What are Credo WIBO Reports?

WIBO reports are a tool for use by Canadian financial advisors and investors.  The tool enables people to explore the difference in investor outcomes that are delivered by different financial institutions. They are based on ongoing research with the Canadian investor community.  Credo has surveyed more than 30,000 investors in order to establish a data set that enables these analyses.

Compare EdgePoint and Fidelity

Credo studied a subset of investors from our complete data set.  This analysis included more than 1,800 investors in an exercise that compared the investor outcomes of the users of one company’s funds with the investor outcomes of the users of the other company’s funds.

  • 206 users of EdgePoint; and
  • 1,611 users of Fidelity funds

We asked them a host of questions… but one question, in particular,  is used to produce results about investor outcomes:

“Which of the following best characterizes how you feel?

1. I am far behind where I expected to be financially.
2. I am behind where I expected to be financially.
3. I am about where I expected to be financially.
4. I am ahead of where I expected to be financially.
5. I am well ahead of where I expected to be financially.

 

Exhibit 1 below shows the high-level results. On first blush, and by reviewing this graphical analysis alone, it may appear that the distributions we found are very similar. Statistical testing, however, reveals that they are not.

Exhibit 1. Comparing Investor Outcomes: EdgePoint vs Fidelity

The facts: investors who elected to invest in EdgePoint funds are significantly more likely to feel that they are behind or far behind  their financial expectations than are investors who elected to have Fidelity manage their money.  Further, they are less likely to feel on par than investors who have Fidelity manage their investments.  The probability that the difference between EdgePoint and Fidelity results happened by chance alone is tiny: the calculation of this probability = the p-value < 0.0001 is presented in Exhibit 2.

Exhibit 2. Detailed test of independence (Chi Squared) analysis comparing EdgePoint investors’ claimed outcomes with Fidelity’s investor outcomes.

Note: This test was conducted on April 8 2018 and will be re-run in three months on July 8 for comparison over time.

 

Highlights

The highlights from this research:

  1. If there were no difference between the investor outcomes these two companies deliver, we would have expected 8% of their combined 1,817 investors to feel far behind their financial expectations.  In fact we found only 7% of Fidelity’s investors feel far behind expectations while 17% of EdgePoint investors feel far behind their financial expectations.  We note that 15% of Canadian investors in general indicate that they feel far behind their expectations.  Fidelity performs better than this industry benchmark but EdgePoint does not.
  2. If there were no truly differences between the investor outcomes EdgePoint and Fidelity investors experience, we would have expected 21% of their combined 1,817 investors to feel behind their financial expectations. We found 21% of Fidelity investors feel behind their expectations but 24% of EdgePoint investors feel behind their expectations.  Credo’s research found that 28% of Canadian investors, generally, would be expected to feel behind their expectations. So, both Fidelity and EdgePoint do better than average with respect to investor outcomes.
  3. If there were no differences between these two companies’ investor outcomes,  we would expect to see 21% of their combined investors feel ahead of their financial expectations. Only 20% of EdgePoint investors feel ahead of their financial expectations while 21% of Fidelity’s investors feel ahead of their financial expectations.  Both companies deliver for investors more effectively than average because only 12% of Canadian investors in general indicate that they feel ahead of their expectations.
  4. Were there no real difference between the investor outcomes of these two companies, we would expect to see 5% of each of their client bases indicate that they feel well ahead of their expectations.  We found that 5% of Fidelity’s investors feel well ahead while 7% of EdgePoint investors feel well ahead of their financial expectations. Only about 3% of Canadian investors in general indicate that they feel well ahead of their expectations so both EdgePoint and Fidelity investors are, on average, better off than other investors.
  5. About 42% of Canadian investors generally indicate that they feel on par with their financial expectations.  46% of Fidelity investors indicate that they feel on par with their financial expectations but only 31% of EdgePoint investors make the same claim.
  • EdgePoint investors were 144% more likely than Fidelity investors to feel far behind their expectations and 21% more likely than Fidelity investors to feel behind their expectations.  Apparently EdgePoint investors are not as well protected on the down-side as Fidelity investors.
  • EdgePoint investors were 29% more likely than Fidelity investors to feel well ahead of their expectations but 7% less likely to feel ahead of their financial expectations.  Apparently EdgePoint delivers on the upside somewhat better than Fidelity.

This offers evidence that the investor outcomes delivered by these two companies differ significantly.  Given the choice of recommending Fidelity funds rather than EdgePoint, a financial advisor will need to decide what is more important for their clients… the opportunity to deliver upside (in which case EdgePoint appears to deliver slightly better investor outcomes) or the need to mitigate down-side risk (in which case our evidence suggests Fidelity might be the better choice.)

Note: This research was NOT funded by either EdgePoint or Fidelity.  It was conducted independently and objectively by Credo Consulting Inc. without prejudice.

If you have questions about this or other Credo research, your welcome to call us.