribbean Group

to Wealth Management resources of one of the world s largest financial services firms. The Caribbean Group A Defined Approach to Wealth Management Giving UWI access to the combined resources of one of the world s largest financial services firms. The Caribbean Group The information in this presentation is intended

More information

Staying alive: Bond strategies for a normalising world

Staying alive: Bond strategies for a normalising world Staying alive: Bond strategies for a normalising world Dr Peter Westaway Chief Economist, Europe Vanguard Asset Management November 2013 This document is directed at investment professionals and should

More information

2-Minute Guide to Fixed Income Investing

2-Minute Guide to Fixed Income Investing 2-Minute Guide to Fixed Income Investing There s now more money invested in fixed income securities than in equity securities. And that market hasn t just grown it s grown more diverse, which means new

More information

EQUITY INVESTMENT IN REAL ESTATE THROUGH LISTED REITS

EQUITY INVESTMENT IN REAL ESTATE THROUGH LISTED REITS Your Fund s Real Estate Investments: Approaches for Today s Market and a Better Tomorrow EQUITY INVESTMENT IN REAL ESTATE THROUGH LISTED REITS National Association of Real Estate Investment Trusts REITs:

More information

Target-Date Funds: The Search for Transparency

Target-Date Funds: The Search for Transparency Target-Date Funds: The Search for Transparency Presented by: Joachim Wettermark, Treasurer Salesforce.com, inc. Linda Ruiz-Zaiko, President Financial, Inc. Qualified Default Investment Alternative (QDIA)

More information

Diversify your global asset allocation approach by focusing on income and income growth.

Diversify your global asset allocation approach by focusing on income and income growth. Diversify your global asset allocation approach by focusing on income and income growth. Institutional investors have embraced global asset allocation (GAA) strategies as a way to pursue returns with low

More information

Investment Services 4 4

Investment Services 4 4 Investment Intelligence Our Philosophy 1 Our philosophy is to provide unbiased top quality investment services and solutions tailored to your individual needs, objectives and risk tolerance based on a

More information

4/26/2012. Navigating the ETF Landscape. The ETF revolution. ETF assets expected to approach $2 trillion by 2014 $2,500 1,200 AUM ($B) # of ETFs

4/26/2012. Navigating the ETF Landscape. The ETF revolution. ETF assets expected to approach $2 trillion by 2014 $2,500 1,200 AUM ($B) # of ETFs Navigating the ETF Landscape FOR FINANCIAL PROFESSIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION The ETF revolution ETF assets expected to approach $2 trillion by 2014 $2,500 $2,000 AUM ($B) # of ETFs 1099

More information

The Fundamentals of Asset Class Investing

The Fundamentals of Asset Class Investing The Fundamentals of Asset Class Investing The first goal of any financial plan should be to avoid outliving your money. FPO IMAGE NEED FINAL SELECTION 1 Investing is About You We are living longer. No

More information

Investment Policy Statement

Investment Policy Statement Investment Policy Statement Prepared on: February 04, 2013 Prepared for: Sample Individual Client 432 Elm St Chicago IL 60630 Executive Summary Client Name: Sample Individual Client Client Type: Individual

More information

The Case for Active Management in the Large Cap Growth Equity Universe

The Case for Active Management in the Large Cap Growth Equity Universe The Case for Active Management in the Large Cap Growth Equity Universe Pioneer US Concentrated Growth Strategy This case for active management examines risk-adjusted returns among large cap growth managers

More information

Evaluating Target Date Funds. 2003 2013 Multnomah Group, Inc. All Rights Reserved.

Evaluating Target Date Funds. 2003 2013 Multnomah Group, Inc. All Rights Reserved. 2003 2013 Multnomah Group, Inc. All Rights Reserved. Scott Cameron, CFA Scott is the Chief Investment Officer for the Multnomah Group and a Founding Principal of the firm. In that role, Scott leads Multnomah

More information

Interest Rates and Inflation: How They Might Affect Managed Futures

Interest Rates and Inflation: How They Might Affect Managed Futures Faced with the prospect of potential declines in both bonds and equities, an allocation to managed futures may serve as an appealing diversifier to traditional strategies. HIGHLIGHTS Managed Futures have

More information

Statement of Investment and Administrative Policies & Procedures. Defined Contribution Pension Plan and RRSP for Nipissing University Employees

Statement of Investment and Administrative Policies & Procedures. Defined Contribution Pension Plan and RRSP for Nipissing University Employees Statement of Investment and Administrative Policies & Procedures Defined Contribution Pension Plan and RRSP for Nipissing University Employees Approved and adopted effective October 2008 Last revised:

More information

High Yield Bonds A Primer

High Yield Bonds A Primer High Yield Bonds A Primer With our extensive history in the Canadian credit market dating back to the Income Trust period, our portfolio managers believe that there is considerable merit in including select

More information

Active vs. Passive Money Management

Active vs. Passive Money Management Active vs. Passive Money Management Exploring the costs and benefits of two alternative investment approaches By Baird s Advisory Services Research Synopsis Proponents of active and passive investment

More information

COMMUNITY FOUNDATION OF GREATER MEMPHIS, INC. INVESTMENT GUIDELINES FOR MONEY MARKET POOL

COMMUNITY FOUNDATION OF GREATER MEMPHIS, INC. INVESTMENT GUIDELINES FOR MONEY MARKET POOL INVESTMENT GUIDELINES FOR MONEY MARKET POOL discretionary Money Market Pool is expected to pursue their stated investment strategy and follow the investment guidelines and objectives set forth herein.

More information

Learn about active and passive investing. Investor education

Learn about active and passive investing. Investor education Learn about active and passive investing Investor education Active, passive or both: Which is right for you? Portfolios can be built using actively managed and index mutual funds either individually or

More information

The active/passive decision in global bond funds

The active/passive decision in global bond funds The active/passive decision in global bond funds Vanguard research November 213 Executive summary. This paper extends the evaluation of active versus passive management to global bond funds. Previous Vanguard

More information

MLC MasterKey Unit Trust Product Disclosure Statement (PDS)

MLC MasterKey Unit Trust Product Disclosure Statement (PDS) MLC MasterKey Unit Trust Product Disclosure Statement (PDS) Preparation date 1 July 2014 Issued by MLC Investments Limited (MLC) ABN 30 002 641 661 AFSL 230705 This information is general and doesn t take

More information

David C. Reilly, CFA President - Decision Critical Resources, Inc.

David C. Reilly, CFA President - Decision Critical Resources, Inc. David C. Reilly, CFA President - Decision Critical Resources, Inc. Portfolio Construction and Asset Allocation Only - Do not distribute to public 2 Traditional asset classing has proved inadequate to the

More information

About Hedge Funds. What is a Hedge Fund?

About Hedge Funds. What is a Hedge Fund? About Hedge Funds What is a Hedge Fund? A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost

More information

CONTENTS MODULE 1: INDUSTRY OVERVIEW 4 MODULE 2: ETHICS AND REGULATION 6 MODULE 3: INPUTS AND TOOLS 8 MODULE 4: INVESTMENT INSTRUMENTS 12

CONTENTS MODULE 1: INDUSTRY OVERVIEW 4 MODULE 2: ETHICS AND REGULATION 6 MODULE 3: INPUTS AND TOOLS 8 MODULE 4: INVESTMENT INSTRUMENTS 12 SYLLABUS OVERVIEW 1 CONTENTS MODULE 1: INDUSTRY OVERVIEW 4 CHAPTER 1 The Investment Industry: A Top-Down View MODULE 2: ETHICS AND REGULATION 6 CHAPTER 2 CHAPTER 3 Ethics and Investment Professionalism

More information

GLOBAL LISTED INFRASTRUCTURE

GLOBAL LISTED INFRASTRUCTURE JUNE 2016 GLOBAL LISTED INFRASTRUCTURE A Case for Investing Jeremy Anagnos, CFA Chief Investment Officer - Infrastructure INTRODUCTION Listed appeals to investors in many ways. It has a history of attractive

More information

my money @ work my Investments Canada Post Corporation Defined Contribution and Group Retirement Savings Plans

my money @ work my Investments Canada Post Corporation Defined Contribution and Group Retirement Savings Plans my money @ work my Investments Canada Post Corporation Defined Contribution and Group Retirement Savings Plans my money. my tools. As a member of a company group retirement savings plan, you have access

More information

STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES. WASHINGTON AND LEE UNIVERSITY The General Endowment Fund. Approved May 2007

STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES. WASHINGTON AND LEE UNIVERSITY The General Endowment Fund. Approved May 2007 STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES WASHINGTON AND LEE UNIVERSITY The General Endowment Fund Approved May 2007 This statement is issued by the investment committee of the board of trustees

More information

Target-Date Funds: It s Time to Take a Closer Look

Target-Date Funds: It s Time to Take a Closer Look Target-Date Funds: It s Time to Take a Closer Look Executive summary Over the past few years, retirement plans have seen significant changes in their investment structures, as well as the level of fiduciary

More information

AMP Capital Investment Funds

AMP Capital Investment Funds AMP Capital Investment Funds Investment Statement Dated: 18 September 2015 Issued by AMP Investment Management (N.Z.) Limited Important information (The information in this section is required under the

More information

Quantitative Asset Manager Analysis

Quantitative Asset Manager Analysis Quantitative Asset Manager Analysis Performance Measurement Forum Dr. Stephan Skaanes, CFA, CAIA, FRM PPCmetrics AG Financial Consulting, Controlling & Research, Zurich, Switzerland www.ppcmetrics.ch Copenhagen,

More information

THE PHILADELPHIA FOUNDATION, INC. INVESTMENT POLICY. APPROVED November, 2009

THE PHILADELPHIA FOUNDATION, INC. INVESTMENT POLICY. APPROVED November, 2009 THE PHILADELPHIA FOUNDATION, INC. INVESTMENT POLICY APPROVED November, 2009 I. MISSION The mission of The Philadelphia Foundation s (the Foundation) investment funds is to support current operations through

More information

HSBC World Selection Portfolios The smart way to diversify your customers investments

HSBC World Selection Portfolios The smart way to diversify your customers investments HSBC World Selection Portfolios The smart way to diversify your customers investments 2 A smart way to invest 3 The benefit of diversification 6 How is HSBC World Selection managed? 8 What are the advantages

More information

www.fa-mag.com www.pw-mag.com PRESENTED BY 1

www.fa-mag.com www.pw-mag.com PRESENTED BY 1 www.fa-mag.com www.pw-mag.com 1 Confronting Market Volatility: Help Clients Weather The Market's Ups And Downs Mark E. Carver, CIMA March 25, 2015 How is BlackRock defining Smart Beta? An evolution in

More information

A Primer for Investment Trustees (a summary)

A Primer for Investment Trustees (a summary) A Primer for Investment Trustees (a summary) Jeffrey V. Bailey, CFA, Jesse L. Phillips, CFA, and Thomas M. Richards, CFA Investment trustees oversee the investments and investment process for a variety

More information

RISK ALLOCATION IN THE 21 ST CENTURY. February 2012. SEATTLE 206.622.3700 LOS ANGELES 310.297.1777 www.wurts.com

RISK ALLOCATION IN THE 21 ST CENTURY. February 2012. SEATTLE 206.622.3700 LOS ANGELES 310.297.1777 www.wurts.com RISK ALLOCATION IN THE 21 ST CENTURY February 2012 SEATTLE 206.622.3700 LOS ANGELES 310.297.1777 www.wurts.com AGENDA INVESTMENT APPROACH SAMPLE RISK DASHBOARD GOVERNANCE 2 INVESTMENT APPROACH 3 WHY DOES

More information

Benchmarking Real Estate Performance Considerations and Implications

Benchmarking Real Estate Performance Considerations and Implications Benchmarking Real Estate Performance Considerations and Implications By Frank L. Blaschka Principal, The Townsend Group The real estate asset class has difficulties in developing and applying benchmarks

More information