Articles & Insights
Investment Executive: Focus on Products  |  02 November 2020

Many advisors need to retool their portfolio models

Low interest rates will be here for years as central bankers cope with the aftermath of the massive economic collapse triggered by the Covid-19 pandemic. The dismal interest rate outlook has major ramifications for your clients’ portfolio construction. Read more>

Tacita Capital Commentary  |  29 January 2020

2019 Global Factor Roundup

One of the most important discoveries in finance over the past few decades is that stocks of firms that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. Critical to investors is the fact that, over long periods of time, certain of these factors have earned excess returns compared to the overall market. Read more>

Investment Executive: Focus on Products  |  17 December 2019

Finding value in the value factor

Despite recent underperformance, there still may be a value premium.

Has the value factor — the tendency of value stocks to outperform growth stocks — faded into oblivion? Several recently published papers argue otherwise. The EDHEC-Risk Institute in France analyzed factor returns in the U.S. from 1977 to 2017 and concluded that value’s recent underperformance is not abnormal and occurs fairly frequently.

The analysis of macroeconomic influences suggests negative surprises over the past three years are in part a contributor to the underperformance. Read more >

Investment Executive: Focus on Products  |  11 October 2019

Managing liabilities

The advisor’s job includes making sure a client’s portfolio can fund future expenses.

Ever since the groundbreaking research of Gary Brinson, Randolph Hood and Gilbert Beebower identified asset allocation as the primary determinant in the variability of portfolio returns, thoughtful investment advisors focus on asset-mix composition as the building block of portfolio construction. The goal has been to construct optimally diversified portfolios that seek the highest return relative to their risk as measured by volatility. Read more >


Investment Executive  |  31 May 2019

The quality puzzle

Why do markets reward investors for holding stocks that usually provide excess returns over low-quality ones?

Of all the factors associated with long-term outperformance by equities, quality is the most puzzling. Because investors demand a return premium for incurring risk, it is easy to understand why small company stocks have outperformed over long time frames: they are more volatile and less liquid than large-capitalization stocks. Read more >

Investment Executive: Focus on Products  |  15 April 2019

Realities of full market cycles

Impressive returns over the past decade represent only the bull phase of the market cycle.

Many investors must be delighted with the 10-year performance of their equity funds. International and emerging markets stocks, as measured by MSCI market indices, delivered 10.5% and 11.1% annual returns, respectively, for the decade ended Feb. 28, 2019, while the S&P 500 composite index sported a stunning 17.1% annual return. Even the lacklustre Canadian market posted double-digit returns, with the S&P/TSX composite index returning 10.2% per annum. Read more >

Investment Executive: Illiquidity has its risks  |  13 February 2019

Illiquidity has its risks

Private investment funds often are marketed as a cure-all to low interest rates and equities market volatility.

Private investment funds that invest in illiquid assets such as mortgages, corporate loans, real estate and private companies are growing in popularity. Low interest rates have dulled the appeal of investment-grade bonds, the traditional portfolio stabilizer, while nerve-racking volatility has left many investors disenchanted with stocks, the classic source of higher returns. Read more >

Tacita Capital Commentary  |  22 January 2019

Three Big Rocks

The fourth quarter of 2018 featured a bruising October followed by a muted November recovery that only served as a fleeting pause before a deep market selloff capped off the year. Read more>

Tacita Capital Commentary  |  07 November 2018

How Common Are New Market Highs?

With the U.S. stock market hitting all time highs, a question you may be asking yourself is, how should I be feeling about that? Phrased another way, how common are market highs? Are they extremely rare and should I be panicking or are they pretty much par for the course?
To try and answer these questions we must put market highs into historical context. Read more >

Investment Executive: Focus on Products  |  23 October 2018

Patience is a key factor

Momentum is dead. At least that’s what several studies published in the first half of this decade suggested. Back then, momentum – the well-documented tendency of stocks that have outperformed over the past three to 12 months to continue to outperform for a short period – was no longer generating excess returns reliably. Read more > 

Investment Executive: Focus on Products  |  31 July 2018

Biggest risk to retirees

Today, retirees are rightly concerned with the risk exposure of their portfolios. Therefore, financial advisors appropriately spend considerable time designing portfolios that meet their clients’ downside risk tolerances. Read more >

Investment Executive: Focus on Products  |  01 March 2018

The search for excess returns

Today’s low interest rates and high stock valuations translate into modest expected future returns. At a time of increasing longevity, this situation creates a formidable challenge to financial advisors assisting their clients in retirement planning. Read more >

Investment Executive: Focus on Products  |  01 February 2018

Expecting too much?

Global synchronized growth, combined with muted inflation and low interest rates, propelled stocks to new highs in 2017. Read more >

Investment Executive: Focus on Products  |  01 December 2017

A major market shift

For many years, Canada’s stock market was a proxy for emerging-market equities. In both markets, energy and materials have played an outsized role. Read more >

Investment Executive: Focus on Products  |  15 September 2017

No panacea, but useful

Active share – a measurement of the degree to which an active portfolio manager’s portfolio varies from its benchmark index – has become one of the most popular metrics in the investment industry. Read more >

Investment Executive: Focus on Products  |  01 August 2017

Active managers

As financial advisors pour billions of dollars into index-based ETFs, the use of active managers in portfolio construction increasingly comes under question. Read more >

Investment Executive: Focus on Products  |  15 June 2017

Forecasting market returns

There is an adage from Wall Street’s early days: “Valuation helps define risk, but it doesn’t help with timing.” Brokers learned eons ago that simply because a stock is cheap or expensive says nothing about its short-term price direction. Read more >

Investment Executive: Focus on Products  |  15 February 2017

Curb your enthusiasm

Several academic studies have determined that investors’ future return expectations are heavily influenced by recent performance. With the Canadian stock market delivering an exceptional 21.2% in 2016 and the U.S. market up 17.4% annually over the past three years, many investors are likely ratcheting up their return expectations. Read more >

Investment Executive: Focus on Products  |  15 January 2017

Not dead yet

In the U.S., actively managed domestic equity mutual funds have suffered nine years of consecutive outflows as investors have poured money into index domestic equity mutual funds and ETFs. The contrast is glaring – from 2007-15, US$835 billion exited actively managed domestic equity mutual funds while $1.2 trillion flooded into index domestic equity mutual funds and ETFs. Read more >