BCI Shuts Two Internal Stock Funds
British Columbia Investment Management Corp. is closing two global stock-picking strategies that oversee about C$4.3 billion ($3.1 billion), as it contends with a contracting pool of publicly listed firms.
The pension fund manager is retiring two internally managed global strategies focused on thematic and fundamental equities, BCI said an emailed statement to Bloomberg. The strategies, Global Active Thematic Equities and Global Active Fundamental Equities, make up about 7.2% of its public equities portfolio.
“The opportunity set for active fundamental stock selection in global developed equities has reduced materially — fewer listed companies, growth companies staying private for much longer, higher index concentration and a narrower path to alpha,” BCI’s global head of capital markets and credit investments, Daniel Garant, said in the statement.
The rise of passive investing has further reshaped markets in recent years, with investors directing more capital toward index funds and low-cost exchange-traded funds. At the same time, increasing concentration in major benchmarks — driven in part by the so-called Magnificent Seven group of tech and growth stocks — has diminished the payoff of stock picking.
Meanwhile, private capital is keeping high-quality businesses private for longer, BCI said in the statement. Other firms are staying away from the public markets because of regulatory costs and quarterly reporting mandates, according to the pension manager.
BCI, which had C$251.6 billion in net assets as of March 31, 2025, said it will remain active in other areas of equities, including Canadian large-cap stocks, global quantitative active strategies and global emerging markets.
The pension manager said it has shifted the responsibilities of several individuals within capital markets, and that several others have left BCI.
Josh Welsh of Benefits and Pensions Monitor also reports Maple Eight fund shuts two global equity strategies amid shrinking public markets:
British Columbia Investment Management Corp. (BCI) is winding down two internally managed global stock-picking strategies that together oversee roughly $4.3 billion, pointing to a steadily shrinking universe of publicly traded companies as a key driver of the decision, Bloomberg News recently reported.
The two strategies being closed — Global Active Thematic Equities and Global Active Fundamental Equities — represent approximately 7.2 per cent of BCI's public equities portfolio, the Victoria-based pension manager confirmed in an emailed statement to Bloomberg.
BCI, which managed $251.6 billion in net assets as of March 31, 2025, said the move reflects a fundamental shift in the global equity landscape rather than a retreat from active investing overall.
In comments provided to Bloomberg, Daniel Garant, BCI's global head of capital markets and credit investments, said the case for active fundamental stock selection in developed markets has weakened considerably. He cited a smaller pool of listed companies, growth firms remaining private for longer periods, heightened index concentration, and fewer opportunities to generate alpha as the principal headwinds.
Bloomberg notes that the surge in passive investing has reshaped global markets, with investors funneling capital into index funds and low-cost exchange-traded funds. Concentration in major benchmarks — fueled in part by the so-called Magnificent Seven group of mega-cap technology and growth stocks — has further eroded the rewards available to active stock pickers.
BCI also pointed to the growing role of private capital in keeping high-quality businesses out of public markets for longer, according to Bloomberg. The pension manager added that regulatory costs and quarterly reporting requirements are deterring other firms from listing publicly altogether.
Despite the closures, BCI told Bloomberg it intends to stay active in several other segments of the equity market, including Canadian large-cap stocks, global quantitative active strategies, and global emerging markets.
Meanwhile, the pension manager said responsibilities have been reassigned for several members of its capital markets team, while several other employees have departed BCI because of the changes, according to Bloomberg.
I read this story and while I feel terrible for Amy Chang who headed up the internal global fundamental portfolio at BCI and her team, I can't say I'm surprised.
It's been brutal for some strategies in global equities, contending with a market where semiconductor stocks went parabolic, leaving the rest of the market way behind.
Global Active Thematic Equities and Global Active Fundamental Equities represent approximately 7.2% of BCI's public equities portfolio, so that's not negligible.
Anything fundamental or thematic is getting smoked. Value is significantly underperforming growth this year as elite hedge funds all ramp up chip stocks.
It's basically a market that rewards momentum, and by a wide margin:
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Will things revert back? Will value come back? You bet, but right now, it's all about momentum and quant strategies.
Still, I did read this Bloomberg article last week that explains how value stocks with earnings strength have posted a 3,500% run since 2000:
Turns out, loading up on technology giants isn’t the only route to better returns. Value companies, too, stand a decent chance of trouncing the market — as long as several conditions are met.
Picking out winners in the group whose stocks are tied the most to the economy requires two steps, strategists at Bloomberg Intelligence say. First select companies with rising share prices, then narrow the list to only keep those with improving earnings.
That portfolio returned 3,471% on a cumulative basis since 2000, more than eight times the advance in the S&P 500 Index, BI analysts led by Christopher Cain said in a note to clients. And it’s outperformed the benchmark equity gauge by more than two-fold this year through April, gaining 12.1% during that time.
The finding offers solace to those worried that having too light a position in technology shares would lead to meager long-term returns. It also underscores the importance of factoring in a profit backdrop when picking stocks. Strip out the earnings filter from the portfolio, and its return drops to 2,170%.
“This portfolio only invests in companies with improving fundamentals. That matters when valuations are stretched, since you’re buying companies that may look expensive but are expensive for a good reason,” said BI’s Cain. “It helps avoid buying stocks that trade at a premium without the underlying fundamentals to justify it.”
Value stocks, the group comprising companies whose fortunes are closely tied to the economy, have spent the better part of the last decade trailing growth as investors chased companies at the forefront of digital transformation.
The trend has reversed so far in 2026 as hostilities in the Middle East fueled a rally in energy shares and worries mounted that the euphoria around artificial intelligence has gone too far, too fast. The Russell 1000 Value Index has advanced 9.9% since early January, compared with a 4% gain in the Russell 1000 Growth Index. Chipmakers, the stock market’s biggest gainers this year, have stumbled since mid-May as investors pulled back from the group after weeks of outsize gains.
Rising earnings estimates have been the cornerstone of the bull run in US stocks that’s powered past geopolitical tensions in the Middle East and uncertainty about the path of inflation at home that in another environment may have derailed the advance.
And while value and momentum have been among the most popular investing factors, disregarding the companies’ earnings backdrop may come at a cost, say strategists at BI. They cited Walmart Inc., Pfizer Inc., and Goldman Sachs Group Inc. as examples of companies that screened highly in those categories but saw shares fall as fundamentals deteriorated.“In essence, going with earnings revisions as a factor is staying convex to the concept of a company’s fundamentals improving, without passing judgment on what the valuation around the improvement of those fundamentals might actually be,” said Julian Emanuel, chief equity and quantitative strategist at Evercore ISI.
Analysts have continued lifting profit forecasts for Corporate America, and chiefly for companies tied to artificial intelligence, helping offset concerns around rising inflation as oil prices have surged from the Iran war.
A strategy that entails chasing stocks with the highest three-month upward revision in earnings has gained 31% in the 12 months through May 18, the second-best performing group among 12 factors tracked by Bloomberg. It has advanced 8.5% in 2026, in the third-biggest gain among the factors.
“Much of the recent equity market momentum has corresponded with surging near-term earnings estimates,” Ben Snider, chief US equity strategist at Goldman Sachs Group Inc. wrote in a note to clients. He said recent conversations with portfolio managers have underscored the difficulty of finding investment opportunities not linked to AI.
“We believe investors should continue to focus on equities with fundamental support from earnings growth and revisions, whether those earnings are driven by AI or other tailwinds.”
Now, BCI said it will remain active in other areas of equities, including Canadian large-cap stocks, global quantitative active strategies and global emerging markets.
It also told Bloomberg it shifted the responsibilities of several individuals within capital markets, and that several others have left BCI.
But even in emerging markets, things are getting wacky.
Yesterday I read Taiwan overtook India in stock market value, powered mainly by a breakneck rally in the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. :
The island’s market capitalization climbed to $4.95 trillion as of Monday, according to data compiled by Bloomberg. India’s value has dropped to $4.92 trillion. Taiwan’s stock market is now the fifth largest in the world, behind only the US, mainland China, Japan and Hong Kong.
Taiwan’s ascent up the global equity rankings is largely driven by TSMC, which now accounts for about 42% of the benchmark index, representing intense market concentration. The chipmaker’s shares have rallied 46% this year as it has benefited from the artificial intelligence trade, in which its semiconductors have a dominant market position.
The surge in the island’s market value highlights intense optimism in AI that is triggering a global rally in tech shares, disproportionately benefiting manufacturing hubs such as Taiwan and South Korea. India, on the other hand, is grappling with surging energy cost, slowing corporate earnings growth and the lack of companies directly linked to the AI buildout.
Talk about concentration risk, one stock is powering that index to the stratosphere, reminding me of the old Nortel days in Canada (except Taiwan Semiconductor is a great company, not a fraud like Nortel).
Alright, let me wrap it up there, just remember if you move to Victoria to manage an equity strategy, make sure you sign a decent golden parachute in case things go south (and sign it prior to moving there).
The stock market is a brutal and dangerous place, but I learned a hell of a lot from Fred Lecoq who reinvented himself from a fundamental portfolio manager to a great trend follower after leaving PSP.
Below, the CNBC Investment Committee debate whether it's too late to buy the tech high-fliers.
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