Buy-hold-rebalance approach, using Exchange Traded Funds (ETFs), can improve retirement outcomes
Predicting the future is a tricky business.
Predicting the stock market is even tougher.
In a year that turned the world upside down with COVID-19 and fooled nearly everyone on Bay Street and Wall Street, it’s hardly surprising to hear that the majority of large-cap equity fund managers underperformed against the S&P 500 in 2020—the 11th straight year this has happened.
A similar story played out in Canada, where nearly nine of 10 Canadian equity funds underperformed against their benchmark in 2020, according to last year’s S&P Indices Versus Active Canada scorecard.
At Link Investment Management, we subscribe to a different theory. To put a twist on an old phrase, if you can’t beat ’em, track ’em.
Our experienced portfolio management team uses Exchange Traded Funds (ETFs)—low-cost, passive, index-tracking funds—along with Link’s own proprietary robo-advisor algorithm and a passive investing model as the lynchpin of our innovative approach.
“It would have been massively unfair to expect anyone to predict the market in a turbulent year like 2020. But there are also surprises in any given year,” says Brian McClennon, President and CEO of Link Investment Management.
“A passive investing approach has a tendency to resist style drift while withstanding cyclical exposure,” he adds. “It’s a combination that may improve retirement outcomes for employees.”
For small to midsize employers seeking a workforce savings plan that works for both the business and its employees, Link’s solutions—like our own LINK Multi Employer Pension Plan—can pay big dividends. Advantages include:
- Tailor-made investment portfolios that reflect an employee’s retirement objectives, risk tolerance and timeline
- Regular, automated rebalancing based on a member’s assigned asset allocation
- Reduced strain on a company’s internal resources, with Link responsible for design, investment strategy, implementation, monitoring, disclosure, communication and service provider selection and oversight
- A lower and completely transparent fee schedule
“Our stewardship of those personalized, diversified and suitable investment portfolios includes ongoing, automatic rebalancing, as well as an annual checkup,” notes Mr. McClennon. “Ultimately, we believe that this buy-hold-rebalance approach produces successful investment strategy.”