Dear Santa…

Our annual letter to Santa – with our 2022 wish list!

Ian Tam, CFA 23 December, 2021 | 2:01AM
Facebook Twitter LinkedIn


Dear Santa,

As the year comes to close, I wanted to thank you for some of the gifts I got from my wishlist last year. 2021 was a good year for Canadian investors. Our regulators (the CSA) implemented the Canadian Client Focused Reforms, offering additional protections for retail investors by better aligning the interests of advisors to those of the clients that they serve, hopefully having the effect of moving client assets into lower cost investments (which are often in the investors’ best interest). The CFA institute released its ESG Disclosure Standards for Investment Products, creating a global framework for fund manufactures to communicate their approach to investing sustainably. Finally, the CSA has also proposed that Canadian-listed issuers of stocks and bonds begin to disclose their climate-related risks and greenhouse gas emissions starting as early as 2024.

And though the pandemic continues to wreak havoc on the world, the global economy seems to be recovering despite supply chain issues, and along with it a brand-new way of working. It also doesn’t hurt that the S&P/TSX Composite is up almost 18% this year. Certainly, I have a lot to be thankful for. 

I’m not sure if I made the ‘nice’ list this year, but if I did – hoping that you might consider these 3 wishes for 2022:

(1)    That the Canadian wealth management industry takes the Client Focused Reforms to heart. Though the principles behind the regulation changes are straight forward (i.e. do the best for your client, in their best interest), the devil is in details. Canadians have already witnessed the announcement of several Schedule I banks moving to proprietary-only products for their branch advice networks, coupled with regulatory scrutiny around the moves. I hope that, for the sake of investors, that the banks reconsider and continue to offer 3rd party funds to the everyday investor in the spirit of competition and freedom of choice.

(2)    That younger Canadian investors take the time to understand where thematic funds (like those that invest in cryptocurrencies, a specific type of technological innovation, or cannabis) fit into their overall portfolio. With the increased proliferation of these types of products, it’s easy for the average investor to buy into the well-crafted stories of fund manufacturers around thematic funds. Unfortunately, Morningstar’s data shows that thematic funds tend to have a higher mortality rate than their traditional counterparts. Given the shift in demographics of Canadian investors who increasingly choose the do-it-yourself option, and our propensity to ingest loads of news and content often without deeper analysis or thought, many investors might lose sight of the fact that the path to financial freedom is a slow boring race, not one won by a quick bet on an unproven theme.

(3)    That investors in Canada don’t dismiss the concept of sustainable investing by throwing the baby out with the bathwater. Warren Buffet has said that investing as “simple, but not easy.” I would argue that the world of sustainable investing is the opposite - easy, but not simple. This year, sustainable investing has come under fire by select thought leaders, claiming that there is little evidence that the approach works, with the word ‘greenwashing’ plastered all over the news. Although there may be a bad apple or two amongst the larger bushel, let’s not forget that investing sustainably can help funnel capital away from companies that exhibit poor ESG characteristics, or encourage them to improve their corporate policies around ESG factors. Investors need to know that though the world of sustainable investing is moving rapidly, we are still some ways away being able to measure the actual impact investments have on the planet and its people. But that doesn’t mean we should forget the idea altogether.

Thanks again Santa,

Ian Tam, CFA
Director of Investment Research, Canada

P.S. It would be really nice if you could get rid of Omicron, but I know that’s a stretch. In lieu of that a new toque would be great (one with ear flaps).



Facebook Twitter LinkedIn

About Author

Ian Tam, CFA  is Investment Specialist at Morningstar Canada. 


© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility