Beginning in 2017 the performance reporting on your investment statement will compare your rate of return to a particular benchmark. The stock market is classified into sections by companies that have similar characteristics or investment objectives. Each section is called a benchmark. Examples of a benchmark are Canadian resources, emerging markets, or Europe.
In some ways this comparison could be unfair because expert and experienced investment managers add a lot of value, and will often not invest in a way that reflects or follows the benchmark.
However, the reporting of performance in comparison to a benchmark is a mandatory requirement that Portfolio Strategies must comply with.
The investment managers I carefully choose usually want their funds to be unlike the index or benchmark they are compared against. They have deep research teams and resources that enable them to get more information than other investors have access to. They meet with management, competitors, and customers of a company they potentially want to invest in. They are also careful because they know that a loss of capital means it will be more difficult to get a good return if their decision is incorrect. Many investment managers have their own money invested in the funds they manage.
These managers also can include more asset classes in their fund than the index. Their investment experience allows them to manage to preserve capital when the stock market loses value in a correction or downturn. This is where active managers earn their keep, because a passive index investment will by default participate fully in a down cycle of the market.
Please be assured that I am always seeking the best value and return for your cost to invest.