Funds that outperformed in 2008

Seven equity funds that protected on the downside during the 2008-2009 financial crisis and recovered faster than the index

Ian Tam, CFA 13 March, 2020 | 1:52AM

Strong woman

After the triple hit to the Canadian economy (COVID19 worries, a surprise interest rate cut, and an oil price plunge) the S&P/TSX Composite has fallen about 12% YTD, erasing a bit over half the gains made last year. Although Morningstar’s view is that the impact of COVID19 will have marginal impact to world GDP over the long term, this doesn’t mean that investors aren’t feeling the full pain of today’s equity markets.

To see what we could learn from history, I decided to look for Canadian equity managers who were able to outperform the index during the 2008-2009 financial crises. They could be ideas for those who might consider paying for active management during today’s volatile times. The key measure that outlines this trait is known as maximum drawdown, or the value lost from peak to valley during a market correction. A related measure is known as the recovery period, or the number of months it took for the fund to recover its peak value from prior to the correction. To this end, I screened Morningstar’s database of equity managers across these dimensions:

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About Author

Ian Tam, CFA  Iam Tam, CFA, is Director of Investment Research at Morningstar Canada. 

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