Canadian equity investment managers faced a more challenging investing environment in the second quarter of 2007, with only 53% of large cap equity managers beating the S&P/TSX Composite Index’s return.

According to Russell Investments Canada’s 2nd Quarter 2007 Active Management report, that was down from 65% in the first quarter, which was the highest proportion in almost three years.

“However, we’re half-way through the year and I’m still more encouraged by the active management environment now than I have been in the last couple of years when the market was dominated by resource stocks”, says Kathleen Wylie, senior research analyst, Russell Investments Canada.

On average, less than 50% of large cap Canadian equity managers in Canada beat the benchmark in 2005 and 2006.

“In the second quarter, there was a notably larger range in manager returns between the top-performing manager and the bottom-performing manager. At 13%, that difference was up from 7.8% in the first quarter and likely stemmed from the fact that there was a wider range between the top- and bottom-performing sector and individual stock returns. The top-performing sector was Telecommunication (+17.4%) while the bottom-performing sector was Health Care (+0.02%) in the quarter,” says Wylie.