What Really Determines Investment Returns?

By Shea Sanche, CFP® · Last reviewed: April 2026

Spoiler: it's not your fund selection. The actual drivers of long-term investment returns are often misunderstood - and that misunderstanding is expensive.

By Shea Sanche, CFP®

When it comes to investing, it’s easy to get caught up in chasing “hot” stocks or trying to time the market. But decades of research show that those things actually play a much smaller role in your long-term results than most people think.

In fact, the single biggest driver of your returns is something much simpler and completely within your control: it’s your overall investment mix.

The Landmark Study

A landmark study by Gary Brinson, Randolph Hood, and Gilbert Beebower looked at how U.S. pension funds performed between 1974 and 1983. They found that 93.6% of the ups and downs in returns came from the portfolio’s overall mix of stocks, bonds, and cash—not market timing or picking the “right” individual investments.

When the study was repeated a decade later, the results were almost identical at 91.5%.

In other words, your investment mix is the steering wheel of your portfolio; it will set the direction more than any other factor.

Beyond the Mix: What’s Inside the Portfolio

Once we determine your mix by understanding your goals and risk tolerance, we use an evidence-based approach to decide what goes inside that mix.

Research from Eugene Fama and Kenneth French (1992) found that most stock returns are influenced by three main factors:

1. Market exposure: How much of your portfolio is actually in stocks.

2. Company size: Whether you own more small companies or large ones.

3. Value vs. growth: Whether you own high-quality, attractively priced stocks versus more speculative ones.

Conclusion

Successful investing isn’t about guessing the next market move or finding the perfect stock. It’s about having a clear, disciplined plan based on what decades of research tell us works. We focus on building portfolios that match your goals, manage your risk, and keep you on track through good markets and bad.

Common Questions

Answers to the questions people actually ask.

How do financial advisors in Canada get paid?

Common models include AUM fees, fee-for-service, commissions, or blended arrangements. What matters is understanding incentives and whether you receive coordination beyond investments.

What is a normal advisor fee in Canada?

Fees vary by service and complexity. Instead of comparing a single percentage, evaluate what the fee includes: planning outputs, coordination, accountability, and improved net outcomes.

Are financial advisors worth it in Canada?

They can be when the relationship coordinates investments, tax, estate, and decisions as a system. They are less valuable when the service is limited to reporting and portfolio-only management. ← Back to all articles