Mark Sutcliffe GUEST BLOGGER

An indictment of the whole strategy

June 3, 2016 - 0 comments

I’ve written before about how the Canada Pension Plan has transitioned from a successful passive investment strategy to a less effective method of actively picking investments. The results, as Andrew Coyne documents here in the National Post, are disastrous. The CPP spends much more than it used to and is getting far poorer results on behalf of Canadians than if it had just put the money in index funds.

As Coyne writes, “The inability of active managers to consistently beat the market is one of the most well-established principles of modern portfolio theory.” So why does the CPP keep choosing a more expensive, less effective strategy?

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