Monday, November 24, 2014

RRSP Comparison - 2014 edition

Last year I decided to do a comparison chart of RRSP returns after a friend asked how ours stacked up against others available to the industry. Time for an update (results below). I'm pleased to report that our funds continue to perform well.

These results (annualised returns) are from the most recent month end, as provided in member reports. Equity offers eight funds, Association 1 offers two, and Association 2 offers five. Note that some Association 2 funds are relatively new, so they do not show up in all the clusters.

Looking at our slate of conservative, moderate, balanced, advanced and aggressive funds, they continue to 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 over 80% 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 on a ten year horizon. Depending on when you buy in, a member could do quite nicely. Or the opposite. If only one could know in advance when these were going to skyrocket and dip…

The ethics fund (deep red), being comprised entirely of stocks, is also subject to the ups and downs of the market, but has performed very 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 of capital is more critical than growth.

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.

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