New Vanguard Canada paper:

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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blbarnitz
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New Vanguard Canada paper:

Post by blbarnitz »

Hi:

Vanguard Canada has posted a new white paper: Advisor’s Alpha: Canada
Executive summary. How do sophisticated advisors construct portfolios? Typically, they use some form of wealth management process to determine the most suitable portfolio for their clients’ particular goals. Some focus on traditional investments; others split traditional asset classes into sub-asset classes; still others add alternative investments. Regardless of the mix, these processes share a common objective—to obtain the highest return for a given level of expected risk. Index funds are often employed in allocations, but probably more often an advisor selects actively managed investments in an attempt to enhance performance, thereby validating the advisor’s fees.

Outperforming the broad market has historically been very difficult, both in absolute terms and in tax- and risk-adjusted frameworks. Where adding value is the goal, advisors may be better served by changing their performance benchmark from the market’s return to the returns that investors might achieve on their own, without professional guidance. A financial advisor has a greater probability of adding value, or alpha, through relationship-oriented services, such as providing cogent wealth management and financial planning strategies, discipline and guidance, rather than by attempting to outperform the market.
regards,
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