Reduce risk, eliminate emotion, diversify: Harness the investment power of Exchange Traded Funds
- Posted By: Brian Prokop
- 0 Comments
- Posted on: 7th January, 2020
Link uses ETFs, passive investing and our robo-advisor to improve retirement outcomes
Saving for retirement shouldn’t be a roll of the dice. And that’s one of the clear advantages of Exchange Traded Funds (ETFs)—their potential for diversification.
During the recent 2nd annual ETF Summit in Toronto, speakers noted that ETFs outsold mutual funds in 2018 for the first time EVER—for some sound reasons.
“ETFs are great for client customization, and very small changes in a portfolio can help address goals-based investing, that helps get clients to their retirement goals without taking on undue risk.” noted one ETF expert, Andrew Clee of Fidelity.
Other advantages of ETFs were identified as:
- Their lower price point
- Their tendency toward long-term advantage through strategic exposure
- Their ability to withstand cyclical exposure by resisting style drift (unacceptable changing investment objectives)
“They’re rules-based and they’re transparent. They rebalance (on a regular basis) . . . ETFs do not get exposed to style drift. The reason for that is, there are no emotions that come into this,” said Clee.
Link Investment Management is a disruptive innovator in the workplace financial wellness space and we use low-cost, passive, index-tracking ETFs in our workforce savings plans—the Alberta Link Pension Plan (ALPP), Group RRSPs, Group TFSAs—to reduce the burden for plan sponsors and improve retirement outcomes for employees.
“Passively managed funds consistently outperform actively managed funds. That’s been well documented,” says Brian McClennon, President and Chief Executive Officer of Link Investment Management.
“Much of that has to do with significantly lower management fees,” he adds. “At Link, our experienced portfolio managers follow a passive investing model—matching market performance, rather than trying to beat the market, with a buy-hold-and-rebalance strategy using ETFs.”
By combining ETFs, passive investing and our own robo-advisor algorithm, Link offers a number of distinct advantages:
- Tailor-made investment portfolios that reflect an employee’s retirement objectives, risk tolerance and timeline
- Ease of administration for employers
- Regular, automated rebalancing based on a member’s assigned asset allocation
- A lower and completely transparent fee schedule
“Put all of this together,” says Mr. McClennon, “and it means we offer small to midsize employers and their employees simple, low-cost, attractive, well-diversified investment solutions.”
Read more: Fee transparency, greater efficiency, investment simplicity: The next generation has arrived. Link’s Brian McClennon discusses robo-advisors and Exchange-Traded Funds (ETFs) before CPBI audience
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