E&R Canada Hits Historical Highs
In the world of finance, reaching all-time highs is a remarkable feat that reflects the prowess of an investment strategy. E&R Canada 60 has surged past its previous peak on April 19, 2022, and now stands at historical highs, while the benchmark lags behind. Since January 2016, E&R has consistently delivered an impressive annualized excess return of 700 basis points above the benchmark, the S&P TSX 60. And it’s noteworthy that this Canadian achievement has yet to make headlines on Bloomberg.
The reason for this delay lies in the limitations of conventional benchmarks, which often poorly represent the true nature of the market. Conventional indexes overweight a few stocks, thus misrepresenting the market. A few stocks can never represent the real Canada. Popularity does not always equate to accuracy. The rationale behind this inefficiency is straightforward. Market capitalization (MCAP) weighted benchmarks tend to exhibit significant inertia. When the market stagnates, as it has since January 2022, a handful of heavyweight stocks can anchor the entire index, preventing it from reflecting the broader market’s true performance. Hence, it may take several months, or even longer, for the actual Canadian success to become visible.
This is precisely where E&R steps in. The E&R Index, based on open-sourced Universal Indexing methodology, breaks free from the constraints of conventional benchmarks. It doesn’t adhere to a rigid focus on market weight and is systematically designed for exceptional and rich performance.
E&R’s investment portfolios track conventional benchmarks, but they consistently outperform them while maintaining an “apples-to-apples” comparison. This means E&R achieves outperformance while holding the same 60 assets as the benchmark, demonstrating the strength of its innovative methodology.
Here are the core benefits of aligning with E&R:
- Low Tracking Error: E&R’s approach minimizes tracking error, ensuring that investor portfolios closely mirror their intended benchmarks. This reduces unexpected deviations and enhances predictability.
- Higher Information Ratio: The E&R approach delivers higher risk-weighted excess returns and hence a higher information ratio.
- Low Turnover: E&R’s methodology is also low on turnover and, on average, readjusts components once every 24 months.
- High Alpha: The true gem in E&R’s strategy is its consistent ability to generate alpha, surpassing market expectations. We make money when our clients create alpha.
- High Recovery Rate: In the dynamic world of investments, setbacks are inevitable. What sets E&R apart is its remarkable resilience, swiftly recovering from adverse market conditions, safeguarding investor assets, and instilling confidence in its strategy.
For asset managers, asset owners seeking to initiate a fund that offers low tracking error, a higher information ratio, low turnover, high alpha, and a high recovery rate for their sponsors or investors, reach out to us for a trial. E&R can be your partner on this journey, helping you create value and deliver excellence to your clients.