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 Cleeof Fidelity.
Other advantages of ETFs were identified as:
“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.
ETF’s are relatively new to the Group Retirement space and can be a disruptive innovator in the workplace financial wellness space and we use low-cost, passive, index-tracking ETFs in our workforce savings plans—Multi Employer Pension Plans (MEPP),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. 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 robo-advisor algorithm, Link offers a number of distinct advantages:
