They disrupted the dynasty, maybe the best team in recent history, by defeating the Golden State Warriors. Suddenly, Canada was on the global basketball map.
This breakthrough got me thinking about other dynasties in basketball, about the Boston Celtics in particular, and about some parallels with asset management. Although the Celtics were not prominent in last year’s playoffs, even non-NBA fans have a vague sense that they are one of the storied franchises in the NBA. People think of John Havlicek, Bill Russell, Larry Bird, Paul Pierce – all these retired champions, all these great Boston Celtics teams. There’s an expectation among Boston fans that they simply deserve to be in first place, and will be.
Boston underachieved last year, which again surprised people. Why are they losing? They are the Celtics! So, the thing about dynasties is that everything is seen through the lens of the team being a dynasty. Reputation hangs around, even when the reality is middle-of-the-pack. We find this in asset management: advisor perception of performance more closely tracks reputation than it does actual performance. Research from Environics shows that advisor rankings of performance have a 56% correlation with actual performance over one year. Over two years, it’s 34% and, over three years, the correlation is negative!
As with the basketball, Boston has a similar dynastic reputation in asset management – much of it well deserved. In fact, one of Sun Life Global Investments' (SLGI) key sub-advisors, MFS (founded in 1924, owned by Sun Life), is among those elite Boston firms. At the same time, investment excellence has truly gone global. There are a number of potential champions out there.
At SLGI, we have just under 10 years of managing money for retail and institutional investors. But it’s hard to call us newcomers. We benefit from the global asset manager research capabilities of Sun Life, which has been managing asReady for content publishingsets for 154 years, and currently has $1 trillion-plus in AUM. We also draw on the Sun Life culture of managing risk. Like the Raptors, we scout around the world for talent, and try to partner with the world’s best. At the corporate level, Sun Life evaluates a universe of 4,000 investment managers and has over 100 investment manager relationships. With external sub-advisors and related firms like MFS, we try to ensure that we have enough quality and depth that investors don’t have to experience sticking with a team through its “rebuilding” years.
Let’s go back to basketball. In 2019, not many people outside of Canada were aware of the Raptors’ consistency as an elite team in the Atlantic Division. In fact, they placed first in four of the five years leading up to their title season. As they wore down opponents with tough defense (or, risk management) through the playoffs, sports analysts continued to make predictions based on reputation. Who were these Raptors? And, time and again, defense and exceptional global talent worked.
Over time, we think that SLGI’s reputation will catch up with our reality. But we’re impatient, and we’d like it to happen sooner. We want people to look at our numbers. As we say around SLGI: You don’t know us yet, and it could be costing you.
Think global, play defense. It’s time for a new dynasty.
Boston region population: 4.9 million
GTA population: 6.4 million
This commentary contains information in summary form for your convenience, published by Sun Life Global Investments (Canada) Inc. Although this commentary has been prepared from sources believed to be reliable, Sun Life Global Investments (Canada) Inc. cannot guarantee its accuracy or completeness and is intended to provide you with general information and should not be construed as providing specific individual financial, investment, tax, or legal advice. The views expressed are those of the author and not necessarily the opinions of Sun Life Global Investments (Canada) Inc. Please note, any future or forward looking statements contained in this blog are speculative in nature and cannot be relied upon. There is no guarantee that these events will occur or in the manner speculated. Please speak with your professional advisors before acting on any information contained in this blog.
© Sun Life Global Investments (Canada) Inc., 2020. Sun Life Global Investments (Canada) Inc. is a member of the Sun Life Financial group of companies.