Mark Sutcliffe February 5, 2016 Starting Out Learning from the CPP’s mistakes Not so long ago, the Canada Pension Plan used a passive approach to investing, seeking to capture the returns of the overall market rather than beat them. At that time, the CPP had five employees, the highest paid of which was earning $250,000. But as this article and others point out, the CPP now has more than 1,000 employees, some of whom are making millions of dollars per year. The fund now spends $3 billion a year on research and analysis and other overhead. So it must be doing a much better job of investing Canadians’ money, right? Nope. When you measure returns compared to the overall market, they aren’t considerably better. They just cost more. Which is consistent with all the research about active stock picking: it’s more expensive but it doesn’t produce better returns. The problem is that it’s hard to get the people employed by CPP to acknowledge that they would be better off putting everything in an index fund and laying off 1,000 employees. But that doesn’t mean you have to make the same mistake they do with the investments you control. Share: Facebook Twitter LinkedIn Email CIRO Advisor Report
Personal Wealth Mark Sutcliffe Beat the market? Most mutual funds don’t even meet the market Apr 26, 2017 Personal Wealth