On November 17, 2021, Refinitiv Lipper unveiled the results of the Refinitiv Lipper Fund and Exchange-Traded Fund (ETF) Awards for Canada in conjunction with our long-term media partner The Globe and Mail.
Because of the ongoing COVID-19 pandemic, physical in-person events won’t be held, but we have a series of articles, blogs, and videos highlighting investment excellence in what has been a fairly robust year for fund managers. The Refinitiv Lipper Fund Awards should get a lot of attention from the asset management industry, as these awards showcase the ability of a fund to deliver strong risk-adjusted returns in comparison to its peers.
Different methodologies lead to different results
While the Refinitiv Lipper Fund Awards are entirely quantitative, the award winners are not determined by picking the funds with the highest returns within their individual Canadian Investment Funds Standards Committee (CIFSC) classifications over the respective awards periods.
The Refinitiv Lipper Fund Awards are based on the Lipper Leader rating for Consistent Return. These ratings are calculated using a risk-adjusted return model that is based on the effective return of the fund over multiple non-overlapping periods—within the respective three-, five-, and/or 10-year horizons. The calculations over multiple periods ensure that all periods in which a fund underperforms the average of its peer group are identified.
Then, Refinitiv Lipper uses a utility function based on behavioral finance theory—relative loss avoidance—to penalize periods of underperformance against the CIFSC peer-group average of eligible funds, with more significant weightings being given to excess losses. Consistent Return is a risk-adjusted performance measure for investors with a stronger risk aversion of clustering of losses than of gains.
The calculation methodology ensures that the winners are funds that have provided superior consistency and risk-adjusted returns compared to a group of similar funds. We believe this is more in line with how investors view financial gains and losses, meaning that funds receiving a Lipper fund award may be the best suited for investors who value a fund’s year-over-year performance consistency relative to other funds in a particular peer group. A document outlining the full methodology for the Refinitiv Lipper Fund Awards can be found here.
The best mutual funds and ETFs in Canada
The Refinitiv Lipper Fund Awards honour those funds which had the highest score in the Lipper Leader rating for Consistent Return over the three-, five- and/or 10-year periods. Overall, on the mutual fund side there were 51 funds that won an award for the three-year period ended July 31, 2021. Also, 33 funds were recognized with a Lipper Fund Award over the five-year period and 27 funds won the prestigious trophy for the 10-year period. Meanwhile on the ETF side, there were 15 ETFs that won a three-year award and nine that a won a five-year award. The complete lists of the winning funds and ETFs can be found on our awards website.
Here are a few examples of fund excellence highlighted in this year’s Refinitiv Lipper Canadian Fund Awards:
Canadian Equity Funds
Fidelity Canadian Opportunities Fund Series F, sweeping its CIFSC classification this year, was named the Lipper Fund Award winner for Canadian Equity funds over the three-, five-, and 10-year periods ended July 31, 2021.
Source: Refinitiv Lipper, an LSEG Business
Canadian Small-/Mid-Cap Funds
Scotia Canadian Small Cap Fund Series F was designated as the three- and five-year 2021 Lipper Fund Award winner for Canadian Small-/Mid-Cap Funds, while BMO Enterprise F Share Class took the top honours for the 10-year period ended July 31, 2021.
Source: Refinitiv Lipper, an LSEG Business
Canadian Fixed Income Balanced Funds
Compass Conservative Balanced Portfolio Series F1 (and Series A for the 10-year period) swept its CIFSC classification this year and was named the Lipper Fund Award winner for Canadian Fixed Income Balanced funds over the three-, five-, and 10-year periods ended July 31, 2021.
Source: Refinitiv Lipper, an LSEG Business
The best asset management groups in Canada
The group awards recognize strong overall fund and ETF performance within a fund family lineup by asset class for Canadian fund management companies with at least three equity, three bond, and/or three mixed-assets portfolios.
On the fund side of the Canadian universe, competing against 50 other fund families for the 2021 claim to fame as the best equity asset management firm, I.A. Michael Investment Counsel Ltd. took the top billing this year. On the ETF side of the equity group award, top honours were extended to Horizons ETFs Management (Canada) Inc., outshining 17 other competitors in this asset class and space.
Within the bond segment, the best asset fund manager was Lysander Funds Limited, which outperformed 31 competitors in this group, while the best bond ETF manager was RBC Wealth Management, which beat 10 other competitors in the asset class.
There were 39 asset managers competing for the Lipper Canadian Fund Awards in the mixed-asset segment. ATB Investment Management Inc. won the trophy for the best mixed-assets manager.
The winning asset management firm for the overall award showed an above-average risk-adjusted performance within its bond, equity, and mixed-assets product lineup. In this category, there were 29 fund families competing for the prestigious trophy. Phillips, Hager & North Investment Funds Ltd. was named the best overall Canadian fund management group for 2021.
As one can see from the number of fund management groups in each category, the Lipper Fund Awards are exceedingly competitive and recognize the fund managers that are displaying fund management excellence within the industry. The Awards commemorate the expertise of the collective fund management industry and the individual funds’ ability to outperform their peers on a risk-adjusted basis.
Refinitiv Lipper data covers more than 345,000 share classes in more than 80 countries. The Lipper Leader ratings are available for mutual funds registered for sale in 47 markets. Find out more.
The views expressed are the views of the author and not necessarily those of Refinitiv. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.
Disclaimer
The Refinitiv Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers.
The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60, and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the Refinitiv Lipper Fund Award. For more information, see lipperfundawards.com. Although Refinitiv Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Refinitiv Lipper.
About Refinitiv Lipper Fund Awards:
For more than 30 years and in over 17 countries worldwide, the highly respected Refinitiv Lipper Awards have honoured funds and fund management firms that have excelled in providing consistently strong risk-adjusted performance relative to their peers and focus the investment world on top funds. The merit of the winners is based on entirely objective, quantitative criteria. This, coupled with the unmatched depth of fund data, results in a unique level of prestige and ensures the award has lasting value. Renowned fund data and proprietary methodology is the foundation of this prestigious award qualification, recognizing excellence in fund management. Find out more at www.lipperfundawards.com.
