During the first quarter of 2016 only 41% of Canadian large-cap managers beat the benchmark S&P/TSX Composite Index according to a report from Russell Investments Canada. The media return for managers was 4.0% versus 4.5% for the index. The number of managers able to beat the benchmark was a sharp decline from the fourth quarter of 2015, where 82% were able to outperform. The disconnect between the index and manager performance can largely be blamed on a sharp upturn in in the market at the end of the quarter which most managers were unable to beat.
Gold lead the way, surging a record 39% in the quarter according to Kathleen Wylie, head of Canadian equity research at Russell: “Gold stocks surged a record 39% in the quarter, and even though large-cap managers are only 2% underweight, it still hurt their benchmark-relative performance because of the magnitude of the increase. Renewed strength in Energy stocks also added to the challenges since large-cap managers on average are about 3% underweight,” she explained.