Oct 30 2012

Indices and Benchmarks – Q3 2012

Indices and Benchmarks – Q3 2012

Reviewing the returns of indices and benchmarks is useful for comparing how your portfolio performed when viewing your latest statement. 

A portfolio is made up of several components based upon your risk profile. For example, a balanced portfolio might have 5% cash, 45% bonds and 50% equities. The Canada Pension Plan would be considered a balanced portfolio as it had 50.9% in equities as of September 30, 2012. Click here to see the CPP asset mix.

Annual Returns for Major Indices as of June 30, 2012
(see Provisus – September 28, 2012 – Market Data)

  • Bonds – represented by the DEX Universe + 5.5%
  • Equities
    • Canadian equities represented by TSX +9.2%
    • US Equities represented by the S&P 500 +24.1% ($Cdn)
    • EAFE (Europe, Australasia and far East) +9.5% ($Cdn)

It’s rare for an investor to have a single investment in any one major area but rather a portfolio or blend of several of these investment indices.

For comparison purposes, I looked at two typical mutual fund groups to give you perspective on your own portfolio’s performance over the past year.

The Average Canadian Balanced Equity Peer Group return for 1 year was -+7.73% (as of September 30, 2012 source: www.Globeadvisor.com) . This calculation is simply the average of all the Canadian Balanced Equity funds in Canada. The portfolio would be about 40% bond and 60% equity.  

The Average Global Equity Balanced Peer Group return for 1 year was +9.51% (as of September 30, 2012 source: www.Globeadvisor.com). This portfolio has less Canadian Equity (compared to the Average Canadian Balanced Equity Peer Group) and increased equity weighting in international markets (typically equally divided between US and EAFE).

I recommend you review your risk profile at least annually to determine if it’s still appropriate.  As a certified financial planner, I do this at the client’s annual review and make changes as appropriate. We also discuss any major life  changes and how they may impact your retirement income plan or risk management plan.

Learn more about portfolio indices and benchmarking

Learn more about how to determine if your retirement plan is on track?



Disclaimer: “Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.”

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