Monday, October 21, 2013

Equity RRSPs - a comparison

A few weeks back, I was buttonholed by a friend who wanted to know why her Equity RRSP returns were so "lousy" compared to another industry RRSP she held. The question took me by surprise, since our RRSP committee reviews fund performance every year against similar funds on the market, and then reports their findings to Council. I can only remember one occasion when the committee had anything bad to say, and that only about a single fund some time ago. (The fund has long since been replaced.)

Anyhow, the whole discussion got me thinking. How do our RRSP funds stack up against those on offer by our sister organisations? Quite nicely, as it turns out. Time for another chart.

Funds comparison, 3rd quarter, 2013
These results are from the most recent quarter, as provided in member reports. Note that some funds have not been around for 10 years, hence the missing grey bars on the right.

Looking at our slate of conservative, moderate, balanced, advanced and aggressive funds, it's interesting to see that they perform exactly as one might expect. Conservative and moderate (medium red, green) have some variation over time, but pretty much chug along year after year with fairly consistent results: low volatility, with decent (if modest) returns.

The balanced fund (purple) has a little bit more swing to it over time, but comes out well in the long term. This is our default fund, and accounts for about 82% of all retirement assets, with 75% of participants holding this fund.

The advanced, aggressive and global equity funds (light blue, orange, medium blue) certainly do very well when they do well, but they are also higher risk investments and have much more volatility. The chart above doesn't show annual data, but the down years for these funds tend to be just as pronounced as their up years. As a result, they still end up in the same ballpark as all the others over the long term. Depending on when you buy in, a member could do pretty well. Or not. If only one could know in advance when these were going to skyrocket and dip…

Ethics (deep red) also bounces around a bit, but has still performed well over time. The lowly money market fund (short, dark blue) is not really an investment fund as such, and is only included here for completeness. It can be useful in circumstances when stability is critical.

All told, we have 8 different funds so that members at various ages and stages of their career can put together the investment mix best suited to them. Members contribute from every pay cheque, and have the ability to make additional contributions as well.

RRSP season is all year round for Equity members, so if you have questions about where your money is being held, and whether it is the right mix for you, your "retirement" horizon (I use the word loosely) and your risk tolerance, give Great West Life a call and talk to an investment advisor. They can, well, advise you. If you already did that some years ago, don't forget to do it periodically to keep up to date. Maybe do it now before the February RRSP crunch hits.

And of course, the all-important disclaimer: past performance is no guarantee of future results, etc.

Wednesday, October 9, 2013

Did you know? - how we came to be known as "Equity"?

I was reading through Performance of the Century, by Robert Simonson, about the first 100 years of American Equity, and found the following, describing the genesis of AEA.

In desperation, a few actors decided to give the organization another chance. On January 13, 1913 – less than a month after the death of the Actors' Society of America, which had tried unsuccessfully for sixteen years to negotiate with the producers – William Harcourt, Charles D. Coburn, Arthur Byron, Milton Sills and Frank Gillmore gathered […] to decide "upon a uniform form of contract that would be alike acceptable to the fair-minded engager and the fair-minded actor."
And from a subsequent meeting on February 4…

William Courtleigh, a Canadian-born actor […] deserves a place in [the union's] history for suggesting "Equity" as a name. The motion was unanimously carried.
Well, whaddaya know?!