Accessibility Statement Skip Navigation
  • Resources
  • Blog
  • Journalists
  • Webcasts
  • Data Privacy
  • Français
  • my CNW 
    • Login
    • Register
  • Client Login 
    • Online Member Centre
    • Next Gen Communications Cloud
    • Cision Communications Cloud®
  • Sign Up
  • Send a Release
Return to PR Newswire homepage
  • News
  • Products
  • Contact
When typing in this field, a list of search results will appear and be automatically updated as you type.

Searching for your content...

No results found. Please change your search terms and try again.
Advanced Search
  • News in Focus
      • Browse News Releases

      • All News Releases
      • All Public Company
      • News Releases Overview

      • Multimedia Gallery

      • All Multimedia
      • All Photos
      • All Videos
      • Multimedia Gallery Overview

      • Trending Topics

      • All Trending Topics
  • Business
      • Auto & Transportation

      • All Automotive & Transportation
      • Aerospace, Defense
      • Air Freight
      • Airlines & Aviation
      • Automotive
      • Maritime & Shipbuilding
      • Railroads and Intermodal Transportation
      • Supply Chain/Logistics
      • Transportation, Trucking & Railroad
      • Travel
      • Trucking and Road Transportation
      • Auto & Transportation Overview

      • View All Auto & Transportation

      • Business Technology

      • All Business Technology
      • Blockchain
      • Broadcast Tech
      • Computer & Electronics
      • Computer Hardware
      • Computer Software
      • Data Analytics
      • Electronic Commerce
      • Electronic Components
      • Electronic Design Automation
      • Financial Technology
      • High Tech Security
      • Internet Technology
      • Nanotechnology
      • Networks
      • Peripherals
      • Semiconductors
      • Business Technology Overview

      • View All Business Technology

      • Entertain­ment & Media

      • All Entertain­ment & Media
      • Advertising
      • Art
      • Books
      • Entertainment
      • Film and Motion Picture
      • Magazines
      • Music
      • Publishing & Information Services
      • Radio & Podcast
      • Television
      • Entertain­ment & Media Overview

      • View All Entertain­ment & Media

      • Financial Services & Investing

      • All Financial Services & Investing
      • Accounting News & Issues
      • Acquisitions, Mergers and Takeovers
      • Banking & Financial Services
      • Bankruptcy
      • Bond & Stock Ratings
      • Conference Call Announcements
      • Contracts
      • Cryptocurrency
      • Dividends
      • Earnings
      • Earnings Forecasts & Projections
      • Financing Agreements
      • Insurance
      • Investments Opinions
      • Joint Ventures
      • Mutual Funds
      • Private Placement
      • Real Estate
      • Restructuring & Recapitalization
      • Sales Reports
      • Shareholder Activism
      • Shareholder Meetings
      • Stock Offering
      • Stock Split
      • Venture Capital
      • Financial Services & Investing Overview

      • View All Financial Services & Investing

      • General Business

      • All General Business
      • Awards
      • Commercial Real Estate
      • Corporate Expansion
      • Earnings
      • Environmental, Social and Governance (ESG)
      • Human Resource & Workforce Management
      • Licensing
      • New Products & Services
      • Obituaries
      • Outsourcing Businesses
      • Personnel Announcements
      • Real Estate Transactions
      • Residential Real Estate
      • Small Business Services
      • Socially Responsible Investing
      • Surveys, Polls and Research
      • Trade Show News
      • General Business Overview

      • View All General Business

  • Science & Tech
      • Consumer Technology

      • All Consumer Technology
      • Artificial Intelligence
      • Blockchain
      • Cloud Computing/Internet of Things
      • Computer Electronics
      • Computer Hardware
      • Computer Software
      • Consumer Electronics
      • Cryptocurrency
      • Data Analytics
      • Electronic Commerce
      • Electronic Gaming
      • Financial Technology
      • Mobile Entertainment
      • Multimedia & Internet
      • Peripherals
      • Social Media
      • STEM (Science, Tech, Engineering, Math)
      • Supply Chain/Logistics
      • Wireless Communications
      • Consumer Technology Overview

      • View All Consumer Technology

      • Energy & Natural Resources

      • All Energy
      • Alternative Energies
      • Chemical
      • Electrical Utilities
      • Gas
      • General Manufacturing
      • Mining
      • Mining & Metals
      • Oil & Energy
      • Oil and Gas Discoveries
      • Utilities
      • Water Utilities
      • Energy & Natural Resources Overview

      • View All Energy & Natural Resources

      • Environ­ment

      • All Environ­ment
      • Conservation & Recycling
      • Environmental Issues
      • Environmental Policy
      • Environmental Products & Services
      • Green Technology
      • Natural Disasters
      • Environ­ment Overview

      • View All Environ­ment

      • Heavy Industry & Manufacturing

      • All Heavy Industry & Manufacturing
      • Aerospace & Defense
      • Agriculture
      • Chemical
      • Construction & Building
      • General Manufacturing
      • HVAC (Heating, Ventilation and Air-Conditioning)
      • Machinery
      • Machine Tools, Metalworking and Metallurgy
      • Mining
      • Mining & Metals
      • Paper, Forest Products & Containers
      • Precious Metals
      • Textiles
      • Tobacco
      • Heavy Industry & Manufacturing Overview

      • View All Heavy Industry & Manufacturing

      • Telecomm­unications

      • All Telecomm­unications
      • Carriers and Services
      • Mobile Entertainment
      • Networks
      • Peripherals
      • Telecommunications Equipment
      • Telecommunications Industry
      • VoIP (Voice over Internet Protocol)
      • Wireless Communications
      • Telecomm­unications Overview

      • View All Telecomm­unications

  • Lifestyle & Health
      • Consumer Products & Retail

      • All Consumer Products & Retail
      • Animals & Pets
      • Beers, Wines and Spirits
      • Beverages
      • Bridal Services
      • Cannabis
      • Cosmetics and Personal Care
      • Fashion
      • Food & Beverages
      • Furniture and Furnishings
      • Home Improvement
      • Household, Consumer & Cosmetics
      • Household Products
      • Jewelry
      • Non-Alcoholic Beverages
      • Office Products
      • Organic Food
      • Product Recalls
      • Restaurants
      • Retail
      • Supermarkets
      • Toys
      • Consumer Products & Retail Overview

      • View All Consumer Products & Retail

      • Entertain­ment & Media

      • All Entertain­ment & Media
      • Advertising
      • Art
      • Books
      • Entertainment
      • Film and Motion Picture
      • Magazines
      • Music
      • Publishing & Information Services
      • Radio & Podcast
      • Television
      • Entertain­ment & Media Overview

      • View All Entertain­ment & Media

      • Health

      • All Health
      • Biometrics
      • Biotechnology
      • Clinical Trials & Medical Discoveries
      • Dentistry
      • FDA Approval
      • Fitness/Wellness
      • Health Care & Hospitals
      • Health Insurance
      • Infection Control
      • International Medical Approval
      • Medical Equipment
      • Medical Pharmaceuticals
      • Mental Health
      • Pharmaceuticals
      • Supplementary Medicine
      • Health Overview

      • View All Health

      • Sports

      • All Sports
      • General Sports
      • Outdoors, Camping & Hiking
      • Sporting Events
      • Sports Equipment & Accessories
      • Sports Overview

      • View All Sports

      • Travel

      • All Travel
      • Amusement Parks and Tourist Attractions
      • Gambling & Casinos
      • Hotels and Resorts
      • Leisure & Tourism
      • Outdoors, Camping & Hiking
      • Passenger Aviation
      • Travel Industry
      • Travel Overview

      • View All Travel

  • Policy & Public Interest
      • Policy & Public Interest

      • All Policy & Public Interest
      • Advocacy Group Opinion
      • Animal Welfare
      • Canadian Federal Government
      • Canadian Municipal Government
      • Canadian Provincial Government
      • Corporate Social Responsibility
      • Domestic Policy
      • Economic News, Trends, Analysis
      • Education
      • Environmental
      • European Government
      • FDA Approval
      • Federal and State Legislation
      • Federal Executive Branch & Agency
      • Foreign Policy & International Affairs
      • Homeland Security
      • Labor & Union
      • Legal Issues
      • Natural Disasters
      • Not For Profit
      • Patent Law
      • Public Safety
      • Trade Policy
      • Policy & Public Interest Overview

      • View All Policy & Public Interest

  • People & Culture
      • People & Culture

      • All People & Culture
      • Aboriginal, First Nations & Native American
      • African American
      • Asian American
      • Children
      • Diversity, Equity & Inclusion
      • Hispanic
      • Lesbian, Gay & Bisexual
      • Men's Interest
      • People with Disabilities
      • Religion
      • Senior Citizens
      • Veterans
      • Women
      • People & Culture Overview

      • View All People & Culture

  • Advanced Search
  • Overview
  • Multichannel Amplification
  • Monitoring
  • Distribution
  • Multimedia
  • Guaranteed Paid Placement
  • AI Tools
  • IR
  • Become a Client
  • Request a Demo
  • Editorial Bureaus
  • Partnerships
  • General Enquiries
  • Media
  • Worldwide Offices
  • Hamburger menu
  • Cision Canada
  • Send a Release
  • FR
    • Phone

    • 877-269-7890 from 8 AM - 10 PM ET

    • ALL CONTACT INFO
    • Contact Cision

      877-269-7890
      from 8 AM - 10 PM ET

  • Send a Release
  • Sign Up
  • Resources
  • Blog
  • Journalists
  • Webcasts
  • GDPR
  • News in Focus
    • Browse All News
    • Multimedia Gallery
    • Trending Topics
  • Business
    • Auto & Transportation
    • Business Technology
    • Entertain­ment & Media
    • Financial Services & Investing
    • General Business
  • Science & Tech
    • Consumer Technology
    • Energy & Natural Resources
    • Environ­ment
    • Heavy Industry & Manufacturing
    • Telecomm­unications
  • Lifestyle & Health
    • Consumer Products & Retail
    • Entertain­ment & Media
    • Health
    • Sports
    • Travel
  • Policy & Public Interest
    • Policy & Public Interest
  • People & Culture
    • People & Culture
  • Send a Release
  • Sign Up
  • Resources
  • Blog
  • Journalists
  • Webcasts
  • GDPR
  • Overview
  • Multichannel Amplification
  • Monitoring
  • Distribution
  • Multimedia
  • Guaranteed Paid Placement
  • AI Tools
  • IR
  • Send a Release
  • Sign Up
  • Resources
  • Blog
  • Journalists
  • Webcasts
  • GDPR
  • Become a Client
  • Request a Demo
  • Editorial Bureaus
  • Partnerships
  • General Enquiries
  • Media
  • Worldwide Offices
  • Send a Release
  • Sign Up
  • Resources
  • Blog
  • Journalists
  • Webcasts
  • GDPR

Surge in Valeant Pharmaceuticals increases pain for Value and Dividend investment managers: Latest Russell Canada Active Manager Report


News provided by

Russell Investments Canada Limited

May 07, 2015, 08:00 ET

Share this article

Share toX

Share this article

Share toX

  • Only 39% of value and 34% of dividend managers beat the benchmark in Q1 2015; versus 75% of growth managers
  • Growth managers outperformed their value counterparts for the fourth consecutive quarter
  • Early look at Q2 2015 shows mixed results for active managers, hinging on stock selection

TORONTO, May 7, 2015 /CNW/ - While 2015 started on a healthy note for the S&P/TSX Composite Index, which gained 2.6% for the first quarter after two negative quarters, a majority of large cap investment managers in Canada faced an extra valiant challenge. Valeant Pharmaceuticals International's stock price surged 50% in the quarter and accounted for more than half the benchmark index's gain, but only 35% of large cap managers in Canada held Valeant Pharmaceuticals at the start of 2015. Despite this predicament, 53% of Canadian large cap managers beat the benchmark for the first quarter, albeit down from 65% in the fourth quarter of 2014. In addition, the median large cap manager returned 2.9%, slightly outperforming the benchmark. These and other notable observations are included in the most recent Russell Investments Canada Limited ("Russell Canada") Active Manager Report, which is based on a quarterly survey of roughly 150 institutional money manager products (all data cited is gross of fees).

"We know that the Canadian market is prone to concentration issues," explains Kathleen Wylie, Head of Canadian Equity Research at Russell Canada. "We had Nortel back in 1998/1999, and in recent years the large weight of resources, financials and gold stocks in the index has presented challenges for managers at different times. Valeant Pharmaceuticals is now the latest concentration issue given it is the third-largest stock in the index with a weight of more than 4%. Concentration can make it problematic for active managers to beat the benchmark in certain quarters, especially when one of the largest stocks or sectors in the index surges."

Wylie added that despite those challenges, an average of 58% of large cap managers have beaten the benchmark over the last five years, according to the Russell Canada report, with the median manager ahead of the benchmark by more than 40 basis points on average per quarter. Over 10 years on average per quarter, her findings show that 54% of large cap managers have beaten the benchmark, with the median return nearly 20 basis points ahead of the benchmark and the first quartile manager roughly 150 basis points ahead.

"Skilled active managers can add value over the long run," Wylie summarized.

Report reveals less sector breadth in the first quarter

Russell Canada's report also found that sector breadth was slightly less favourable in the first quarter of 2015, with six out of 10 sectors beating the benchmark, down from eight out of 10 in the fourth quarter of 2014. In addition, large cap managers were favourably positioned in six of the sectors, primarily helped by their average overweights to the outperforming sectors—Information Technology, Consumer Discretionary and Consumer Staples—and underweights to the three most underperforming sectors: Telecommunications, Financials and Energy. As for precious metals, gold stocks rose 3.9% in the first quarter after falling nearly 14% in the fourth.

"Since large cap managers on average started the quarter 2.2% underweight gold stocks, the strength of those stocks hurt their benchmark-relative performance to some extent," said Wylie, who also noted that this underweight by managers is the smallest since Russell has been closely tracking the data. The weight of gold stocks in the Index started the quarter at 4.2%, down significantly from a peak of 14% in 2011 when large cap managers were nearly 6% underweight on average.

Value and Dividend Managers Struggle Most in the Quarter

The surge in Valeant Pharmaceutical's stock price in the quarter had the biggest negative impact on value and dividend managers, many of whom were not holding the stock. Only 13% of value managers and 11% of dividend managers owned Valeant Pharmaceuticals at the start of the quarter, which made it challenging for them to beat the benchmark. Only 39% of value and 34% of dividend managers were able the beat the benchmark in the first quarter, down from 52% and 57%, respectively, from the fourth quarter of 2014. Value and dividend managers also were hurt by the rise in gold stocks. On average, value managers were 2.8% underweight gold stocks at the start of the quarter and dividend managers were 3.1% underweight. On the other hand, 75% of growth managers beat the benchmark in the first quarter. Growth managers were less underweight gold stocks—only 1.4% on average—and the majority of them (67%) held Valeant Pharmaceuticals, which also helped their benchmark-relative performance. The median growth manager's return was 4.3%, compared to only 1.5% for value and 1.6% for dividend managers in the first quarter. 

"This was the fourth consecutive quarter that growth managers have outperformed value managers," highlights Wylie. "Growth managers struggled during the financial crisis, particularly in 2011 and 2012 when the equity market was rewarding value and dividend managers the most, but the tide seems to have shifted in the last year. We have observed that investment styles come in and out of favour, which is why a multi-style, multi-manager approach is essential to helping reduce volatility."

Diversified Bank Performance Negative in the Quarter

The performance of diversified banks also had an impact on large cap manager performance in the quarter. As a group, they fell 3.9%, with five of the six biggest banks ranking among the top 10 largest negative contributing stocks. Although large cap managers overall were underweight the group by 4.1% at the start of the quarter, three of those banks—Royal Bank, Bank of Nova Scotia and Toronto Dominion Bank—were held by at least 80% of large cap managers, and so their performance negatively impacted benchmark-relative performance. Those three stocks were also more widely held by dividend mangers, which helped to explain why dividend managers lagged.

Active management mixed so far in in the second quarter

The market is off to a solid start in the second quarter with the S&P/TSX Composite Index up 2.4% for the month of April. Still, the active management environment looks less favourable, with only four of the 10 sectors ahead of the benchmark (compared to six of 10 in the first quarter) and Energy and Materials the top-performing sectors. Overall, large cap managers appear to be favourably positioned in only two sectors but stock selection is also having a significant impact in the second quarter. Energy is the top-performing sector quarter-to-date and although large cap managers are underweight the sector on average, Canadian Natural Resources and Suncor are still widely held and outperforming so far in the quarter. Offsetting that to some extent, however, is Encana— the second-highest contributing stock in the Energy sector with a return of 21% in April—which is held by less than 40% of large cap managers.

Managers also continue to  be challenged by strength in Valeant Pharmaceuticals and gold stocks, which outperformed in April. On a positive note, diversified bank stocks are rebounding in the quarter, led by Royal Bank, Bank of Nova Scotia and Toronto Dominion.

"It's always challenging to figure out which style will outperform when it's so early in the quarter," said Wylie. "Based on overall sector positioning, and the strength in gold stocks and Valeant Pharmaceuticals, growth managers are likely outperforming again. However, the top-performing bank stocks are more widely held by dividend managers so that may help their performance. It's just too early to make a call on style since it changes day-to-day. It will come down to stock selection."

Growth managers currently have their largest overweights to the Information Technology and Consumer Discretionary sectors and their largest underweights to Financials and Telecommunications. Value managers also have their largest overweights to Information Technology and Consumer Discretionary but their largest underweights to Financials and Energy. Dividend managers have their largest overweights to Utilities and Consumer Discretionary and their largest underweights to Energy and Materials.

For more information on this report and findings from previous quarters, please go to http://www.russell.com/ca/insights-research/active-manager-report.page.

About Russell Investments

Russell Investments is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell Investments stands with institutional investors, financial advisors and individuals working with their advisors—using the firm's core capabilities that extend across capital market insights, manager research, asset allocation, portfolio implementation and factor exposures to help each achieve their desired investment outcomes.

Russell Investments has more than CAD$315 billion in assets under management (as of 12/31/2014) and works with over 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, the firm has US$2.4 trillion in assets under advisement (as of 12/31/2014). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell Investments traded more than US$1.7 trillion in 2014 through its implementation services business. The firm also calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, including more than 80 countries and more than 10,000 securities.

Headquartered in Seattle, Washington, Russell Investments is wholly owned by London Stock Exchange Group (LSEG) and operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Milan, Dubai, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, Milwaukee and Edinburgh. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow @Russell_News.

Important Information

Nothing in this publication is intended to constitute legal, tax securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. This is a publication of Russell Investments Canada Limited and has been prepared solely for information purposes. It is made available on an "as is" basis. Russell Investments Canada Limited does not make any warranty or representation regarding the information.

Indexes are unmanaged and cannot be invested in directly. Past performance is not indicative of future results.

Any stock commentary is for illustrative purposes only and is not a recommendation to purchase or sell any security.

Unless otherwise stated all index data is sourced from ©BNY Mellon Asset Servicing.  All rights reserved.

Russell Investments Canada Limited is a wholly owned subsidiary of Frank Russell Company and was established in 1985. Russell Investments Canada Limited and its affiliates, including Frank Russell Company, are collectively known as Russell Investments.

Russell Investments is a trade name and registered trademark of Frank Russell Company, a Washington USA corporation, which operates through subsidiaries worldwide and is part of the London Stock Exchange Group.  It is used under a license by Russell Investments Canada Limited.

Copyright © Russell Investments Canada Limited 2015. All rights reserved.

RETAIL-2015-05-05-1244.  Exp. May 2016

SOURCE Russell Investments Canada Limited

Steve Claiborne, 206-505-1858, [email protected]; Beja Rodeck Communications, 908-885-5945; For real-time news updates, follow @Russell_News on Twitter.

Modal title

Organization Profile

Russell Investments Canada Limited

    Also from this source

  • Russell Investments announces upcoming changes to Russell Investments Inflation Linked Bond Fund

Contact Cision

  • 866-245-2317
    from 8 AM - 10 PM ET
  • Become a Client
  • Request a Demo
  • Editorial Bureaus
  • Partnerships
  • General Enquiries
  • Media

Products

  • Cision Communications Cloud®
  • Media Monitoring
  • Content Distribution
  • Multimedia Distribution
  • Measurement & Analytics
  • Investor Relations

About

  • About Cision Canada
  • About Cision
  • Media Partners
  • Careers
  • Accessibility Statement
  • APAC
  • APAC - Simplified Chinese
  • APAC - Traditional Chinese
  • Brazil
  • Canada
  • Czech
  • Denmark
  • Finland
  • France
  • Germany
  • India
  • Indonesia
  • Israel
  • Japan
  • Korea
  • Mexico
  • Middle East
  • Middle East - Arabic
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • Russia
  • Slovakia
  • Spain
  • Sweden
  • United States
  • Vietnam

My Services

  • All News Releases
  • Online Member Centre
  • Next Gen Communications Cloud
  • Cision Communications Cloud®
  • my CNW

Do not sell or share my personal information:

  • Submit via [email protected] 
  • Call Privacy toll-free: 877-297-8921

Contact Cision

Products

About

My Services
  • All News Releases
  • Online Member Centre
  • Next Gen Communications Cloud
  • Cision Communications Cloud
  • my CNW
877-269-7890
from 8 AM - 10 PM ET
  • Terms of Use
  • Information Security Policy
  • Site Map
  • Cookie Settings
  • Accessibility Statement
Copyright © 2025 CNW Group Ltd. All Rights Reserved. A Cision company.