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Impact Investing

IPE special report May 2018

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Canada: Fund returns disap point

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Mutual funds are a common component of Canadian Registered Retirement Savings Plans, a deferred tax savings vehicle which allows the investor to claim a deduction in taxes proportional to the investment each year. As with the US and UK fund industries, there is a strong concentration of assets into equity, especially domestic equity - far more than is found in continental Europe.

Micropal tracks around 850 Canadian mutual funds, representing around C$270bn (US$200bn), making the Canadian domestic fund industry one of the largest in the world.

Canadian mutual funds may not be offering Canadian investors the best alternatives. A significant shortfall in pension liabilities already exists, and the table below suggests that the funds are significantly underperforming the benchmarks overall, although individual funds have notched up significant gains. This makes selection of funds much harder, and also creates an opportunity for index and passive fund managers who can offer replication of index returns to investors disillusioned by mediocre returns from active management.

David Masters, Micropal

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  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
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    Size: USD 300 million.
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    Closing date: 2018-05-31.

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