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Private Wealth Canada News Archive 2011

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December 19, 2011

Lack of Information Deters Emerging Market Investments

Canada's affluent concentrate nearly three quarters (74 per cent) of their investments in Canada, says a national trend report by HSBC Bank of Canada. While 62 per cent confirm they feel it's important to have a diversified portfolio which includes emerging markets, only eight per cent of investments are currently concentrated in those areas. Furthermore, 55 per cent indicated that the United States was their second favourite investment market. The survey reveals that a lack of familiarity may be one of the key hurdles to investing in emerging markets with 71 per cent of respondents indicating they need to feel well-informed about a market before they invest there. Sixty-seven per cent of respondents are willing to invest anywhere they think there are opportunities.

Infiniti To Reveal Latest In Montreal

The newest addition to the Infiniti Canada lineup, the Infiniti JX luxury crossover, will make its Canadian debut at the 2012 Montreal International Auto Show (MIAS) in January. The all-new JX is designed to excel in the areas that luxury crossover buyers desire most – interior flexibility and roominess, safety, and advanced hospitality features. Inspired by versatility and convenience, it offers real third row utility with easy-access due to wide door openings and long forward slide of the second row seat. The new Backup Collision Intervention (BCI) feature and the currently available Blind Spot Intervention (BSI) system comprise the ‘All-around Safety Shield.’ Other available technology includes both Infiniti’s Lane Departure Warning (LDW) and Lane Departure Prevention (LDP) systems. 

Investments Go Mobile

I Investments Inc. launched CI Mobile, an iPad app that offers on-the-go access to key facts about the company's products. Through CI Mobile, investors and advisors can find daily fund prices, fund codes and performance, the latest commentary from CI's portfolio management teams, and profiles of CI funds. Certain features, such as a fund code finder, were developed specifically for the application.

Investors Own Physical Gold

BMO InvestorLine has launched a new gold deposit and delivery program which offers a cost effective way for clients to buy and hold physical gold in their portfolios. The program allows investors to purchase physical gold through BMO InvestorLine and either have it held in a custodial account operated by BMO Nesbitt Burns at an approved third-party storage facility or delivered to their home. The program offers daily liquidity and physical withdrawal and delivery options.

Private Investment Program Expands

Fidelity Investments Canada ULC has expanded its Private Investment Program, an investment management solution designed for high net-worth investors. Since its launch in November 2008, the program has achieved close to $2 billion in sales. The new asset allocation pools are broadly diversified core offerings that seek to achieve high total investment returns. The pools will have a neutral mix of 50 per cent equity and 50 per cent fixed income with tactical bands extending from 20 to 70 per cent for both asset classes, and from zero to 40 per cent for money market securities. The portfolio manager also has the flexibility to invest in a wide range of extended asset classes such as convertible securities, emerging markets debt and equity, floating rate high income, and U.S. high yield.

Gold Pullback Healthy

Gold will continue rising in value over the coming years for one reason: the primary buyers are purchasing physical gold for wealth preservation and there simply isn’t enough physical gold to satisfy their appetites, says Nick Barisheff, president and CEO of Bullion Management Group Inc. In the article ‘Gold’s Healthy Pullbacks On Long Road To $10,000’ at, he says the recent pullback was by no means the bursting of the gold bubble. “Bubbles are characterized by months of extended exuberance and consistently higher highs ‒ not the $200 and $300 corrections we’ve seen in the past few weeks. Such pullbacks are healthy as they indicate gold has much, much farther to go,” he says.

Euro Unlikely To Collapse

If the crisis in Europe worsens, foreign investors would likely be unable to liquidate their euro-denominated holdings quickly, says Amundi's December issue of ‘Cross Asset Investment Strategy.’ It asks the question ‘has the euro become a currency that is too big to fail?’ However, barring an extreme scenario in which all the countries in the Eurozone return to their national currencies, the Euro is unlikely to collapse. The euro (like the US dollar) is, in fact, a currency that international investors cannot suddenly abandon because no other financial market has the capacity to quickly absorb the demand for assets which would result. While the U.S. dollar remains the dominant currency of the international monetary system, the Fed's propensity for money printing is prompting investors to question the status of the greenback as a reserve currency. The euro – the second global currency of importance in international trade – ended up becoming the preferred investment currency by default. While the pressure on the euro could certainly increase in the near term, especially if the sovereign debt crisis worsens, it says, the sell pressure on the single currency will be presumably limited.

Widget Shows Personal Rate Of Return

Great-West Life group retirement and savings plan members can now access a personal rate of return widget to help assess their progress towards achieving retirement income readiness. The latest enhancement to ‘GRS Access – the company’s secure, transactional website for retirement plan members – this new widget (a kind of ‘mini-app’) provides plan members with a quick picture of their personal rate of return, from the date of their first contribution to their group retirement and savings plan(s), as well as one-, three-, five- and 10-year time periods. It calculates plan members’ personal rate of return using the internal rate of return method (also referred to as the dollar-weighted return). The distinguishing characteristic of the calculation is that, rather than ‘estimating’ a rate of return based on the starting and ending values and total deposits and withdrawals made, it takes into account the timing and amount of such deposits and withdrawals, factors that do have an effect on the rate of return. This provides members with a personal rate of return that reflects their actual investment behaviour.

Canadians More Optimistic About Markets

While CFA members from across the globe remain pessimistic about the prospects for capital markets in the coming year, Canadian CFA members are markedly more positive on Canada’s economic outlook, says the ‘CFA Institute 2012 Global Market Sentiment Survey.’ It says comparing Canadian predictions for domestic and global markets, 88 per cent predict the local economy will expand or stay the same in 2012 while only 11 per cent predict local economic contraction. At the same time 32 per cent predict contraction for the wider global economy. Though Canadians are optimistic about the local economy, 57 per cent of Canadian respondents cited weak economic conditions as the biggest potential risk to local capital markets in 2012. As well, globally, 59 per cent of respondents predict that asset classes other than equities will be top performers in 2012. This number was even higher among Canadian respondents, at 64 per cent. However, U.S. respondents are more bullish, with a majority predicting global equity markets to be top performers.

Real Estate Fund Venture Launched

Fiera Sceptre Inc. and Axia Investments Inc. have created a joint venture to offer national real estate fund vehicles and segregated account management services to investors. Fiera Properties Limited will be headed by Stuart Lazier, who has been appointed president and chief executive officer. Catherine Ann Marshall, who has close to 20 years of experience in the real estate industry, has also joined the company as vice-president.

Impact Investment In Infancy

The market for impact investing remains small, but it's growing, says a report from J.P. Morgan and the Global Impact Investing Network. It found that investors believe the niche is "in its infancy and growing." They indicate that they are planning to invest almost US$4 billion over the next year, and expect that impact investments will come to comprise five to 10 per cent of portfolios over the next 10 years, ranging from five per cent for institutions to 10 per cent for high net worth investors. Impact investment is investing in projects that aim to make a positive social impact along with a financial return.

Alternative Alpha Will Get Harder To Find

Private equity and hedge funds will find it harder to beat the market going forward than they have in the past, says a study by J.P. Morgan Asset Management. The study projects that median returns on PE during the next 10 to 15 years will match that of a midcap long-only stock portfolio, while the median hedge fund will underperform that portfolio. During the next decade and a half, the study projects that returns for such equities will return to their historical norms of 10 per cent. Investors may have to do even more due diligence because the study also finds that the dispersion of manager returns is significantly wider in the alternative strategies arena than in traditional asset classes.

Community Initiatives Make Good Business Sense

Organizations need to look at corporate social responsibility and corporate volunteering as activities that make good business sense, says Randstad Canada. The company’s president, Jan Hein Bax, says adopting corporate responsibility programs and policies will go a long way towards enhancing an employees' engagement level with their company as well as build a good reputation in the marketplace. The ‘2007 Canada Survey of Business Contributions to Community (CSBCC)’ found 82 per cent of respondents reported that they support employee volunteering programs.

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December 12, 2011

Director Compensation Rises Significantly

Compensation for directors of publicly traded Canadian corporations rose significantly between 2008 and 2010, says the Conference Board of Canada's '2011 Canadian Directors' Compensation and Board Practices' report. And it expects this trend to continue. The average total compensation paid to outside directors for their regular board service is $112,651 per individual, a substantial increase from $84,452 in 2008. Eighty per cent of firms have adjusted director compensation since 2008. Directors are expected to increase the time commitment to their duties, assume additional responsibilities for oversight, and take on greater personal liability. If workloads and expectations continue to rise, it is almost certain that director compensation will also continue to escalate at a rapid rate. The survey shows that large companies (defined as firms with more than $2 billion in annual revenue) and medium-sized firms ($150 million to $2 billion in revenue) paid their directors similar amounts. Total average compensation in large firms was $128,171; directors of medium-sized firms averaged $124,851. Small firms (under $150 million in revenue) recorded an average of $70,648 in total compensation per director.

Investors Seek Personalized Advice

Canadian affluent investors have a high propensity to seek investment advice from a professional advisor when compared to their counterparts in other countries, says TNS Canada. Nine out of 10 affluent Canadian investors (89 per cent) turn to professional advisors at least occasionally, the third-highest level of all 24 countries surveyed, behind only Sweden (100 per cent) and India (95 per cent). In fact, Canadians are tied with investors in Denmark as the most likely to agree that "I rely upon an investment professional or advisor to make most or all of my investment decisions", with 25 per cent stating that this best describes their investment approach. Outside of deposit accounts (held by 90 per cent), affluent Canadians are most likely to invest in mutual funds (held by 56 per cent). This is one of the highest levels of mutual fund ownership of all countries surveyed (Chinese investors top the list of mutual fund holders at 85 per cent). In contrast, Canadians are among the least likely to include stocks in their investment portfolio, with 44 per cent holding stocks, the fourth-lowest level. Stocks are most popular in China (100 per cent), Hong Kong (85 per cent), and Finland (82 per cent).

Rich Make Nine Times More Than Poorest

Governments need to do more to address a growing gap between rich and poor in Canada and around the world by fostering more and better jobs and perhaps even considering raising taxes, says a global economic think-tank. The Organization for Economic Co-operation and Development says that the average income of the top 10 per cent of Canadian earners in 2008 was $103,500, 10 times that of the bottom 10 per cent at $10,260. The ratio for Canada in the early 1990s was about eight to one. The aim of the study is to dispel the assumption that the benefits of economic growth trickle down automatically to those on the lower end of the earning spectrum. It noted that the economic crisis has added urgency to the debate as disenfranchised young people see little opportunity in the future. It also suggested governments may want to consider raising marginal tax rates on income, though cautioned it may not be the most effective way to raise revenue.

Developing Markets Investing Will See Boost

Nearly 40 per cent of companies worldwide plan to shift some foreign investment from developed to emerging markets within five years, says Ernst & Young. Its Economist Intelligence Unit paper, 'Canada in a Globalised Economy: An investment perspective' shows the trend has important implications not only for Canadian firms as investors, but also for Canada as a destination for investment. "Emerging markets account for more than half of all global foreign direct investment now, showing a continued upward trend that's likely to continue," says Colleen McMorrow, its entrepreneurial services leader in Canada, who points to the appeal of a six per cent growth forecast for these markets in 2012 compared to only 1.7 per cent in developed ones.

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December 5, 2011

Transparent Regime Needed

Ottawa should transform the Investment Canada Act to create a broader, more transparent foreign investment review regime to encourage investment inflows while protecting Canadian national interests, says a report from the C.D. Howe Institute. 'Reforming the Investment Canada Act: Walk More Softly, Carry a Bigger Stick' says that Canada should scrap the "net benefit test" that now restricts inbound foreign investment. The authors argue that such an overhaul could help reverse Canada's declining share of global foreign direct investment and bring Canada in line with its more open peers. Canada benefits from foreign investment, say the authors, but the Investment Canada Act creates unnecessary barriers to it. Currently, before approving any foreign investment above a specific dollar threshold, Canada imposes a test of its "net benefit to Canada," including its potential effect on Canadian employment, exports, and productivity. The current test is subjective and unpredictable, says the report, and does not necessarily cover many situations where Canada's interests might be involved beyond the narrow calculation of a net benefit. Furthermore, the test is a throwback to an outdated industrial policy that was detrimental to the economy's long-run growth.

'Twelve Days of Christmas' Costs More Than $100,000

Being someone's true love will cost you more than $100,000 this holiday season, says PNC's annual 'Christmas Price Index.' The analysis is based on the gifts described in the song, 'The Twelve Days of Christmas.' The price tag for the 364 items gifted by someone who repeats all the song's verses is $101,119.84 ‒ a 4.4 per cent increase over last year. The 3.5 per cent increase in the Christmas Price Index is close to the federal government's Consumer Price Index, which grew 3.9 per cent over the past 12 months, proving that inflation affects even true love.

Small Indulgences Just As Meaningful

Luxury is in the eye of the beholder, says a study by the Economic Policy Institute (EPI). The survey queried respondents on their last purchase in 15 categories. More than 90 per cent of affluent consumers surveyed said small indulgences can be just as meaningful as high-end products and over half said a luxury is the same thing as a treat. Responses varied widely, but pampering such as massages or spa facials were important, as well as travel. Two-thirds of affluent respondents said they define luxury differently than they did five years ago. For instance, affluent consumers no longer think value pricing hurts a luxury brand's cachet, as 90 per cent admitted to going out of their way to find the best price. The takeaway is that personal meaning in luxury is intertwined with the brands and their meanings and is much more about self-gratification.

Year-End Tax Tips for Small Business Owners

BMO Bank of Montreal says it is a good time to do a quick financial check-up with a small business specialist and accountant before the holiday rush to help minimize the amount of 2011 income tax payable. For small business owners in Canada (most commonly a sole proprietorship or partnership), BMO says there are a number of year-end strategies that can be applied to reduce the amount of income tax payable. In addition to financial check-ups, they can defer income, maximizing income tax deductions by ensuring all allowable receipts for business-related expenses (e.g. gas, stamps, customer lunches, coffee for the office) are itemized; and set-up a new RRSP or make the maximum annual RRSP contribution.

'Who Will Own My Business'

Never in the history of civilization has so much wealth been created inside businesses – equity now sitting as cash, inventory, receivables, intellectual property, and goodwill, says Tom Deans, an award-winning professional speaker and author of all-time best-selling family business book 'Every Family's Business'. While this wealth represents a lifetime of risk-taking by family business owners who created enterprises that beat the odds, lurking around the corner is a question that confounds and frustrates the brightest business minds: 'Who will own my business when I'm gone?' He provides one answer to that question in his article 'Here's A Radical Idea: Don't 'Pass-On' Your Family Business' now posted at The story is at

Canadians Put As Much In RRSPs

Most Canadians say they plan to keep investing at least as much in RRSPs as they did last year, despite recent volatility in North American and global stock markets, says an Investors Group poll. Eight-of-10 (83 per cent) say they will increase or match their 2010 RRSP contribution. That's up slightly from the 79 per cent of Canadians who reported similar intentions last year. Three-quarters (76 per cent) say they have an RRSP or plan to open one in the coming year. That's similar to the 74 per cent last year. Among those who say they don't plan to invest, concern about stock market volatility remains near last year's level. Ten per cent said concern about the stock market was the reason they have decided not to invest this year compared to nine per cent last year.

Investor Confidence Up In November

Global investor confidence increased to 97.2 in November, up two points from October's revised reading of 95.2 for the State Street 'Investor Confidence Index.' In October, the gains in the global index originated in North American and Europe. In November, North American investor confidence increased 4.7 points to 95.2 from October's revised reading of 90.5, while confidence among European institutional investors rose 5.4 points from October's revised level of 96.1 to 101.5. "This month was a case of 'two steps forward, one step back' as strong reallocations to risk in late October and early November gave way to some pull-back from risky assets in the middle part of November," says Harvard University professor Kenneth Froot, one of the developers of the index. "To a large degree the ebb and flow was driven by persistent doubts about the way forward for European policy makers. At 97.2, global investor confidence is close to its three-year median, signaling that investors are adopting a wait-and-see attitude at this midway point of the fourth quarter."

Crestpoint Buys Properties

Crestpoint Real Estate Investments Ltd. has acquired two properties with a combined value exceeding $12 million. The first property is an 18,567 square foot freestanding Shoppers Drug Mart located in the retail commercial centre of Parksville, BC. The second property is Buro Plus, an 11 acre site located in Laval, QC. This is a 172,000 square foot state of the art Class 'A' distribution facility. Crestpoint, a business dedicated to providing institutional and high net-worth investors with direct access to commercial real estate assets in Canada, was launched earlier this year. Since then, it has acquired seven properties with total approximate value of $100 million. It is part of Connor, Clark & Lunn Financial Group.

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November 28, 2011

Canadians Manage Through Market Fluctuations

Half of Canadian investors stay calm and stick to their buy and hold strategy even in volatile market conditions, though some admit to worrying more about their portfolio during swings in the market, says CIBC. Its poll found per cent of Canadians say they remain calm when their investments are fluctuating with the market, sticking to a buy and hold philosophy Another 29 per cent say they "worry a little" about their investments and check their portfolios more often but don't make immediate changes to their investments. This steady hand in the face of short-term market volatility could be a function of their investment goals as the poll reveals that 53 per cent of Canadian investors say they are investing for the long term. Investment objectives vary by age and the majority of investors (66 per cent) – which are between 25 and 54 - say they are long term investors, with their investment goals many years in the future. Among those 55-64 (at the leading edge of the baby boom), one-third (35 per cent) in this age group remain focused on long term investment goals, while another 41 per cent invest for the medium term, a few years in the future.

911 Carrera Cabriolet Available In 2012

Porsche AG is introducing Cabriolet versions of the new 911 Carrera to go with the recently-launched coupe. Like the coupe, the 911 Cabriolet features aluminum-steel construction, along with an all-new convertible top design which preserves the typically sleek 911 roof line. As with the hardtop 911 models, Porsche has managed to reverse the weight spiral and make the new open-top models significantly lighter than their predecessors. Each of the two new cabriolets has the same engine as its coupe equivalent. The rear of the 911 Carrera houses a 3.4-litre flat engine generating 350 hp, driving the rear wheels through a seven-speed manual transmission. The open-top Carrera S comes with a 3.8-litre six-cylinder engine developing 400 hp. On sale at Canadian Porsche Centres in spring 2012, the 911 Carrera Cabriolet starts at $106,900, while the 911 Carrera S Cabriolet starts at $123,200.

Companies Lose Senior Executives By 2016

Corporate Canada and the public sector are facing a massive exodus of senior executives over the course of the next five years who are likely to be replaced by much younger executives with higher salary expectations, says Leger Marketing. It found 17 per cent of Canadian companies expect to lose more than 50 per cent of their senior executives by 2016 and one in four expects to lose more than 20 per cent. The outgoing executives, who are predominantly between the ages of 40 and 54, will be replaced by a younger cohort that ranges in age from 35 to 49. More than half (53 per cent) of companies anticipating a wave of younger executives say they will be forced to pay higher salary demands generated by a shrinking pool of executive talent.

Americans Still Make More

Even after the financial and housing meltdowns, Americans remain richer than their Canadian counterparts, says the Conference Board of Canada. It says if Canada had enjoyed the same income-boosting productivity growth seen in the U.S. since the late 1980s, average take-home pay in this country would be about 26 per cent higher. That amounts to a shortfall of about $7,500 per Canadian. The total pay gap is about twice this size since Canada's starting point was already lower,

Electric Sports Car in Development

A highly advanced, range-extending electric sports car concept is under development at car maker Infiniti. Set to emerge at the Geneva Auto Show in March 2012, this vehicle is being created to extend the potential for high performance, low emission electric cars. Infiniti already has hybrid and clean diesel models on sale and an all-electric sedan on the way. It offers a full-line of luxury performance automobiles including the G37 sports coupe, convertible and sedan, M37/56 luxury performance sedan, EX personal luxury crossover, FX premium crossover SUV, and the QX full-size luxury SUV. There are 29 Infiniti retailers across Canada.

CVCA Members Optimistic

There is a sense of optimism among those in Canada's private equity and venture capital industry, says a survey of CVCA members by CVCA ‒ Canada's Venture Capital & Private Equity Association and McCarthy Tétrault LLP. It found 80 per cent of the respondents say the investment pace over the next six months will be consistent with, or more active than, the previous six months. The investment focus will be on new investments over the next six months, rather than investing in existing portfolio companies or follow-on transactions. "These survey results demonstrate that venture capital and private equity funds see great opportunity in these turbulent times," says Gregory Smith, CVCA president and managing director of Brookfield Financial. "It is particularly encouraging to see the optimistic view of investing in Canada that emerges. Canada's attractiveness as an investment destination for venture capital and private equity is a competitive advantage for our member funds and for the country as a whole, given the central role the industry plays in fostering innovation and company growth."

Insurance May Exclude Pension Plans

Directors' and officers' insurance policies often have an exclusion clause for pension and benefit plans, says Jeremy Forgie, of Blake, Cassels & Graydon. In a session on 'Fiduciary Risk Management Decision-making ‒ Issues and Answers' at its 'Recent Developments in Pension and Employee Benefits Law,' he said fiduciary liability insurance provides protection for organizations and individuals responsible for the governance, management, and administration of pension and benefit plans. This coverage can extend to a wide range of fiduciaries including the employer, plan sponsor, plan administrator, officers and directors, the pension committee, a trustee or custodian, an investment manager, and other internal consultants or advisors, including actuaries and lawyers. The coverage provided is very similar to that of directors' and officers' insurance in that it covers losses incurred as a result of wrongful acts. However, the differences between the two types of insurance reflect the fact that fiduciary liability insurance relates to the specific duties and liabilities associated with being a fiduciary. Consequently, the definition of wrongful acts in a fiduciary liability insurance policy generally concentrates on the violation of responsibilities, obligations, or duties imposed by statute or the common law on fiduciaries, and any negligent errors or omissions that occur in the administration of a pension plan. Similarly for losses, the coverage resembles that of directors' and officers' insurance, except that it often excludes benefits due under a plan and losses associated with plan asset reversion or contribution holidays. It can also exclude coverage for issues such as disputes over ownership of pension surplus and the failure to fund, remit, or collect contributions owed to a plan.

Compensation System Will Create More Crises

Stock-based compensation for senior executives has created a system which will produce more financial bubbles and crises, says Roger Martin, dean of the Rotman School of Management at the University of Toronto. Speaking on 'Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL' at the Portfolio Management Association of Canada's '2011 Annual Meeting and Conference,' he said since this was first introduced in the mid-1970s as a means to align management interests with those of shareholders, senior executives have moved from managing their companies to managing expectations. As a result, they may resort to extreme measures to meet expectations or, since expectations cannot go up forever, tank performance to bring expectations down.

CRA Scrutinizes Taxable Benefits

The Canada Revenue Agency is increasing the level of audit scrutiny on taxable benefits received by employees, says a Borden Ladner Gervais LLP 'Tax Law Bulletin.' While the dollar amounts on individual items for each employee may be relatively small, the aggregate amounts for all employees of a business can be quite substantial and the CRA is becoming increasingly active in auditing businesses to ensure that all benefits enjoyed by an employee which might potentially fall within the tax net are taxed accordingly. CRA is also no longer willing to allow employers to make a payment to the CRA to resolve situations in which taxable benefits enjoyed by employees had been under-reported. Instead, the CRA will insist on re-assessing individual employees (or groups of employees) for taxes and interest (and potentially penalties) on amounts that constitute taxable benefits, a potential HR disaster for employers. Among the benefit-related issues most commonly re-assessed are unreported bonuses, commissions and incidental cash payments, motor vehicle benefits, and independent contractors determined to be employees instead.

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November 21, 2011

Advisors Developing Retirement Succession Plans

A survey of independent advisors in the U.S. finds that almost two-thirds have, or are working on, plans for their retirement from the business, says TD Ameritrade Institutional. The investment advisor found that 62 per cent of advisors say they have, or are in the process of developing, a succession plan ‒ up sharply from just 43 per cent in 2010. The survey found that 'satisfying client expectations' is the top reason advisors say they have a succession plan (66 per cent), followed by 'supporting the long-term viability of the firm' (51 per cent), and 'providing a smooth transition into their retirement' (49 per cent). For advisors nearing retirement without a plan, 'difficulty identifying an internal successor' (53 per cent) and 'lack of time to develop' a plan (21 per cent) were cited as the top reasons.

Canadians Lack Donation Strategies

Despite the recent market volatility and the challenging economy, 71 per cent of Canadians plan on donating the same amount or more compared to last year, says a BMO Harris Private Banking study. It found that in the past 12 months, Canadians gave an average of $487 to charitable organizations. However, the report found that 54 per cent of Canadians don't have a strategy when donating, and instead give on an ad hoc basis. The report noted that there are two kinds of giving – charitable giving and philanthropy. Philanthropy involves a longer-term commitment and a wealth management and donating strategy that is aimed at building a lasting legacy towards a specific cause. Charitable giving, on the other hand, refers to donations made on an ad hoc basis and may include a variety of causes and charities. The report also revealed that nearly two-thirds of Canadians have a good or strong understanding of how donating impacts them from a tax perspective.

Morningstar Introduces Fund Ratings

Morningstar Research Inc. has introduced analyst-driven global fund ratings for approximately 150 Canadian funds. The rating supplements the Morningstar rating for funds, commonly known as the 'star rating,' which assigns one to five stars based on a fund's past risk and return versus category peers. The scale has three positive levels ‒ gold, silver, and bronze ‒ in addition to neutral and negative ratings. Analysts arrive at a rating through an evaluation of five pillars they believe are crucial to predicting the future success of a fund, considering both numeric as well as qualitative factors: people, process, parent, performance, and price.

PRPP Legislation Introduced

The federal government has introduced legislation to create its new retirement savings vehicle ‒ pooled registered pension plans (PRPPs). The proposed plans are intended to fill the gap between traditional employer-sponsored pension plans and private savings plans such as RRSPs. They will provide a new Defined Contribution plan option for employers, particularly small businesses and the self-employed, who currently don't have access to workplace pensions. In addition to the federal legislation, the provinces will also need to introduce their own enabling legislation. As well, new federal tax rules for PRPPs need to be developed which will apply to both federally and provincially regulated plans.

Impact Of Major Illness Significant

Nine out of 10 Canadians anticipate a financial impact if they were to experience a major or chronic illness, with more than half (53 per cent) saying that impact would be significant or perhaps permanent, says the second annual 'Sun Life Canadian Health Index.' Despite these high awareness levels, only 58 per cent of Canadians are either preparing or are currently prepared financially in case they get sick. And only eight per cent of Canadians have a written financial plan that includes insurance and risk management ‒ two elements that address the economic impact that could come with a major health issue. "Canadians' understanding of the connections between health and personal finances are hard-earned," says Kevin Strain, senior vice-president, individual insurance and investments. "We found the majority of Canadians have either personally experienced or have had someone close to them suffer a serious health issue. However, fewer than one in five say they had evaluated or re-visited their finances following the experience."

VC Market Makes Gains

After a comparatively slow first half of 2011, venture capital (VC) market activity in Canada made gains in the third quarter, with particularly substantial year-over-year growth in dollars invested, says a report by CVCA Canada's Venture Capital & Private Equity Association and research partner Thomson Reuters. Canadian VCs invested $388 million between July and September, up 51 per cent from the same time in 2010. This occurred following two quarters of more moderate trend lines in the domestic VC market, especially as compared to activity in the United States. As a result of the third quarter activity, Canadian VC deal-making dollar flows totaled $1.1 billion at the end of September, up 30 per cent from the $882 million invested during the first nine months of 2010. Canadian technology sectors benefited from higher levels of VC activity with $177 million invested, up 31 per cent from the year before, while the life sciences sectors secured $106 million, up 83 per cent.

Businesses Holding Line On Prices

Despite rising raw material costs, 57 per cent of Canadian businesses have no plans to raise prices next year and more than three-quarters plan to invest the same amount or more in their businesses next year, says a report from BMO Bank of Montreal. "Current modest economic and wage growth and the lure of cross-border deals have convinced many Canadian businesses not to raise prices," says Sal Guatieri, senior economist, BMO Capital Markets. "Staying competitive is the name of the game, and will help Canadian businesses in the long run." He notes that with a slower economic growth rate for Canada of two per cent in 2012, price pressures will be contained. The survey found that Canadian businesses have taken a number of steps to improve their business performance during 2011. While 15 per cent say that lower interest rates have had the most positive impact on their business, 21 per cent point to productivity improvements such as upgrading equipment and processes, and one in four say lowering expenses/costs have had the most positive effect on their business this year.

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November 14, 2011

Credit Card Teams With Luxury Goods Site

American Express Co. and have launched a website featuring member-only sales of luxury goods from European and American designers. The French online retailer specializes in selling overstocked designer items. The first deal it is offering with American Express is items from French clothing designer Paul & Joe Sister. American Express is giving its existing cardholders incentives to shop at, including a $20 statement credit for their first purchase before the end of the year.

Compensation Risk Disclosure Required

Recent regulations in the U.S. and Canada require all publicly traded companies ‒ not just financial institutions ‒ to disclose risks associated with their compensation programs in their annual proxy statements, says Towers Watson. These rules require companies to disclose whether their board of directors, or a committee of the board, considered the implications of the risks associated with the company's compensation policies and practices. Towers Watson has developed three approaches for evaluating the relationship between pay and risk that range from simple (compliance-focused) to more proactive (focus on integrating risk management and pay/performance management). In addition, Canadian companies must also disclose how they identify and mitigate these risks.

Private Jet Travel Back In Demand

The recession may have knocked the wind out of private jet travel, but the industry is making a comeback, says the Luxury Institute's wealth survey. With major airlines hiking airfares and cutting routes, private jet carriers are seeing the first increase in demand since 2008. Twelve per cent of wealthy Americans plan to boost spending on private jet travel this year, up from nine per cent in 2010. As well, less affluent consumers are also starting to trade up as some private jet firms lower prices to lure in new business through flight-sharing deals and social networking campaigns on Facebook that offer last-minute deals. In addition, some jet companies which let members share a small portion of the cost of owning a private plane (fractional ownership), have lowered prices significantly and are seeing more business. Flexjet, for example, says its fractional business is up 120 per cent year-over-year as of August.

Executors Need Time And Commitment

A majority of Canadian Boomers would appoint family as the executor of their will, but they may not appreciate the complexities of the tasks that come with the duty, says BMO Financial Group. Its study found 85 per cent of Canadians 45 years of age or older would appoint family as the executor of their will, while seven per cent would appoint friends. If appointed as executor, the majority of Canadians (65 per cent) would not, or are not sure if they would hire a professional to assist them. The study also revealed that those who have experienced being an executor (41 per cent) have encountered the issues or complications including administrative (47 per cent); emotional (31 per cent); and legal (26 per cent). Only one per cent of Canadians over 45 have appointed a trust company as the executor of their will.

New Book Targets Wealth Management Industry

Industry practitioners have to get 'Back-to-Basics' and focus on becoming 'stewards of wealth' rather than'developers and sellers of product' if they truly expect to fulfill their responsibilities, says HighView Financial Group. Its new book, 'The Wealth Steward: Preserving & Growing Capital With a Fiduciary Mindset,' presents an alternative perspective to meeting the goals and expectations for investors within a stewardship-based process.  It says this will require new behaviours on the part of the counsellors including taking a collaborative approach to harnessing the expertise of other professional practitioners to truly address the wealth continuum for the client and a commitment to spending the time to understand the goals, expectations, and desires of the client.

Emerging Markets Story Changes

If China and India are going to account for 25 per cent of the global economy in 10 years, why not get into them now, says Andrew Barker, senior portfolio manager at Artio Global Investors. Speaking at its 'Global Economy: Structural Clarity/Policy Uncertainty' presentation, he said 10 years ago the story in emerging markets was their exports to developed markets. Now they are starting to focus on domestic consumption which means they are no longer as linked or co-related. In terms of investing in the developed world, he suggested investors look for companies that have recognized this shift in the emerging world and have strategies for a changing global economy. Part of the reason for the change is that U.S. consumers are of decreasing importance globally. In fact, companies that depend on U.S. consumption for their earnings should be avoided, he said. Another issue is that the U.S. has not come to grips with solving its problems. Politicians are treating it as a normal cyclical downturn, and it is isn't. Traditional methods for solving these issues such as stimulus programs no longer work because the money ends up leaving the country and doing more for the economies of Asia than that of the U.S.

Desjardins Launches Personal Finance Index

Desjardins Group has instituted the first-ever Canadian index of responsible personal finances. This index was inspired by the definition of financial literacy developed by the federal government's financial task force in June 2009. It's an original and comprehensive yardstick that provides a complete assessment of the public's ability to manage their personal finances, covering the two basic dimensions of knowledge and behaviour. It features an online self-evaluation tool to help individuals assess and improve their personal finance management skills and develop responsible habits.

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November 7, 2011

Reward Travellers Want Flexible Programs

Canadians are avid collectors of reward points, as six-in-10 (58 per cent) earn travel rewards towards flights and hotels, but an almost equal number (57 per cent) say they find limits on their loyalty programs to be frustrating, says an RBC Rewards survey. The poll found that family vacations were the most popular type of redemption (58 per cent) for Canadians who used reward points to redeem a trip for themselves, spouse, or family. If Canadians could only visit one landmark, 26 per cent say they would choose the ancient Pyramids. Honolulu (13 per cent) was the top choice among most reward travellers, given one city in the world to visit. Europe held the most allure among continents.

Wealthy Parents Hesitant To Discuss Wealth

For most parents, ‘the talk’ is about the birds and bees, but for the wealthy, ‘the talk’ is about money and it’s far more uncomfortable. Only a third of wealthy parents have discussed their wealth and its implications with their children before the age of 21, says an SEI ‘Private Wealth Management’ survey of families with an average net worth of more than $20 million. Only 16 per cent discussed their wealth with their kids before they turn 16. “Parents need to make talking about money a rite of passage with their children,” says Michael Farrell, managing director. “The most successful families talk about finances early and often, making children feel involved, empowered, and better prepared for the future.” Many of today’s self-made rich don’t want to raise spoiled children. So the less the kids know about their family’s wealth, they believe the better, and the more likely they are to pursue a career and have ambitions.

Challenging Quarter For Active Managers

The active management environment in the third quarter of 2011 was one of the most challenging on record, says Russell’s ‘Active Manager Report.’ Only 40 per cent of large cap Canadian equity investment managers beat the benchmark, down from 68 per cent in the second quarter – a dramatic decrease. “Bottom-up stock fundamentals did not seem to matter in the quarter, as macro concerns such as the on-going debt crisis in Europe, dominated,” says Kathleen Wylie, senior research analyst. “As well, we observed a significant spike in the correlations of stocks and when that happens it is very challenging for active managers to add value. There were few places to hide when 74 per cent of the stocks in the index declined in the quarter. For many investment managers, benchmark-relative performance in the quarter was their worst on record.”

Maximum Set At $50,100

The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2012 will be $50,100, up from $48,300 in 2011, says the Canada Revenue Agency. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada. Contributors who earn more than $50,100 in 2012 are not required or permitted to make additional contributions to the CPP. The basic exemption amount for 2012 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP. The employee and employer contribution rates for 2012 will remain unchanged at 4.95 per cent and the self-employed contribution rate stays at 9.9 per cent.

Uncertainty Only Certainty

Uncertainty continues to be the only certainty in the financial markets these days and the results of the ‘Russell Financial Health Index’ remain at low levels comparable to those seen in early 2010, an indication that Canadians are still concerned about volatility in the markets and the overall economy. For the third quarter of 2011, the index ‒ an online calculator that gauges the overall financial health of Canadian investors ‒ stood at 47.47, slightly lower than the same timeframe last year and approaching the lowest levels since the benchmark was established in early 2008. Of note this quarter was the fact that two of the 14 indicators surveyed were at an all-time high since the inception of the survey in 2008 as key concerns for Canadians about their financial health in retirement. Interestingly, these were life factors rather than financial factors. They were children and aging parents needing help and the financial impact of the death of a spouse.

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October 31, 2011

Growing Wealth Higher Priority

Increasing their wealth is a priority for more high net worth families than merely maintaining what they already have, says a survey by SEI Investments Co. It found about 74 per cent of those surveyed said that growth of wealth was a priority over the next five years, compared with 53 per cent who said that wealth retention was a top concern. Over a longer period of the next 20 years, attitudes reversed, where about 63 per cent of respondents said wealth retention was a top priority, compared with 46 per cent who named growth. That may be because more respondents will be retiring and starting to pass assets on to heirs over that period. 

Forgoing Year-End Bonus For Dividends

Most of Canada's incorporated small business owners will end up with more money in their pockets by forgoing the traditional year-end bonus in favour of paying themselves dividends from 2011 business income, says a report by Jamie Golombek, CIBC's tax and estate planning expert. In ‘Bye-bye Bonus! Why small business owners may prefer dividends over a bonus,’ he argues against the long-held axiom that Canadian small business owners are better off paying themselves a bonus to reduce their business income so that it is all taxed at the preferred lower small business tax rates. The report found that in many cases, a dividends-only strategy may beat the traditional year-end bonus as the preferred method of remuneration for incorporated small business owners in 2011, provided that the payout is not needed in the near term for consumption by the business owner. It also concludes that an even greater benefit can be achieved by reinvesting income within the company, allowing for a significant tax deferral, although the business owner must ultimately pay tax when dividends are distributed.

Advisors Remain Bullish

Poor market returns during the last quarter did not shake the confidence of Canadian investment advisors that higher returns lie ahead, says the fourth quarter ‘Advisor Sentiment Survey’ by Horizons Exchange Traded Funds Inc. While most of the asset classes covered delivered negative returns over the course of the third quarter, Canadian advisors remain quite bullish on most of the broad stock indices. Similarly, they remain slightly bullish at 52 per cent on U.S. large cap equities, despite a more than 14 per cent decline in the S&P 500 Index over the last quarter, and bullish on emerging market equities, which actually increased from 53 to 57 per cent in the wake of a negative 23.19 per cent return for the MSCI Emerging Markets Index last quarter.

Scam Artists Lure Investors

The Canadian Securities Administrators (CSA) has released a list of financial products and practices often used by scam artists to trap investors. Many of these tactics take advantage of those troubled by economic uncertainty and volatile markets. The five common ‘traps’ scam artists use to entice investors are illegal sales of misleading exempt market securities; energy investments; gold and precious metals; affinity fraud; and high risk or false FOREX schemes.

Manulife Launches Insurance App

Manulife Financial has launched an iPad application designed to make it easier for Canadians to explore the benefits of its insurance solution, Synergy. Launched in June 2011, Synergy combines a life insurance policy, a critical illness insurance policy, and a disability insurance policy into one easy-to-manage package.

Canadians Open To Socially Responsible Investing

The majority (54 per cent) of Canadians who have discussed socially responsible investments (SRIs) with their advisor have raised the topic themselves, says a survey for Standard Life. The study found that Canadians are open to SRIs provided their investment returns are similar to other investment choices. However, the research also shows that awareness of SRIs is low and that investor education is required if the category is to reach its true potential. It shows that 10 per cent of Canadian investors have made a socially responsible investment and that number increases to 13 per cent among higher net worth Canadians who have investments of $200,000 or more.

Tax Rules Prevent Retirement Saving

Federal tax rules are preventing many Canadians – especially in the private sector – from saving enough for retirement, says a report by the C.D. Howe Institute. Workers relying on RRSPs cannot accumulate even half the retirement wealth of career members of Defined Benefit pension plans, says ‘Legal for Life: Why Canadians Need a Lifetime Retirement Saving Limit,’ by James Pierlot, of Pierlot Pension Law, with Faisal Siddiqi, a pension consultant and actuary at Buck Consultants. The authors demonstrate that tax rules prevent these workers from saving enough, even as career members of DB plans accumulate retirement savings worth as much as 60 per cent of their total career incomes. This indicates a serious problem of inequity, the prospect of low living standards for future retirees, and an increasing burden on income-support programs funded from general tax revenue, it says.

Only Two Levels Of Leadership Used

While there are five levels of leadership, says Doug Keeley, CEO and chief storyteller of The Mark of a Leader, most organizations only work on two levels. Speaking at the Williamson Group's ‘35th Anniversary Celebration,’ he said real leadership requires spirit, imagination, intellect, heart, and hands. In most organizations, only the intellect and hands are used as employees are told here is the project, now get it done. He defines leadership as helping others to do their best work which means everyone in an organization can be a leader. He cited Wayne Gretzky as an example of a leader who made everyone around him better.

Investor Confidence Rises In October

The ‘State Street Investor Confidence Index for October 2011’ increased to 96.7 in October, up from September’s revised reading of 90. The gains in the index originated in North America and Europe where investor confidence increased from 85.1 in September to 91.7 in October in North America and to 99.3 from 95.9 in Europe. It attributes the rise in confidence to the constructive elements that institutional investors were focusing on in September including solid corporate balance sheets and the prospects for a resolution of the European debt crisis. However, it remains to be seen whether the outcome of European negotiations will convince investors that a line has been drawn under the sovereign credit issue.”

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October 24, 2011

Canadian Household Wealth Ranks Eighth Worldwide

Canada currently accounts for about four per cent of the wealthiest people in the world, says the Credit Suisse Research Institute. In the second edition of its global wealth report, the firm says global household wealth has grown to an estimated US$231 trillion from US$195 trillion over the past year, driven by growth in South Africa, India, Australia, Chile, and Singapore. Credit Suisse projects the total to grow by another 50 per cent over the next five years to reach US$345 trillion by the end of 2016. The report notes that Canada ranks eighth in the world in aggregate household wealth and 13th in wealth per adult. At US$245,000, Canada's wealth per adult is only slightly behind the United States, at US$248,000. Back in 2000, Canadian wealth was only 56 per cent of U.S. levels, it notes. Mean household wealth grew at an average annual rate of 7.7 per cent over the period, although more than half of this was due to exchange rate changes. Canada also accounts for four per cent of the wealthiest one per cent in the world, despite having just 0.5 per cent of the global population. The report notes that that there are now almost 1 million millionaires in Canada.

Jewelry, Watches Driving Luxury Market Growth

The global luxury market has continued its surge as experts project 10 per cent growth in 2013. A resurgence of growth in the U.S. and European markets coupled with strong performance in China and Latin America, and returned growth in Japan are driving growth in the sector, says Bain & Company. The company revised its 2010 figures to euro173 billion, or a 13 per cent growth from a year earlier, compared with earlier figures of euro172 billion. Bain forecasts growth in 2011 is being driven by jewelry and watches, up 18 per cent, accessories, up 13 per cent, and apparel up eight per cent.

Taxes, Retirement Concern Wealthy

The transfer of wealth at death, minimization of taxes, and financial needs during retirement were identified as the top three concerns of high net-worth clients in a survey by RBC Wealth Management. The survey was conducted as part of one-on-one planning sessions with more than 2,500 clients. Other issues identified in the survey as important to RBC Wealth Management clients include planning for disability, tax minimization, and philanthropy. As a comparison, Canadians as a whole are interested in reducing what they owe (32 per cent), followed by spending less (28 per cent) and saving or investing more (24 per cent). 

Fund Management Subsidiary On Market

Dexia SA will sell its fund management subsidiary Dexia Asset Management and its 50 per cent ownership stake in asset servicing firm RBC Dexia Investor Services. The sales are part of an ongoing restructuring of the company driven by underfunding problems. It says the sale of Dexia Asset Management will be done “in the framework of an open and competitive procedure.” The strategy for the sale of its stake in RBC Dexia will be determined by its CEO, Pierre Mariani.

Green Bond Fund Launched

State Street Global Advisors has launched a High Quality Green Bond strategy which offers investors a way to direct fixed income investments to climate solutions. Issued primarily by the World Bank, European Investment Bank, and other supranational and multilateral development banks, green bonds allocate the proceeds of the bond offering to fund environmentally beneficial development projects. In the past two years, the nascent green bond market from these issuers has grown from $1 billion to $5 billion outstanding.

Travel Insurance Goes Mobile

Desjardins Financial Security has launched a mobile travel assistance application. No matter where they are in the world, its travel insurance customers have secure access using their Apple mobile device to receive guidance and support from the beginning of their trip to the end. In the case of an emergency, with just a few clicks they have access to the emergency travel assistance number and important information for a variety of unplanned events. Customers can also extend their insurance as well.

Innovation Means Positive Business Results

To 2.4 million of Canada’s small business owners, innovation is less about disrupting markets and more about changes that generate the greatest impact for their livelihood, says Intuit Inc. Its Canada-wide survey revealed 97 per cent of small business owners see innovation as a key to success, but not about massive change. Rather, it's the innovations that impact business, which respondents defined as new or different strategies, processes, or practices enacted for positive business results.

Owners Unprepared For Succession

Canadian small business owners haven't fully prepared for the day when they will no longer be running their business, says the TD Waterhouse Business Succession Poll. Seventy-six per cent of small business owners admitted they don't have a succession plan, which may cause major complications down the line. According to those surveyed, the top reasons they don't have a succession plan for their business include that they are still trying to figure out what their plan will be (45 per cent) and that they just haven't gotten around to it yet (31 per cent). Respondents were fairly divided in their intentions for their business when they retire, with 23 per cent planning to close it, 20 per cent planning to sell their business to a third party, and 18 per cent planning on transferring to a family member.

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October 17, 2011

Oldest Car Sells For $4.62 Million

The world's oldest car, an 1884 De Dion Bouton et Trepardoux Dos-a-Dos Steam Runabout, sold for $4.62 million at an RM Auctions' sale. Only 20 three-wheeled De Bouton steam-powered cars were made in 1884 and now only six are still known to exist. The one that sold at the auction is the only one known in the world to still operate under its own power. ‘La Marquise’ – named after French entrepreneur Count de Dion’s mother ‒ participated in the first automobile race in 1887, where it reached a top speed of 37 miles per hour on a straightaway. In addition, La Marquise has also successfully completed four London to Brighton runs in the UK.

Private Investment Management Available 

CI Investments Inc. has launched CI Private Investment Management, a new program offering benefits to meet the distinct needs of high net worth investors. Among its features, the program provides for the linking of multiple accounts held by investors and their family members for enhanced efficiency. It is available exclusively through financial advisors. Its features and benefits include portfolio management, tax efficiency, and account consolidation.

Business Leaders Look To Customers

Canadian business leaders rank profitability, a high Canadian dollar, and attracting talent at the top of their list of worries, says a Miller Thomson LLP survey. The vast majority of Canadian executives surveyed said they look to customers when making business decisions, believing that federal and provincial governments are only marginally capable of solving the country's most pressing issues.

RIM Shareholders Want Change

Jaguar Financial Corporation, a shareholder of Research In Motion Limited, says more institutional shareholders are supporting the call for RIM to fix its governance problems and to pursue a value creative transaction such as a sale, merger, or division into separate public companies. Shareholders supportive of Jaguar own eight per cent of the total issued shares of RIM and Jaguar is in discussions with additional institutional shareholders. Shareholders say the RIM board needs to examine its strategic options, some of which could bring a substantial increase in equity value.

Mutual Fund Investors Value Advice

Advice and wealth accumulation go hand-in-hand, says the Investment Funds Institute of Canada (IFIC). Its annual Pollara survey of mutual fund investors in Canada, ‘Canadian Investors' Perceptions of Mutual Funds and the Mutual Fund Industry 2011’ addressed the often asked question as to whether the accumulation of wealth precedes the seeking out of advice. Once they start working with an advisor, mutual fund investors value advice ‒ on average working with advisors for 18 years and two-thirds consult their advisor for other financial advice such as budgeting and planning for the future.

Canadian Companies Still Strive to Grow

Despite another slowdown in the economy, Canadian private companies are still aiming for growth and expansion, says PwC's ‘Business Insights’ survey. In fact, their confidence level is the highest it has been since 2005. This year's survey showed 82 per cent of respondents are striving for growth compared to 66 per cent last year. Many private companies surveyed have been more reserved with their expectations for growth in response to the uncertainty in world markets. For example, only 10 per cent of respondents were looking to aggressively grow by 15 per cent or more, compared to last year, when 24 per cent expected to grow by more than 15 per cent. While remaining optimistic, they are also being realistic.

Turnover Expected To Increase

Employee turnover is expected to increase worldwide during the next five years, says a global survey by Right Management. Half the survey respondents globally expect higher turnover, says Kevin Noronha, market vice-president. About a third foresees no change and a minority a decrease, “all of which points to greater turnover than organizations have been used to dealing with in the past decade,” he says. It found there’s no such thing as typical or average turnover and it varies widely from industry to industry. “Unless current expectations are wrong, most employers are soon going to have to cope with more loss of talent and know-how, greater recruitment and training costs, and all the turmoil entailed with people leaving and waiting for their replacement,” says Noronha.

Current Theory May Fail Investors

Current investment theory and practice runs the risk of failing investors at their time of greatest need, says the 300 Club, a group of investment professionals from around the world. The club was started to respond to what it describes as an urgent need to raise "uncomfortable and fundamental questions" about the very foundations of the investment industry and investing. It says current economic and investment trends would change the investing landscape over the next two decades. Over the past 50 years, there had been three main trends which have contributed to the growing impact of the financial industry on the economies of most developed countries and which culminated in the 2008 financial crisis. These were an increased complexity of instruments and models creating a feeling that return without risk was possible; an increased focus on products as opposed to investor needs; and benign market conditions which had encouraged the view that, in the medium/long term, markets will always rise. A consequence of these which is already visible for the investment markets is the herding of investors into increasingly overpriced assets while continuing to count on de-correlated return or lower risk.

App Looks At ‘Can U Retire’

The ‘Can U Retire’ Apple app gives any baby-boomer in Canada or the U.S. a quick and easy answer to the question ‘is retirement feasible for me right now?’ Its developer, Enrico De Dominicis, says it provides a clear percentage result to the following question: ‘Today I make the following gross monthly dollar amount; what would I receive from my pension plans, government pension plans, and other retirement savings if I retired now?’ The app uses information the user already has such as gross monthly salary and private pension plan amounts from annual statements.

Challenging Times Coming For Canadian Business

Canadian businesses of all sizes are likely to face challenging conditions in the months ahead, says Scotia Economics. Domestic prospects are being constrained by the much slower and uneven pace of economic growth in most advanced nations, amid increasing fiscal restraint and persistently high unemployment. Its report says the current environment favours firms whose products and services are geared to corporate customers over those that rely primarily on households.

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October 10, 2011

Loblaws Launches Luxury Food Line

Canadian grocer Loblaws has launched President’s Choice black label products. The black label products are a line of 200 affordable luxury items normally found in gourmet stores. Black label products are expected in 140 Loblaws, Zehrs, and Fortinos in mid-October in Ontario, Quebec, Nova Scotia, Saskatchewan, and British Columbia.

Thomson Family Richest Again

The Thomson family remains at the top of ‘Canadian Business Magazine's’ Rich 100 for the 13th year in a row. This year, those Canadians who have amassed between $21.34 billion (the Thomson family, whose wealth declined by 8.7 per cent) and $559 million (Nova Scotia's Jodrey family, #100 on the list), made the cut. The highest climber on the list is Chip Wilson, who jumped from #49 last year to #15 this year, thanks to investor interest in Vancouver, BC-based Lululemon. His worth rose this year by 128 per cent to $2.85 billion.

Income Splitting Can Do More Harm
A federal proposal to allow income splitting for two-parent families would create more inequalities in the tax system rather than less, says the C.D. Howe Institute. In the report ‘Income Splitting for Two-Parent Families: Who Gains, Who Doesn't, and at What Cost?’Alexandre Laurin and tax scholar Jonathan Rhys Kesselman found it will create far more losers rather than promote equitable treatment of families. They also suggest income splitting would reverse the relative position of one-earner and two-earner couples with the same money incomes. On average, the two-earner couples would now bear the heavier tax burdens. The gains would be highly concentrated among high-income, one-earner couples as 40 per cent of total benefits would go to families with incomes above $125,000 and the maximum annual gain from federal splitting would exceed $6,400. For the study go to:

ETFs Popularity Growing
With the look of a mutual fund and the flexibility of a stock share, the exchange-traded fund (ETF) has captured an increasing segment of Canadian online investment portfolios. A report by Investor CMY Economics indicates made-in-Canada ETFs represented more than $40 billion in investment assets in June, with retail investors holding more than $25 billion of the ETF pie. Canadian ETF holdings grew by 11.5 per cent in the first six months of this year alone. The first ETFs were created to provide exposure to broad, developed segments of the market, such as the S&P 500 or the Toronto Stock Exchange. ETFs now represent anything from sectoral portfolios to venture capital stocks.

Sandwich Generation In Better Health
Canadian parents who also provide support to their own parents are in better physical, psychological, and financial health than the average Canadian, but these members of the ‘Sandwich Generation’ are concerned about the impact that the eldercare is having on many aspects of their lives, says Desjardins Financial Security. The survey results indicate that people who provide daily support to their parents totally or somewhat agree that this assistance impacts their mental health; the well-being of their family; their physical health; and their professional life.

ETFs Need Transparency
As the market for exchange traded funds becomes larger and more complex, there’s a need for more transparency of product structures, fund holdings, and fees, along with various other market reforms, says a report from BlackRock Inc. and its ETF provider, iShares. The report addresses growing concerns that investors don’t fully understand ETFs or appreciate the risks and costs associated with them. At first, they were straightforward, tracking relatively broad benchmarks such as the S&P 500. Today, the sector has become more complex and confusing. The report makes a number of recommendations including a call for clear labeling of product structure and investment objectives, frequent and timely disclosure of all holdings and exposures, and clear standards for diversifying counterparties and quality of collateral.

New Development Opportunities To Grow
Shifting output and job growth to western Canadian markets will continue and real estate investment opportunities, particularly for new development, are likewise shifting west, says LaSalle Investment Management. In addition, it contends that forecast rises in the value of the Canadian dollar will boost import volumes, which will maintain warehouse demand in Canada’s largest warehousing markets of Toronto, ON, and Montreal, QC. Chris Langstaff, Canadian head of research and strategy, says, “Although Canada’s economy ‒ and by extension its real estate market ‒ survived the Great Recession of 2008/2009 remarkably well compared to many other nations, the recession was less benign for Canada’s trade sector.” Export volumes dropped significantly enough to push Canada into a trade deficit in 2009 for the first time since 1976. Though the trade deficit has continued into 2011, a trade surplus is forecast to emerge later this year and successively strengthen over the next four years, hitting $45 billion by 2014, thus returning Canada’s trade surplus to pre-recession levels of 2008. Import volumes are also forecast to grow over the next five years, particularly for machinery and equipment and consumer goods. Most importantly, an expected shift to energy and natural resources as a greater proportion of Canada exports relative to manufacturing will have implications for the attractiveness of major real estate markets in the country. Specifically, growing demand for commodities and energy from Asian economies will positively impact the real estate fundamentals and investment prospects for industrial and office properties in the western markets of Vancouver, BC; and Calgary and Edmonton, AB.

Equity Funds Suffer In Third Quarter
Equity funds in Canada suffered a fifth consecutive month of overwhelmingly negative returns in September amid high volatility and bleak economic news, says Morningstar Canada. As a result, for the third quarter of 2011 all of its Canada Fund Indices fell, with 16 of them losing more than 10 per cent. The worst performing fund index was the one that measures the Greater China equity category. It lost 20.5 per cent during the quarter, with the bulk of the losses coming in September. The flight from risk has been a recurring theme during the past several months, and the biggest losers among investment funds were those that target riskier asset classes. Even gold funds, which had been one of the few categories to post positive returns so far this year, suffered significant losses in September. The precious metals equity fund index lost 12.1 per cent in September, wiping out its gains from the previous two months and resulting in a 3.7 per cent loss for the index during the quarter.

‘Politics Of False Prosperity’ Behind Crises
Pressure on politicians to deliver more growth is behind the financial crises that have taken place over the past 30 years, says Stephen S. Roach, non-executive chairman, Morgan Stanley Asia, and author of ‘The Next Asia.’ Speaking at the ‘Toronto CFA Society’s 54th Annual Forecast Dinner,’ he said the “politics of false prosperity” was not sustainable. He noted in the past 30 years, starting with the Latin debt crisis, there have been 11 crises in all, or one every three years. This desire for growth has been handled in a reckless way which, at its core, created imbalances. The whole idea that the world can grow forever is “an unsustainable growth path,” he said. While there is no one single cure, he suggested that in the U.S. its “zombie consumers” need ways to reduce their debt and increase their savings. This could be done by, for example, debt forgiveness and measures that encourage saving. These are the “seed corn of future economic growth,” he said.

Alberta Business Owners Still Most Optimistic
After tumbling sharply downward in August, small business confidence in Canada held its own in September with an index of 62.7, says the Canadian Federation of Independent Business Barometer. This reading is up a point from its August level, but still well below the near-70 mark for most of early 2011. Once again, business owners in Alberta show the highest level of optimism, with an index level of 74.4. Those in Saskatchewan (71.9) are not far behind, while businesses in Newfoundland and Labrador (67.4), Manitoba (65.5), and British Columbia (63.7) round out the regions above the national average. The least optimistic business owners are in Ontario and Quebec, with their index levels falling below the 60-mark to 58.6, suggesting larger-than-average concerns over near-term prospects for the U.S. economy.

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October 3, 2011

Self-Employed Have More Wealth
Self-employed households in Canada had more than twice the 'wealth' or household net worth of paid workers in 2009, says Statistics Canada. The median net worth of the self-employed was $520,000 in 2009, 2.7 times the median of $195,000 for paid employees. The self-employed reported not only higher levels of business and financial assets, but also higher levels of tangible assets which include housing-related items and equipment. The higher median wealth of the self-employed corresponds to their greater concentration near the top of the overall net worth distribution. More than one-half of the self-employed were located in the wealthiest 25 per cent of households, compared with about one-fifth of paid employees.

Boomer-age Canadians Most Cautious Investors
Canadian investors are being more cautious as they make their way through the current market volatility than they were when the bottom fell out in 2008, says the Bank of Montreal. A survey found 72 per cent of respondents are willing to sacrifice potential gains for stability and security, while 36 per cent said they are more open to small-gain, predictable-return products like guaranteed investment certificates (GICs) than they were in 2008. Older respondents were even more cautious than the rest. Of those 55 and older, 82 per cent said they were willing to sacrifice possible gains for stability, compared to 66 per cent of those in the younger age groups who answered this way.

Standard Life Adds New Funds And Managers
Standard Life Mutual Funds Ltd. is introducing new funds and non-affiliated investment managers to widen the choice offered to Canadian advisors and retail investors. It also launched a dedicated website,, where advisors have access to tools and information to help them manage their clients' portfolios with ease. Institutional managers Beutel Goodman and Guardian Capital are the first external portfolio managers to be added to SLMF's line-up.
Beutel Goodman's value management style suits the needs of investors focused on capital preservation and long-term investment performance with low levels of risk, and Guardian Capital's growth management style matches the needs of investors looking for growth at a reasonable price.

Owner's eMail Can Help Businesses
Business owners might want to consider adding their email address to their company’s website, says Janine Popick, CEO and founder of VerticalResponse self-service marketing. Writing at, she says an email address can put a personal “face” behind a business and make a company more transparent. While owners might be concerned about receiving a flood of spam and irrelevant emails, but in her experience she has mostly received relevant contact from customers with questions or comments.

High Net-Worth Residences Increase In Atlantic Canada
A private-sector study on wealth in Atlantic Canada and in New Brunswick shows a growing number of wealthy households in the province. The BMO Harris Private Banking study shows the New Brunswick cities of Fredericton and Saint John rank fourth and fifth as far as the number of wealthy households (assets) in Atlantic Canada. Fredericton and Moncton, NB, come in fourth and fifth with regards to the number of households with annual income of more than $150,000. The study also shows there's a growing need for private banking, even in a relatively smaller city such as Moncton, as most high net-worth residents in the region are puzzled about issues such as how to pass on their wealth to the next generation. Only 58 per cent believe their children will be able to handle an influx of cash or handle a thriving enterprise to oversee.

Greece Holds Europe Hostage
Greece is holding the rest of Europe hostage, says Timothy Schuler, senior vice-president, investment strategist, and portfolio manager with Permal Asset Management Inc. He told the Legg Mason Global Asset Management ‘Global Investment Forum: Absolute Return Strategies for Uncertain Markets’ that the reality is Greece doesn’t have to do anything as it is the debtor. As well, the need to bail out Greece has more to do with the large European banks. Some hold large amounts of Greek debt and would suffer serious loses if it does go into default. The hope is to keep Greece alive long enough for inflation to rise which would allow it to pay back its debt, he said. The real problem in Europe is that there is no single fiscal policy as each country sets its own. As a result, they are trying to use currency to solve debt issues in countries such as Greece.

Sentiment Towards U.S. Cools
Investment manager sentiment towards U.S. and global markets cooled this quarter, while sentiment towards the Canadian market rose sharply, with managers warming to traditionally defensive sectors, says the ‘Russell Investment Manager Outlook.’ It found that bullishness towards broad market Canadian equities rose sharply from 43 per cent to 57 per cent of managers in the third quarter, while bearish managers held steady at 20 per cent. Sentiment towards EAFE stocks also fell this quarter with just one-in-three managers now bullish and 43 per cent bearish. And, despite the rocky nature of equity markets, they are still the place most investment managers want to be. Bullishness towards cash is at just 23 per cent, while bearishness is at 40 per cent. Canadian bonds are even further out of favour, with 20 per cent of managers bullish and 67 per cent bearish. High yield bonds didn’t fare much better with bulls at 28 per cent and bears at 45 per cent.

IPO Index Expanded
FTSE Group and Renaissance Capital LLC are expanding the FTSE Renaissance IPO Index Series. The series, which is being renamed the FTSE Renaissance Global IPO Index Series to reflect its new global nature, will now provide investors with the ability to capture the performance of IPOs listed in 53 new country and regional indices within developed and emerging EMEA, Asian, and American markets. The expansion provides investors with comprehensive exposure to the global IPO market.

Investor Confidence Rises In September
State Street Global Markets’ ‘Investor Confidence Index’ shows global confidence increased slightly to 89.9 in September, up from August’s revised reading of 88.1. The gains originated in Europe and Asia. The European investor confidence index gained 5.6 points to reach 95.7, up from August’s revised reading of 90.1, while the Asian index behaved in a similar fashion, rising 5.5 points to reach 100.7. In North America, sentiment declined slightly to 85.1, down 1.1 points from August's revised level of 86.2. “On the face of it, it may seem surprising to measure an increase in global investor confidence in a month in which equity volatility has increased substantially,” says Kenneth Froot, Harvard University professor who helped develop the index. “There are two points that should be kept in mind about the increase. First, confidence remains in the 80s, a relatively low level, albeit better than the low 80s observed in late 2008. Second, despite all of the concern surrounding sovereign balance sheets, corporate balance sheets remain in relatively good shape at present and this is an attractive feature of equities for institutional investors.”

Erlichman Heads CCGG
Stephen Erlichman, one of Canada’s leading securities lawyers, has been appointed executive director of the Canadian Coalition for Good Governance (CCGG). He has practiced corporate and securities law for more than 30 years in Canada and the United States. He is currently a senior partner at Fasken Martineau and heads the firm’s investment products and wealth management group as well as its private equity group. The CCGG represents Canadian institutional shareholders in the promotion of corporate governance practices that best align the interests of boards and management with those of the shareholder. Its 47 members manage approximately $2 trillion of assets on behalf of Canadian investors.

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September 26, 2011

Concerted Action Needed To Avoid Recession
The prime ministers of Canada and the UK are warning that the world is on the verge of another recession. Stephen Harper and David Cameron said concerted action is needed to avoid a downturn. Cameron was in Canada for a special joint session of Parliament. Evidence of that concerted action did start to appear Thursday. Group of 20 finance ministers and central bank governors issued a statement pledging to ensure that banks would have access to all the money they might need to weather the storm after world stock markets, including Canada’s, dropped. As well, India’s finance minister said the BRICS group (Brazil, Russia, India, China, and South Africa) would be part of any G20 “consensus.” The fall of stock prices was attributed to the Federal Reserve’s warning that the U.S. economy faces “significant” threats, especially from financial turmoil linked to Europe’s debt crisis.

Gates Still Leads American Billionaire List
The U.S.'s economic woes don't appear to be hurting Bill Gates who tops Forbes' list of the 400 richest Americans for the 18th year in a row. The Microsoft co-founder and philanthropist's wealth amounts to $59 billion. His fortune swelled by $5 billion from a year ago, outpacing the number two on the list, Warren Buffett, whose net worth is $39 billion. Oracle CEO Larry Ellison rounds out the top three richest Americans with a net worth of $33 billion, $6 billion more than last year. Facebook founder Mark Zuckerberg was the biggest dollar gainer on the list, with a net worth of $17.5 billion that earned him the No. 14 spot. The combined wealth of the 400 people on this year's list is $1.5 trillion, with an average net worth of $3.8 billion. That amounts to a 12 per cent increase from last year.

Canadian Boomers Documenting Assets
A majority of Canadian Boomers have taken the time to prepare a will, says BMO Financial Group study. Eighty-five per cent of Canadians over the age of 45with investable assets, including real estate of more than $500,000, have made basic estate plans. However, almost half have not re-visited or updated their wills in 10 years, potentially leaving their original legacy goals in a precarious state. The top reasons Canadians prepared wills included ensuring their assets are distributed as they wished (36 per cent); avoiding family problems once they have passed away (34 per cent); and protecting and looking after their family (28 per cent). Those who have updated their wills were motivated to do so by a significant change in wealth (25 per cent); a change in a beneficiary’s marital status (21 per cent); a death in the immediate family (11 per cent); or a birth in the immediate family (11 per cent). Of those Canadians who do not have a will in place (15 per cent), the main reason cited is lack of time (35 per cent).

Cars And Cash Really Drool-Worthy
Cold hard cash and a shiny new sports car are just as drool-worthy as a gourmet meals, says a study in the Journal of Consumer Research. The study examined how people react when faced with the prospect of non-edible consumption and found people salivate when they desire material objects. In the study, participants viewed photos of money while holding cotton dental rolls in their mouths. While gazing, some of the participants were instructed to ‘feel’ powerful, while others were told to believe that they lacked power. By weighing the rolls to measure saliva, the researchers found that only those who perceived themselves as being in a low-power situation had a mouth-watering reaction to money, suggesting people salivate to material objects when the items are desired to fulfill a highly active goal.

Regular Consumers Outspending Top Luxury Buyers
The top tier of luxury consumers curbed their spending on high-end clothes, accessories, and jewelry in the first half of 2011, while regular consumers picked up the slack for the first time since the 2008 financial crisis, says American Express. The slowdown in spending by fashion enthusiast’s ‒ defined as the top five per cent of spenders on luxury goods ‒ was seen across the globe. In France, one of the world's key markets for luxury, spending by that group was down 10 per cent in the first half, compared with a year earlier. The other 95 per cent of consumers made up some of the slack, with their spending on luxury goods increasing by 13 per cent in the first half of the year.  

High Earners Spending Less
In the face of the continuing down economy, 27 per cent of affluent consumers say they are spending less on luxury goods than a year ago, says Unity Marketing’s ‘Luxury Consumption Index’ for the second quarter of 2011. The report says numbers were at its lowest point since the second quarter of 2009. Affluent were similarly cautious about their plans for future luxury spending, with 24 per cent saying they planned to spend more.

Russell Launches New Funds
Russell Investments Canada Limited is launching the Russell Focused US Equity Pool, as well as a corporate class version, the Russell Focused US Equity Class. The fund, which emphasizes, value-oriented stocks, is a concentrated portfolio of approximately 50 to 70 companies in the U.S. market. Russell has selected Lazard Asset Management (Canada), Inc., Levin Capital Strategies, L.P., and Mar Vista Investment Partners, LLC as the sub-advisers for the pool.

CEOs Try Comedy
Three Bay Street CEOs ‒ Kevin Sullivan, of GMP Capital; Remit Sega, of Dynamic Funds; and Geoff Beattie, of The Woodbridge Company; will loosen their ties and compete to be hailed the funniest ‘Chief Executive Officer’ October 6 at the Winter Garden Theatre in Toronto, ON. The trio will be coached by top Canadian comics and be judged based on their performance. The event is presented by Scotia bank and Dynamic Funds in support of charities serving at-risk youth ‒ Trails Youth Initiatives: Blessings in a Backpack and CAMH’s Child, Youth and Family Program. Tickets are available through Ticketmaster.

CFOs Weigh In On Investment Priorities
As organizations plan budgets and projects for the year ahead, resources are most likely to be allocated to information technology (IT) systems and new products and service lines, says Robert Half Management Resources. Its survey found in the next 12 months firms were most likely to upgrade IT systems (35 per cent) or develop new products or service lines (21 per cent). Fifteen per cent said they had no plans to invest, while 14 per cent were leaning towards real estate.

Trimark Celebrates 30th
Invesco Canada Ltd. is celebrating the 30th anniversary of its Trimark investment discipline with a dedicated web page highlighting the brand's history. The new site,, features a selection of videos, educational content about the company philosophy, portfolio manager profiles, stories, and fun facts.

Economic Freedom Waning
Canadians are enjoying more economic freedom than Americans, says the Fraser Institute. A recent report ranks Canada sixth in the world for economic freedom, while the United States fell to 10th overall. The ‘Economic Freedom of the World: 2011 Annual Report’ also shows that overall economic freedom across the globe has declined since 2010. Despite coming in ahead of the U.S., Canada's score ‒ based on indicators such as size of government, property rights, legal structures, credit regulations, free trade, and soundness of money ‒ dropped to 7.81, down from 7.95 last year.

Opportunities Exist In Sub-Sahara
Sub-Saharan Africa's political liberalization and regulatory reform are creating invest opportunities, says Daniel Altman, a professor of economics at NYU's Stern School of Business and originator of 3D Economics. Speaking on 'What in the World: Emerging Markets + Geopolitical Impact' at the ‘World Alternative Investment Summit Canada,’ he said in the medium term there will be infrastructure opportunities. However, multi-nationals are establishing beach heads. In fact, the activities of home-grown multi-nationals can be a good indicator of where to invest in this region. While there is, of course, investment risks, investors must be aware of other challenges. These include, he said, making sure you can get your money out after you've earned it.

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September 19, 2011

Rich-Poor Gap Rising In Canada
Canada is rapidly catching up to the United States as a country divided between haves and have-nots, says the Conference Board. Income inequality has been rising more in Canada than in the United States since the mid-1990s and faster than in many peer countries. The study says Canada had the fourth-largest increase in income disparity among a sample group of 17 advanced economies in the period between the mid-1990s and the late 2000s. Overall, income inequality rose in 10 of the countries sampled, rising fastest in Sweden, Finland and Denmark, and then in Canada.

Portfolio Meet Needs Of High Net-Worth Investors
Cypress Capital Management, owned by AGF Management Limited, has launched the AGF Pooled Tactical Income Fund, a professionally managed pooled portfolio to meet the needs of high-net-worth investors. The fund's objective is to provide a balance between a high level of current income and long-term capital appreciation by investing primarily in a diversified portfolio of dividend and/or distribution-paying Canadian equity securities and corporate fixed-income securities. The key benefits include diversification; attractive yield; steady monthly income; and a track record.

Rehab Program Targets Power Elite
A clinic in Salisbury, CT, is providing confidentially sequestered addiction, mental health, and executive wellness programming to the power elite. Prive-Swiss is a private rehab centre targeting high-profile Canadians whose reputations and professional standing require confidential or enhanced treatments.

Confidence In Leadership Effectiveness Wanes
Many organizations doubt their leaders’ ability to meet the challenges of today’s post-recession environment, says the ‘Canadian Talent Survey.’ Results from 386 national organizations found that leaders play a vital role in delivering desired customer service (53 per cent), meeting business goals (40 per cent) and profitability targets (40 per cent), and retaining talent (35 per cent). However, only 14 per cent believe their leaders are extremely effective at delivering quality service, while their ability to meet business goals and profitability targets is ranked at eight per cent and 10 per cent, respectively. As for retaining talent, just five per cent of directors, managers, and human resource professionals rated their leaders as extremely effective.

Concept Of Responsibility Developed
Against the backdrop of international crises and global financial disasters, German sociologist and wealth researcher Prof. Thomas Druyen has developed a new concept of responsibility. For many years, he has researched the circumstances of the world's 12 million millionaires and 1,300 billionaires at the Institute for Sciences of Ethical Wealth and Wealth Psychology at the Sigmund Freud University in Vienna. The monetary wealth belonging to the rich and super-rich amounts to almost half the volume of annual global trade. Given the scale of this wealth, this group has an existential responsibility for shaping the future of us all, he says, and those who possess exorbitant wealth should put extreme pressure on policymakers to drive fundamental change. He outlines his beliefs in his book ‘Wealthibility.’

Canadian Pooled Funds Offered
Turner Investments, an investment management firm based in Berwyn, PA, will provide Integra Capital Limited, a Canadian investment-management firm that is part of the Integra Group of Companies based in Oakville, ON, with three Canadian equity pooled funds. Marketing of the funds began in September with a plan to establish the pools for operation in the fall of 2011 for investment by Canadian institutions. The pooled funds will seek to maximize total return, primarily through capital appreciation, and to outperform their indexes over a full market cycle. The funds focus on concentrated global growth equity, emerging markets equity, and global growth equity.

RBC Offers Corporate Bond ETFs
RBC Global Asset Management Inc. has launched eight Target Maturity Corporate Bond Exchange-Traded Funds (ETFs). "Clients and advisors have been enquiring about an ETF offering of this kind for some time and we are very pleased to be able to bring this innovative structure to market," says John Montalbano, chief executive officer. The ETFs are designed to act like an individual bond, yet provide the diversification and professional oversight of a mutual fund, with the transparency and intra-day liquidity of an ETF. Each provides investors with exposure to the Canadian investment grade corporate bond market by seeking to replicate the performance of the corresponding DEX Maturity Canadian Corporate Bond Index that matures in the same year as the RBC ETF.

Funds Flow Into Canadian Equity ETFs
Canadian equity funds had the lion’s share of new assets in the exchange-traded fund business in August, says a report from BlackRock Asset Management Canada Ltd. It says Canadian equity ETFs generated almost $1.2 billion in new assets in August. Overall, the industry saw net inflows of $1.6 billion in August. Commodity ETFs ranked a distant second to the Canadian equity category with $400 million in new assets and fixed income funds were third with $91 million worth. In the year-to-date, overall industry net inflows are now at $3.7 billion.

Hedge Funds Down For Year
Hedge funds are now down 1.2 per cent for this year after a 2.3 per cent loss in August's turbulent markets, says data from Hedge Fund Research. August's figure was the industry's sharpest fall since May 2010, at the early height of the eurozone's debt crisis. It was driven by drops in value of 4.1 per cent and 3.7 per cent by equity hedge and event-driven strategies, marking the fourth month running each strategy lost value, as well as their longest drawdown since the 2008 crisis.

Tap Phone To Make Purchases
BMO Bank of Montreal has launched its Mobile PayPass Tag, a technology that allows its personal credit card customers to make purchases through a sticker affixed to their mobile phone. By making the technology available for use on mobile devices, consumers no longer need to carry cash or coin, or even a purse or wallet, to make small-dollar-value purchases. They can just tap their mobile phone over the PayPass reader at the point of sale and the transaction is instantly processed to their credit card account. For purchases under $50, no Personal Identification Number (PIN), swipe, or signature is required and they receive an instant eMail verification of each transaction. Users can monitor their spending by opting to receive eMail notifications that report the merchant and exact location of each purchase they make with their tag.

Aging Boomers Influence Housing Demand
Approximately 80 per cent of new housing demand by 2030 will come from consumers in their golden years, says the Conference Board of Canada. The demand will require a new wave of homes that are very low maintenance, such as condominiums or seniors residences, while putting downward price pressure on the traditional single detached home. In 2006, 57 per cent of condo owners were over the age of 50, while 17 per cent were over the age of 75. Prosperity in the renovation market is also predicted to continue, says the Canadian Home Builders’ Association, as seniors who decide to stay in their current residences will be renovating homes to meet the needs of getting older.

Flaherty Wants Price Gap Study
Jim Flaherty, Canada’s finance minister, wants to know why price gaps between the U.S. and Canada still exist despite the Canadian dollar’s gains on the U.S. dollar in recent years. In a letter to the Senate national finance committee, he asks that it study the reasons for this gap. Despite the Canadian dollar trading at par or above parity, Canadian cross border shoppers still find items retail at higher prices in Canada than in the United States.

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September 12, 2011

Price Of Luxury Up
The price of high-end lifestyle products – from Chanel bags to Rolex watches ‒ has risen by 11.7 per cent in the Asia-Pacific region, including India, in the past one year, says a study from High Net Worth Individuals (HNWIs). The study also found that the rise in its Lifestyle Index, which measures the prices of high-end products used by HNWIs, is in fact much higher than the overall consumer price inflation of 5.1 per cent for the region in the same period. It took into account the prices of 20 lifestyle products and services widely used by HNWIs, such as wine, accessories, cigars, and club memberships in four major cities of Asia-Pacific region ‒ Mumbai, Singapore, Shanghai, and Hong Kong ‒ over a one-year period ending April 2011. The Lifestyle Index comprised of items such as a bottle of Lafite Rothschild (up about 22 per cent), Chanel bag (up about 17.5 per cent), Steinway Grand Piano (up 16.7 per cent), Tiffany diamond ring (up over 10 per cent), and Oyster Rolex watch (up 9.1 per cent).

SRI Segregated Funds In Canada

The Standard Life Assurance Company of Canada has added Dynamic Funds and Meritas SRI Funds to its retail segregated fund offering. The new funds will provide investors with a wider choice of investment styles as the company becomes one of the few major insurers to provide socially responsible investments (SRI) in segregated funds in Canada. The new Standard Life Ideal Segregated Funds - Signature Series funds are Ideal Dynamic Aggressive Bundle, Ideal Dynamic Moderate Bundle, Ideal Dynamic Power Balanced Fund, Ideal DynamicEdge Balanced Growth Portfolio, Ideal Meritas Balanced Portfolio, Ideal Meritas Growth & Income Portfolio, and Ideal Meritas Income & Growth Portfolio.

Russell Expands Dollar Hedged Series
Russell Investments Canada Limited is expanding its U.S. Dollar Hedged Series offering – a series for investors who have U.S. dollars but want to maintain exposure to Canadian and international asset classes, without having to worry about the movements between the U.S. and Canadian dollar. “With volatile markets, investors may increasingly look for conservative investments without the added risk of currency implications,” says David Feather, president and chief executive officer. This series provides a solution for investors who have U.S. dollars but want the flexibility to invest in Canadian and international securities. It also provides a currency hedged solution for business owners doing business with the U.S.

Active Managers Perform Better
Active managers have tended to perform better in low correlation market environments in terms of real alpha generation and manager success rate, says FundQuest. In its ‘Correlation Retreats: Active vs. Passive Investment Strategies’ white paper, it says there has been debate recently regarding the challenges for active managers in market environments with consistently high correlations. Some argue that high correlations can greatly impair an active manager’s ability to generate alpha through security selection. Conversely, others contest that correlation environment may affect the risk a manager is willing to take. “While we are committed to determining which investment approach is better in different categories, we found that a new perspective, such as the frequently debated correlation factor, can add value, especially in today’s dynamic market environment,” says Tim Clift, chief investment officer. “We believe our study’s findings are actionable and may help guide advisors and their clients in optimizing portfolios through a blend of both active and passive investments.” The white paper is at

Transparent Orders Need Priority
The message coming from Canadian regulators is clear: the use of dark pools and dark orders should be limited, with priority given to transparent orders. In the wider interests of market integrity, this is a welcome step in the right direction, says Rhodri Preece. In a blog for the CFA Institute’s Capital Markets Policy Group, Preece says Canadian authorities have taken “a bold but welcome step to protect transparent orders and halt the trend towards greater use of dark liquidity by engendering more consistent rules across similar marketplaces.” It cites a joint Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) position statement which sets out four main recommendations. It says an exemption from pre-trade transparency requirements should only be available to orders that meet or exceed a minimum size threshold. The Canadian authorities also propose that two dark orders meeting the dark order size threshold should be able to execute at the National Best Bid and Offer (NBBO), but, in all other circumstances, dark orders would have to provide ‘meaningful’ price improvement. Thirdly, meaningful price improvement should be one trading increment and, finally, displayed orders should receive execution priority over same-priced dark orders on any given marketplace.

More Than Transparency Needed
Regulators considering reforms to the asset-backed securities (ABS) market should look beyond transparency requirements in their efforts to improve investor comfort in the ABS market, says a report from the C.D. Howe Institute. ‘Better Braking for ABS’ says reforms should require, as a condition for allowing a potential ABS issue to be sold on the public market, participation by third-party investors who have the expertise and incentive to assess ABS’ viability. The market for asset-backed securities – financial instruments backed by underlying assets such as mortgages – collapsed in 2007 as a cascade of downgrades and defaults brought turmoil to credit markets and the world economy. Authorities in the United States have since proposed sweeping changes to the ABS market. The Canadian Securities Administrators, representing provincial securities commissions, recently released a discussion paper proposing similar reforms which would require sharply enhanced transparency in ABS structures, CEO certification of the adequacy of such structures, and disclosure of previous asset repurchases by the securities’ sponsor.

Shareholders Vote For Pay
Canadian shareholders have backed every company proposal on executive compensation plans ‒ ‘say on pay’ ‒ this year. A report by Hugessen Consulting Inc., an executive compensation advisory firm, found ‘say-on-pay’ votes this year passed at all 71 major public companies that offered shareholders the opportunity to vote on executive compensation schemes. An average 94 per cent of shareholders supported the pay policies with only 11 companies reporting votes below the 90-per-cent support level. While many companies promised to hold ‘say on pay’ votes last year, most held their first votes this spring.

Canadians Call In Stressed
About 52 per cent of Canadians have called their boss and faked being sick to get out of their jobs. However, this puts Canadians behind China (71 per cent), India (62 per cent), and Australia (58 per cent), says data for Kronos Incorporated. Americans recorded the same percentage as Canada, followed by the United Kingdom at 43 per cent and Mexico at 38 per cent. France was at the bottom at only 16 per cent. The most popular reason for calling in ill was feeling stress and needing a day off, used by 71 per cent of Canadians. Employees in all countries except France said their employers should offer flexible hours to cut down on them skipping shifts. The French want to be able to take Fridays off in the summer and make the hours up during the week. Other countries, including Canada at 38 per cent, said getting more paid leave would also make a difference.

Measures Help Venture Capital
Just-announced measures which complement the Ontario government’s earlier decisions to establish the Ontario Venture Capital Fund and the Ontario Emerging Technologies Fund constitute an important step forward in addressing the critical issue of access to venture capital in Ontario for the high growth, high value-add small, and medium-sized businesses needed for the province’s future prosperity, says CVCA ‒ Canada’s Venture Capital and Private Equity Association. Ontario will encourage domestic and international corporations to invest in venture capital funds which will increase the supply of venture capital available to deserving entrepreneurs, thereby increasing the chances that these entrepreneurs will stay in Ontario and Canada, and not be forced to move abroad. As well, the angel tax credit measure will further increase the supply of risk capital to early-stage firms. A strong angel presence is an important component of the risk capital ecosystem and angels and venture capitalists often work hand in hand to grow the most promising companies. The CVCA says there is a shortage of venture capital in Ontario and in Canada and this shortage is constraining the growth prospects of promising companies that receive less than half the capital of their U.S. counterparts.

Bad News Hurts Small Business Confidence
The Canadian Federation of Independent Business (CFIB)'s Business Barometer Index dropped to 61.7 last month from its July level of 68.3, the lowest reading since July 2009. Ted Mallett, its chief economist, says although confidence suffered from recent market turmoil, owner views of actual current business conditions held up reasonably well. The largest index declines were in Ontario and Quebec which dropped eight points and five points respectively to near the 60 mark. Alberta businesses remain the country's most optimistic with an index score of 75. Saskatchewan follows at 69.1 while British Columbia, Manitoba, and Newfoundland and Labrador are clustered around the 65 level.

Experience And Satisfaction Drive Decisions
In the face of economic uncertainty, Canadian small businesses focus on customer experience and employee satisfaction to drive decision-making around managing rising costs, says the American Express ‘Small Business Monitor.’ It says small business owners find significant value in investing in customer and employee loyalty over short-term financial gain, with almost half (47 per cent) agreeing they would rather reduce profitability than risk losing customers due to price increases. When changes must be made that could impact the customer, including price increases, the report shows that 78 per cent of small business owners have taken steps to make price increases more palatable, including explaining the reason for the increase (61 per cent), extending payment terms (18 per cent), and offering discounts for paying early (16 per cent).

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September 5 , 2011

Profit Sharing Rules Under Review
The federal government is initiating a consultation on the tax rules that apply to employee profit sharing plans, says the Department of Finance. While profit-sharing plans are an important vehicle that allows business owners to align the interests of their employees with those of the business, the department says they are increasingly being used as a way to reduce or defer taxes on profits by funneling them to family members. It also says that some employers are using them to avoid making Canada Pension Plan contributions and to avoid paying Employment Insurance premiums on employee compensation. To ensure that these plans are used for their intended purpose, the government is reviewing the existing rules to determine whether technical improvements are required in this area. Comments can be made until October 25.

Do You Know Where Your Vital Documents Are?
In an emergency, could you access all of your vital documents and records easily and quickly? If your answer is no, you are not alone. Only 26 per cent of Canadians think their personal and financial information would be easy to access, says a poll for the Canadian Life and Health Insurance Association (CLHIA). Nearly half of Canadians consider their vital documents as "somewhat accessible" and 20 per cent of Canadians admit that their documentation would be difficult to find. The CLHIA has launched a free downloadable tool, the Virtual Shoebox, to assist in saving important personal and financial information in one place. It prompts people to enter the location of documents such as insurance policies, wills, and powers of attorney, as well as social insurance numbers, passport numbers, health records, home alarm codes, computer passwords, etc. Once completed, the CLHIA recommends printing out a copy of your Virtual Shoebox and putting it in a safe place, or saving an electronic copy in a secured folder to avoid identity theft. The Virtual Shoebox can be accessed at

Russell Changes Portfolio Names
Russell Investments Canada Limited is changing the name of the Russell Retirement Essentials Portfolio and the Russell Retirement Essentials Class Portfolio. They will now be known as the Russell Income Essentials Portfolio and Russell Income Essentials Class Portfolio. President and CEO David Feather says the change will better reflect the type of investors in the fund as well as the mandate of the portfolio. The Russell Income Essentials Portfolio was designed with an optimal asset mix of 35 per cent equity and 65 per cent fixed income to provide a reliable source of income that balances the priority of preservation of capital with the need for capital appreciation. It is suited for investors who want long-term, consistent cash flow, both leading up to, and throughout retirement. The Russell Income Essentials Class Portfolio is the corporate class version which may enhance the after tax income receive by investors and help them achieve their income goals at any stage of life.

Italy Revamping Austerity Measures
Italian Premier Silvio Berlusconi's government is revamping its proposed austerity measures in several ways, including scrapping a special tax on high-income earners. Government leaders decided to change some measures of the package designed to raise €45.5 billion ($65 billion) in new taxes and spending cuts to help Italy achieve a balanced budget by 2013. The revisions would scrap a tax of an extra five per cent on income over €90, 000 ($130,000) and 10 per cent over €150, 000 ($220,000).

Thinking Changing On SERP Letters
Until recently, employees/executives were very accepting of SERP letters or SERP top-ups with little thought given to the underlying deferred cash flow liability and protection offered. However, a string of high profile corporate bankruptcies and takeovers have changed that thinking, says Roy W. Craik, founder and chairman of Retirement Compensation Funding Inc. In the article ‘SERPs In Public Corporations ‒ Problems & Solutions’ (, he says managed SERP program can overcome some of the concerns about the security of these retirement arrangements. Managed SERPs can provide full security of SERP benefits, fairness to shareholders, and refundable tax account mitigation, he says.

CIBC Acquires American Century Interest
CIBC has completed the acquisition of a 41 per cent equity interest in American Century Investments, a U.S.-based asset management company. American Century manages approximately $111 billion in assets for a diversified mix of institutional, intermediary, and retail investor clients. "Our investment in American Century complements our strong Canadian asset management franchise and provides a platform for CIBC's growth internationally," says Gerry McCaughey, CIBC president and chief executive officer. "It also underlines our confidence in the long-term potential of the asset management business, which has attractive demographic and risk characteristics."

North American Confidence Declines
Investor confidence declined to 89.6 in August, down 12.9 points from July's revised reading of 102.5, says the State Street ‘Investor Confidence Indexfor August 2011. The most significant decline was exhibited by North American investors with confidence decreasing to 88.6, down 13.9 points from July's revised level of 102.5. Declines were more muted elsewhere with the European index sliding 4.6 points to 90.5, down from July's revised reading of 95.1. Amongst Asian investors, confidence decreased 0.6 points from July's revised level of 95.8 to 95.2. Diminished growth expectations, the downgrade of the U.S. sovereign debt rating, and continued difficulties around European sovereign financing, all combined to cause institutional investors to reduce their allocations to risky assets.

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August 29, 2011

Canadians Closely Monitor Investments
Two-thirds of Canadian investors were already concerned about the performance of their portfolios before the recent market turmoil, says a study from BMO InvestorLine. Though the survey was conducted prior to the recent volatility, the results show a majority of Canadians were already closely monitoring their investments, with 69 per cent saying they pay close attention to their investment portfolios throughout the year even during summer vacations. The study also revealed the top triggers that cause Canadians to pay more attention to their portfolios include personal situations such as household expenses, debt, and life events (49 per cent); sudden changes in the stock market (43 per cent); and political or economic unrest in parts of the world (35 per cent).

Replacement Inadequate For $150,000+ Earners
Retirement income replacement rates at annual incomes of $150,000 are inadequate, says Carl Rosen, vice-chairman of Retirement Compensation Funding Inc. In the article ‘Retirement Income Inadequacy Increases Significantly After $150,000’ (, he says the inadequacy of retirement income replacement rates for individuals earning $150,000 and above (where the OAS is clawed back) is established by the caps on Defined Benefit pension payments at retirement of approximately $89,000 per year plus the maximum CPP payment of approximately $10,000 per year which would provide a 66 per cent rate of income replacement of a $150,000 income, but only a 33 per cent rate of income replacement at $300,000 of annual income with smaller replacement rates at higher income levels. As the Defined Contribution and RRSP contribution rates are established presumably to result in retirement payments similar to the DB payments, declining retirement income replacement percentage can only be offset by corporations establishing Supplemental Executive Retirement Plans (SERPs) funded and secured utilizing Retirement Compensation Arrangement (RCA).

Gold/Suit Ratio Holds True
Sionna Investment Managers’ ‘Gold-to-Decent-Suit Ratio’ continues to hold true. Its research shows the cost for an ounce of gold in 1967 was $35, exactly the same price as a decent suit from Eaton’s, a prominent Canadian retailer at the time. In 1975, gold weighed in at $100 an ounce, a 1:1 ratio with a decent suit from Eaton’s during the same year. In 2009, the price of an ounce of gold in Canada soared to $950, or the price of a decent suit at leading tailors during the same 12 months. “The long-held rule in the marketplace is that an ounce of gold, historically, has been able to buy a decent suit. But then again, it may depend on where you shop,” says Mel Mariampillai, a portfolio manager who is part of the investment team that helped develop the concept.

New Funds Launched at Manulife
Manulife Mutual Funds has launched 15 new funds, further expanding and strengthening its global investment options.  The new funds include a Leveraged Company Class, a mutual fund should appeal to investors with high-risk tolerance, who are seeking maximum returns through a unique and opportunistic portfolio of primarily U.S. securities; a Value Balanced Fund/Class which seeks to provide long-term total return by investing primarily in Canadian and foreign equity and fixed income securities, with no asset, sector, or geographical constraints; and an Asia Total Return Bond Fund will seek to extract value through proprietary research of the developing Asian bond markets.

Lack Of Co-ordination Hurts Eurozone
A key factor contributing to Europe’s debt crisis was the eurozone’s lack of fiscal co-ordination, says Sherry Cooper, chief economist at BMO Financial Group. Speaking in a conference call about the ongoing financial crisis in Europe, she said “The fundamental flaw, in my view, in the construction of the eurozone is the absence of a co-ordination mechanism for fiscal policy. The time has come to revise the architecture of the eurozone towards deeper fiscal integration.” In particular, Cooper calls for the establishment of a single authority that can issue euro bonds and co-ordinate fiscal policy.

Vanguard Bringing ETFs To Canada
Vanguard Investments Canada Inc. has filed a preliminary prospectus with Canadian securities regulators for its first suite of Canadian-domiciled exchange-traded funds (ETFs). The line-up of six funds includes equity and bond ETFs. Vanguard Investments Canada Inc. will be the manager of the ETFs and The Vanguard Group, Inc. will provide portfolio management services to the ETFs. Vanguard has more than $168 billion in ETF assets and has ETFs listed on exchanges in the U.S., Mexico, and Australia.

NASAA Warns About Distressed Real Estate
Investment offerings involving distressed real estate have been on the rise following the collapse of the real estate bubble and the North American Securities Administrators Association has included these on its annual list of financial products and practices that can trap unwary investors. Many of the cons try to take advantage of investor worries about economic uncertainty and volatile stock markets. Headline-related investor complaints reported by state and provincial securities regulators include questionable claims related to gold and alternative energy as well as distressed real estate investing. It is also worried about so-called ‘mirror trading,’ which are automated trading programs that mimic the trades of other skilled or knowledgeable traders. NASAA also cites concerns with both legitimate private placements that are risky and fraudulent offerings.

Inflation Relationship Not Substantial
Gold has experienced a dramatic run up in price recently and attracted increasing interest in potential investment, says a Rogerscasey`s editorial board brief. ‘Gold: For Rings and Kings or Portfolios and Pensioners,’ says, however, gold prices do not appear to have any substantial relationship to actual inflation. They rose during the inflationary period of the late ’70s, “but when one looks at most recent times and at the even small bouts of inflation in the late ’80s, especially if one discounts some of the run up resulting from the newly found float of prices, it is hard to draw any conclusion based upon the data.” When it comes to market results, good markets are bad for gold and bad markets are good for gold. Yet, even that is not conclusive as during 1980 when gold peaked, markets were up more than 25 per cent. In 2003, gold was up and the S&P also was up 25 per cent and in 2010 markets were up nicely and so was gold. The other shoe, it says, is deflation which many have said is another period when gold prices should rise. However, while that did hold true in 2009, this is only one data point and that “is pretty flimsy historical evidence.”

Stable Economy Would Increase Flows
Relatively stable global economy could mean increased capital flows into the real estate markets of Europe and the U.S., says a Deloitte report. 'Commercial Real Estate Outlook: Top Five Issues in 2011' says this is likely to fuel investments in the U.S. and Europe, although Asia Pacific may experience a modest tempering of activity. It pointed out that a widespread recovery in the market was unlikely without the help of non-trophy assets. Lending to non-trophy assets needs to resume and refinancing options increase if such assets are to attract more buyers, it says.

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August 22 , 2011

Porsche Launches Luxury Product Line
Porsche has launched a new line of apparel and accessories made from materials used in its sports cars. The Porsche 917 collection includes items such as luggage fashioned from the same cloth as the 911 and Boxster convertible tops and mouse pads and organizers made from leather used in vehicle interiors. Items are sold under the umbrella of the Porsche Design Driver's Selection.

New Investments For Gold And Silver
Horizons Exchange Traded Funds Inc. and BetaPro Management Inc. are now offering Canadians a new way to invest in precious metals by listing what they say are the world’s first gold and silver spread exchange-traded funds. Their COMEX Long Gold/Short Silver ETF (TSX:HBZ) and t COMEX Long Silver/Short Gold ETF (TSX:HZB) offer two ways for investors to attempt to take advantage of relative price changes between gold and silver futures contracts. Both silver and gold prices have hit record highs over the last year. While the two metals may both go up or down in price, investors can still potentially profit from trading the spread between the two metals if the price differential between them contracts or expands. Both ETFs will be rebalanced daily to ensure they have equal exposure to its long index and short index to start each day.

Funds Merging at Manulife
Manulife Mutual Funds plans to merge several funds to streamline and strengthen its product line-up. There will be four trust fund mergers and two corporate class mergers. It says the initiative would ultimately lower the cost of fund administration for investors by spreading operating costs and expenses across a greater pool of assets. The terminating funds selected for merger were matched with continuing funds with consideration for similarities in fund mandates. The Diversified Canada Fund has been merged into the Canadian Focused Fund; the Canadian Balanced Growth Fund joins the Value Balanced Fund; the Global Monthly Income Fund is now part of the Simplicity Income Portfolio which is being renamed the Diversified Income Portfolio; and the U.S. Mid-Cap Fund is merged with the U.S. All Cap Equity Fund.

News Funds at CI
CI Investments Inc. has launched the Black Creek family of funds, offering the global investment expertise of Bill Kanko and Richard Jenkins of Black Creek Investment Management. The new funds are the Black Creek Global Leaders Corporate Class, Black Creek International Equity Corporate Class, and Black Creek Global Balanced Corporate Class. The funds, which are part of the company’s tax-efficient corporate class structure, are modelled on three funds sub-advised by Black Creek for Castlerock Investments. Both managers have more than 20 years of investment management experience with funds in the billions.

Blog Provides Expert Views
The Investor Education Fund, an independent authority on financial literacy, has launched a blogging program that pools Canadian financial experts from print, broadcast, and online outlets. The ‘Masters of Money’ program hopes to provide Canadians with expertise on the broadest range of personal financial issues. Each expert will contribute a series of blogs that provide guidance and perspective to help with personal finance issues ranging from budgeting to making sense of financial industry fees.

New Market Comes To Canada
Goldman Sachs Group Inc. is creating yet another stock market in Canada. It will bring its SIGMA X system to Canada. A so-called ‘dark pool,’ it lets buyers and sellers anonymously trade stocks that are listed on the Toronto Stock Exchange using pure price/time priority. The matching engine resides in a third-party Toronto, ON, data centre and subscribers can access SIGMA X Canada via direct FIX connectivity or a variety of EMS/OMS vendor providers.

ETF Assets To Near $5 Trillion
Global ETF assets under management are expected to grow as much as $4.7 trillion by the end of 2015, says a report by McKinsey & Co. ‘The Second Act Begins for ETFs’ projects that the next phase of growth will be characterized by growing competition, an increase in active ETFs, globalization of the ETF marketplace, and new competitive models. It notes that assets under management of exchange-traded products ‒ covering ETFs, exchange-traded commodities, and exchange traded notes ‒ have grown 31 per cent from 2000 to 2010, compared with assets under management growth of roughly five to six per cent for mutual funds during the same time period.

Complexity Of Linkages Neglected
Our understanding of the links between the financial sector and the rest of the economy needs to improve, says a report from the C.D. Howe Institute. ‘When Nightmares Become Real: Modelling Linkages between the Financial Sector and the Real Economy in the Aftermath of the Financial Crisis’ says that the complexity of these linkages have been neglected in the models typically used to guide monetary policy. The question is how to remedy deficiencies in policymakers’ economic models of the world, so that they can be used with confidence in guiding policy. While considerable progress is being made in modelling the complexities of the linkages between the financial sector and the real economy (the goods and services sectors), the economic models that central bankers use to do so remain stylized and do not cope well with shocks such as those of 2007-08. Policymakers need a range of models that complement each other and to use them circumspectly and with full understanding of their limitations. For the study click here

Tax Fairness Measures Needed
The federal government needs to introduce measures in next year’s budget that increase tax fairness and enhance investment choices for Canadians who are saving for retirement, says the Investment Funds Institute of Canada. In its pre-budget submission to the House of Commons Standing Committee on Finance, it offers input on the framework guiding the government’s proposed pooled registered pension plans and calls for changes to the rules pertaining to sales taxes and registered retirement savings plans. In the submission, IFIC says it supports the government’s proposed PRPP concept, which would allow small businesses, employees and self-employed workers to set up low-cost pension plans through private sector financial institutions. However, the PRPP framework should follow the patterns and rules of RRSPs, with some minor adaptations of pension rules to allow for locked-in provisions and employer contributions. It also wants the federal government to address the “unfair, non-neutral, and administratively complicated application of the goods and services tax (GST) and harmonized sales tax (HST) by applying a single, equitable, low federal-provincial rate of sales tax to management, advisory, and administrative services provided to funds consistent with the treatment of other investment products.

Vanguard Could Force Lower Fees
Vanguard’s arrival in to Canada will force made at home account companies to lower fees, says Moody’s Investor’s Service. With $1.7 trillion in properties worldwide, its low-cost model will put price pressure on Canada’s widespread mutual account players, says Moody’s Inform ‘Vanguard in Canada is Negative for Incumbent Asset Managers.’ It says the made at home account marketplace is dominated by 10 players ‒ the five large banks as well as IGM Financial Inc., Fidelity Investments Canada, Dynamic Funds, AGF Investments Inc., and Franklin Templeton. It cites data from Morningstar which shows Canada’s equity account MERs are more than twice that of the U.S.

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August 15 , 2011

Cash Allocation Popular For Gen Y Investors
More and more investors are turning to cash is what seems to be a long-term change in investing, says the MFS ‘Investing Sentiment Survey.’ Three in five investors cite fear about volatility as a reason they hold increasing levels of cash. They also want immediate access to their assets, and say it will take a meaningful change in either the economy or their personal circumstances to give them enough confidence to return to the equity market. Sixty-two per cent reported that cash is an important part of their investment strategy. Generation Y is leading the pack with this change as the highest group of cash possessors (30 per cent). The typical investor had 12 months' worth of cash on hand, and that cash allocation is increasing for more investors (24 per cent). A quarter of respondents said they liquidated a portion of their portfolio in 2010 or 2011 because of market concerns, with 52 per cent of Gen Y having liquidated. Only one-quarter of investors have reinvested all or most of the cash they liquidated in the past year and a half, while 35 per cent said they will reinvest in the next 12 months and 24 per cent said they would not reinvest in the next 12 months.

Saving For Financial Freedom Rather Than Retirement
Affluent investors ages 40 to 60 are not saving for retirement, but for financial freedom, says Hearts & Wallets. The study, ‘Acquiring Mid-Career Accumulators: Positioning Advice and Disclosing Fees with Upshifting and Downshifting Investors’ found many investors are not planning to retire, but to have a back-up option if they want to leave their job. The study also reports, however, that few providers have been able to change the dialogue from a singular focus on retirement to multi-dimensional freedom money.

Invesco Expands PowerShares
Invesco Canada Ltd. has introduced the latest addition to its PowerShares Funds family. PowerShares QQQ Class gives investors exposure to the U.S.-listed PowerShares QQQ one of the world's largest and most actively traded ETFs (exchange-traded funds). This ETF provides access to the 100 largest U.S. and international non-financial companies based on market capitalization listed on the NASDAQ. Additional benefits of the funds include U.S.-dollar hedging that lets investors be confident their investments won't be affected by changes in the Canadian dollar relative to the U.S. dollar, and greater tax efficiency as the fund is offered in the corporate structure, allowing for switches between funds in the same corporation on a tax-deferred basis. The PowerShares Funds family now features 21 funds across a range of sectors and asset classes.

Top Wage Earners Eco-Conscious
The five per cent of adults classified as ‘Super Greenies,’ those who engage in 10 or more green activities, are also some of the top wage earners, says Scarborough Research. These ‘Super Greenies’ recycle, use rechargeable batteries, and re-use plastic bags, but they also have a taste for luxury and are high-income and high-spending consumers. Super Greenies are 143 per cent more likely than the average adult to have a post-graduate degree, 91 per cent more likely to have a home valued at more than $500,000, and 60 per cent more likely to have a second home. They are 76 per cent more likely to have a household income in excess of $150,000.

Active Managers Beat Benchmark
Active managers in Canada found it easier to beat the benchmark in the second quarter of 2011 with 68 per cent ahead, up from 39 per cent in the first quarter and the highest level since the first quarter of 2010, says Russell’s ‘Active Manager’ report. Overall, it was a difficult market environment with the S&P/TSX Composite declining 5.2 per cent in the second quarter as the three largest sectors ‒ Energy, Materials and Financials ‒ all fell. However, active managers benefited from the strength in the top-performing Telecommunications sector which increased 8.9 per cent in the second quarter. The quarter was also favourable for value and growth managers, with 67 per cent of growth managers and 66 per cent of value managers beating the benchmark. That was up from 22 per cent of growth managers and 59 per cent of value managers in the first quarter of 2011.

Canadian ETF Assets Decline
Assets under management in Canada’s exchange traded fund industry declined slightly in the month of July, with Canadian equity funds suffering the greatest declines, says data from BlackRock Asset Management Canada Limited. Its ‘July 2011 ETF Landscape Report’ shows that Canada’s 200 ETFs represented $39.2 billion in assets under management in July, down one per cent from last month. Canadian equity ETFs experienced the greatest market retraction with $327 million in new outflows, representing a 4.1 per cent drop. The decline coincided with a 2.5 per cent dip in the S&P/TSX composite index during the month of July. Commodity ETFs also experienced a drop in assets, declining by $106 million, or 4.9 per cent. Fixed income funds enjoyed the greatest gains during the month of July, with assets under management growing by $368 million, or 5.3 per cent.

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August 8 , 2011

Entrepreneurship Desirable Option For Boomers
The ‘Boomerprenuer’ trend could quickly make its way across Canada in the coming years as millions of retirement age professionals are expected to launch ‘semi-retirement’ businesses. A report from the BMO Retirement Institute found that more than 52 per cent of Boomers surveyed said they are drawn to entrepreneurial activity because they like the idea of working for themselves. Only 11 per cent cited job loss as the reason for launching a new company and the most commonly cited source for funding for Boomers looking to start a business as their careers wound down is a withdrawal from personal savings (42 per cent). This ‘Boomerpreneur’ trend, where Canadians on the cusp of retirement are looking to realize their self-employment dreams, is expected to grow as Boomers start to retire in greater numbers over the next few years.

Upgrades Create Uber-bathrooms
It’s long been standard real estate advice that updating kitchens and bathrooms increase the value of a home. However, what now constitutes an ‘upgrade’ on an upscale house is like describing bathrooms on steroids. Here are some of the most luxurious features of 21st Century uber-bathrooms. Fully automated toilets, at up to $4,800, control every variable from spray and dry to playing music. One model allows you to select a low-flush setting, making it eco-friendly. A tricked-out walk-in shower can have up to 20 jets, two rain heads, and vapour sealing for a steam shower apparatus. The cost is up to $18,000.A top-line tub, including a rain head and installation, typically ranges from $5,000 to $15,000. High-end consumer electronics can range from speakers to ultra-thin television sets with waterproof remotes. Add in radiant heat floors, towel warmers, and a champagne holder for the bath tub encrusted with Swarovski crystals and 100 magnum bottles of Dom Perignon, 2002 vintage, make the bathroom experience complete.

Hughes Creates House Of Gold
Stuart Hughes, the British designer renowned for his lavish use of gold to create customized luxury items, has completed a luxury home featuring more than 200,000 kilograms of solid gold. He designed the residence as part of a collaboration with Swiss company exklusivHAUS – creators of unique custom homes – for a client requesting something out of the ordinary. Completion of the property took 5½ years and it cost $12.2 billion, making it the world’s most expensive home, surpassing a $2 billion Mumbai property owned by Indian businessman Mukesh Ambani. Located in Switzerland near the Italian border, it features platinum fixtures and fittings and flooring made from meteoric stone with shavings of original 65-million-year-old T-Rex dinosaur bones embedded in each tile. The 2,442 square metre property boasts eight rooms, a vast terrace, a basement with a special stone wine cellar, and a garage large enough for four cars. Other gold luxury items created by Hughes include a Rolls Royce Phantom, a luxury yacht, and an Apple iPhone 4.

Bullion Management Group Inc. is now offering Tax Free Savings Accounts directly through its administrator, RBC Dexia Investor Services. It means advisors no longer have to go through a third party to set up a TFSA and incur associated costs. Introduced in 2009 TFSAs allow Canadians to save money each year without paying any tax on the investment income (interest, dividends, or capital gains). Contributions of up to $5,000 per year are allowed. The new service makes it more convenient for advisors to purchase the BMG BullionFund and BMG Gold BullionFund when choosing a TFSA for their clients.

Fear Drives Markets Down
Global stock markets tumbled last week as a result of fears the U.S. may be heading back into recession and that Europe’s debt crisis is worsening. In Europe, major markets fell, adding to losses Thursday. London’s FTSE 100 declined 3.5 per cent to 5,393.14 and Germany’s DAX shed 3.8 per cent to 6,172.00. France’s CAC-40 lost 2.5 per cent to 3,238.80. Japan’s Nikkei 225 stock average slid 3.7 per cent to 9,299.88 and Hong Kong’s Hang Seng was down 4.6 per cent to 20,877.74. China’s Shanghai Composite Index lost 2.2 per cent to 2,626.42. At the close Thursday, the S&P/TSX composite index was down 3.4 per cent. The tumble follows the biggest one-day points decline on Wall Street since the 2008 financial crisis. The Dow closed Thursday down 512.76 points, at 11,383.68, the ninth-worst by points for the Dow. In percentage terms, the decline of 4.3 per cent does not rank among the worst. On Black Monday in 1987, for example, the Dow fell 22 per cent. The lack of agreement in Europe about debt and how to stabilize the euro and anticipation that the U.S. Federal Reserve will launch a new stimulus effort are being cited as the major reasons for the decline.

Emerging Markets Offer Opportunities
There have been few periods in the past with as many opportunities in emerging markets as there are today, says Karim Abdel-Motaal, GLG's co-head of emerging markets. Speaking at Man Investments Canada’s ‘Emerging Markets – Fact, Fiction and Hype’ session, he said the world is filled with interesting investment opportunities because it is “filled with mayhem.” Every three months it seems, he said there is blow-up going back to the crises in countries such as Greece and Ireland right up the current discussions over raising the debt ceiling in the U.S. In fact, in today’s environment, he suggested the U.S. might be the world biggest emerging market. In the emerging markets themselves, the concerns about inflation are not just because of rising food and gasoline prices. The money supply is increasing and while banks are increasing interest rates, it is not happening fast enough to contain the problem of emerging market equities not performing well.

Equities Post Negative Returns
For a third consecutive month, most equity funds in Canada posted negative returns in July, as the debt crisis afflicting Europe and now the United States continued to shake stock markets around the world, says preliminary performance data from Morningstar Canada. Only seven of its 24 Canada fund indices’ that track equity categories posted gains for the month. The best-performing fund index was the one that measures the Precious Metals Equity category, which gained 4.6 per cent in July. Also among the top performers were the fund indices that track Asian equity funds as these funds benefited from the yen's sharp increase relative to the Canadian dollar. The worst performer among all fund indices in July was Financial Services Equity, which lost 5.3 per cent.

Landscape Being Rapidly Altered
A robust Canadian fixed income market is attracting sell-side investment at such a furious pace that a historically stable competitive landscape is being rapidly altered and the group of Big Five Canadian fixed income dealers could be on its way to expanding to a Big Six, says Greenwich Associates. Canadian fixed income volume increased approximately 12 per cent from 2010 to 2011 after surging 42 per cent the prior year. That consistent growth helped sustain an inflow of investments from both domestic and foreign financial service firms. Foreign firms are looking to capitalize on Canada's fixed income boom by meeting institutions' growing demand for non-domestic investments. As they work to bring their global platforms to Canadian investors, banks from the United States and Europe are opening or expanding offices in Toronto and hiring aggressively. The Big Five Canadian bond dealers saw their aggregate market share eroded by the continuing efforts of their lower-ranked competitors, ceding 1.8 percentage points of market share to the rest of the market.

Base Pay Increasing 3.1 Per Cent
Canadian employers project average base pay increases of 3.1 per cent for 2012, says preliminary compensation planning data from Mercer’s ‘Compensation Planning Survey.’ Employers report they awarded pay increases of three per cent in 2011. This is up from the 2.7 per cent awarded in 2010 and the two per cent awarded in 2009. Its ‘What’s Working’ survey of employee views on work showed that employees consider base pay the most important part of their employment deal by a wide margin, but only 53 per cent say they are satisfied with their base pay. Slightly more (58 per cent) feel they are paid fairly given their performance and contribution to the organization.

Canadians Feel Unsettled
Ongoing market volatility and global unrest continue to leave Canadians feeling unsettled about retirement, says the Russell ‘Financial Health Index.’ In fact, second quarter results show a strong decline in financial health, to the lowest level since the inception of the online tool in late 2008. Two factors stood out as key concerns for Canadians about retirement and had a noteworthy increase over last quarter ‒ having a reliable source of income and having sufficient income to cover essentials. To a lesser extent, three other factors also contributed to the decline of the index this quarter ‒ leaving assets/inheritance to beneficiaries, maximizing tax efficiency of investments, and having reliable, trustworthy advice.

Business Confidence Slowly Rising
Confidence among Canada's small and mid-sized businesses rebounded in July, rising two points to 68.3, says the monthly ‘Business Barometer’ from the Canadian Federation of Independent Business. Alberta businesses are still the most optimistic (at 70 points), while Prince Edward Island and Nova Scotia businesses are the least (low 60s). Short-term employment plans are also quite positive with 18 per cent of business owners saying they will add to full-time staff levels in the next three or four months versus only 10 per cent who expect to cut back. Concerns about the price of energy remain the biggest cost concern for owners, but that too has moderated in recent months. Measured on a scale between zero and 100, an index level above 50 means owners expecting their businesses' performance to be stronger in the next year outnumber those expecting weaker performance. According to past results, index levels normally range between 65 and 75 when the economy is growing.

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August 1 , 2011

Compensation Disclosure Required
The Canadian Securities Administrators (CSA) is implementing amendments to its ‘Statement of Executive Compensation’ which will provide investors with enhanced information on the key risks, governance matters, and compensation practices of publicly listed companies. A key amendment, which will come into effect October 31, is to require public companies to disclose to investors whether their boards of directors adequately considered the implications of the risks associated with the company’s compensation policies and practices. Public companies will also be required to provide investors with greater details on the fees paid to outside compensation consultants.

Scotia Gives Finance Tips for New Couples
Financial planning is an important area of consideration for soon-to-be-wed couples, but sometimes goes unconsidered, says Scotia Private Client Group. For those re-marrying, it is likely each partner will come to the marriage with various levels of wealth and debt and, perhaps, children from a previous union. It advises couples to discuss and plan important factors ahead of time to avoid legal issues or family turmoil. For example, couples should discuss where each partner stands financially as well as their expectations for how finances will be managed within the relationship. As well, they need to determine if a pre-nuptial or co-habitation agreement is necessary. Whether or not they choose to marry, couples are considered common law in some provinces after one year of co-habitation. This means they could face many of the same legal implications as married couples, making it equally important to discuss these same questions.

Report Focuses On Lack Of Training For Investment Brokers
Brokers need better training and supervision, says a report by the U.S. Securities and Exchange Commission on sales practices for structured products to retail investors. The report identifies common weaknesses seen in the sales of structured products and recommends measures brokers can take to better protect retail investors. There is evidence from the report that some firms have recommended unsuitable products, traded at prices that were disadvantageous to retail investors, omitted material facts about products being offered to investors, and engaged in questionable sales practices.

Mobius Heads Frontier Fund
Franklin Templeton Investments Corp. has launched the Templeton Frontier Markets Fund, an emerging markets fund to be managed by investing guru Mark Mobius and his team. The fund will invest at least 80 per cent of its net assets in frontier markets ‒ countries with smaller economies that are in the early stages of development. These 61 countries show strong economic growth and include Bangladesh, Sri Lanka, Azerbaijan, Romania, Jordan, Tunisia, Columbia, Paraguay, Kenya, and Zambia. Mobius, lead manager of the fund, says "between 2001 and 2010, nine of the 10 fastest-growing economies in the world were frontier markets, places such as Kazakhstan, Nigeria, and Mozambique." He has spent more than 40 years working in emerging markets all over the world.

Links Found Between Sustainability And Shareholder Value
A study by Sustainalytics has found strong links between sustainability performance and shareholder value for companies in the mining sector. ‘Sustainability and Materiality in the Natural Resource Sector: Mining' looks at whether environmental and social practices impact competitiveness for companies within the mining sector. The study finds that effective management in four key areas of sustainability was positively linked to shareholder value ‒ responsible community relations, employee and labour relations, environmental operations, and climate change.

Cash Best Tail-risk Strategy
Giving investment managers leeway to move into cash when markets become pricey is the best tail-risk strategy available, says James Montier, a London-based portfolio manager with GMO LLC. In a white paper, he contends that institutional investors seeking black swan protection may now be looking for returns in all the wrong places. Calling cash “a severely underappreciated tail-risk hedge,” he says in the hands of skilled managers it offers the most organic solution to the thorny issue of when investors should add such protection and at what cost.

Neutral Interest Rate Difficult To Determine
While the Bank of Canada expects the Canadian economy to return to full employment by the middle of 2012, its critics have stressed the need to raise interest rates to a ‘neutral’ value by then to keep inflation stable. However, defining this neutral level, normally associated with full employment, is a bit of a smoke and mirrors game, says a report from the C.D. Howe Institute. In ‘Natural Hazards: Some Pitfalls on the Path to a Neutral Interest Rate,’ David Laidler, a monetary economist, questions the theoretical concept of the ‘natural interest rate’ that underlies the idea that there is a well-determined and stable neutral value for market rates. He notes that much discussion of this natural rate "presumes, first, that such a value is grounded in the basic structure of the Canadian economy and, second, that this structure is stable over time, so that the neutral interest rate can be inferred from past data." Today's monetary policy models treat the Canadian economy as if its output was only one thing and its people all alike in their economic decision-making. In the real world, spending decisions depend on expected returns in specific lines of business, which are diverse and variable over time, and economic fundamentals are not their only determinants. "The neutral interest rate's value is hence extremely difficult to estimate, making other policy indicators highly relevant," says Laidler.

Investor Confidence Up Very Slightly
Investor confidence rose very slightly in July to 101.1, up 2.2 points from June’s revised level of 98.9., says the State Street ‘Investor Confidence Index for July 2011.’ Confidence declined marginally among North American investors, whose reading fell 1.3 points to 99.2 from June’s revised level of 100.5. A similar decline was recorded for Asian investors, with the reading there falling 2.1 from June’s revised level of 92.2 to 90.1. After a weak spell in recent months, European investor confidence continued to increase, rising 10.5 points to 98.1 from June’s level of 87.6. Looking regionally, it seems that European investors took to heart the European Monetary Union announcements that could prompt an orderly resolution of peripheral debt concerns. In the U.S. and Asia, these positive European developments had much more muted impacts on portfolios, with the overall mood remaining cautious, especially around the U.S. debt ceiling and credit rating.

Consumer Confidence Waning
After three months of gains, the TNS Consumer Confidence Index dropped in July from 100.3 to 99.7. The ‘Present Situation Index,’ which measures how people feel about the economy right now, was up very slightly, from 100.1 to 100.3 The ‘Buy Index,’ which measures the extent to which Canadians feel that now is a good time to purchase a ‘big ticket item’ such as a car or major household appliances, has dropped more than two full points, from 95.4 to 93.3, losing the gains that it made when people were feeling better in the spring. The ‘Expectations Index,’ which measures people's outlook for the economy six months from now, remains unchanged at 105.4.

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July 25, 2011

Executive Pensions Changing
Companies are quickly changing pension packages for FTSE 100 executives, says the ‘LCP Executive Pensions Survey 2011.’ It shows that FTSE 100 companies are offering executives a cash supplement instead of a pension scheme. New executives are likely to be offered a cash supplement instead of a company sponsored pension scheme as cash is more flexible and allows executives to make pension contributions within the limits of the UK government’s £50,000 ceiling on tax relievable pension contributions. A cash supplement is typically 25 per cent of basic salary whereas the cost of a pension provided from a final salary pension scheme would normally be much higher, averaging 60 per cent of basic salary for executives.

Canadians Believe In Emerging Markets
Canadians believe the emerging markets – in particular Asian nations such as China and India – represent the best investment opportunities, says research from Franklin Templeton Investments Corp. It found a significant proportion of Canadians (38 per cent) think emerging markets represent the greatest investment opportunity over the next decade. Canada placed second (25 per cent) followed by developed international markets such as the United Kingdom, Germany, and Japan (six per cent). The United States was chosen by only three per cent of respondents. Within the emerging markets, 45 per cent of Canadians who currently have investments picked Asia (including East, South, and South East Asia) as the region showing the greatest promise. Unfortunately, few Canadians are taking full advantage of the emerging markets opportunity within their investment portfolios, says Don Reed, president and chief investment officer of Franklin Templeton Investments Corp. At its ‘’Annual Investment Forum,’ he said dollars invested in emerging market equities account for only 2.3 per cent of the value of equity funds owned by Canadians. In comparison, emerging market equities account for 9.6 per cent of all equities held by the Canada Pension Plan Investment Board, more than four times as much as Canadian retail investors.

Investors Leery Of Europe
Investors are increasingly leery of Europe, but the global economic outlook remains positive, says the BofA Merrill Lynch ‘Survey of Fund Managers for July.’ It found that a net 19 per cent of global fund managers and asset allocators believe that the global economy will strengthen in the next 12 months. This number has grown for two successive months from a net 10 per cent in May. However, growing fears over sovereign debt have pushed European economic pessimism to its highest level since the depths of the credit crisis. Nearly two-thirds of investors identified EU sovereign debt funding as the number one tail risk (up from 43 per cent in June). European investors have also sharply reduced positions across many sectors, particularly banks. A net 57 per cent of investors from Europe is now underweight banks (versus 33 per cent in June).

SMEs Complacent About Threat
Despite a seemingly unending stream of media stories on the increase of online data security breaches, research by Trend Micro reveals that while the majority (68 per cent) of Canada's small and medium sized businesses (SMEs) believe a threat exists to the security of businesses' online information, most are complacent about the IT safeguards at their companies and tend to underestimate the consequences of an Internet security breach. The ‘2011 Trend Micro Canada SME Survey’ shows SME views are equally divided about whether the threat arises from companies not taking the necessary precautions to protect their data (38 per cent) or because existing software does not provide effective protection (33 per cent). The remaining businesses surveyed say both are equally responsible, or are unsure. As well, it found there is not yet widespread awareness of cloud computing. The limited number of Canadian SMEs who have adopted cloud computing were driven by a desire to spend less time and money on IT infrastructure. Most SMEs believe cloud represents the future of IT, but few think it will become the common standard in the next 12 to 18 months.

End Of QE2 Not ‘Earth Shattering’
The end of QE2 is not “earth shattering news,” says Ryan Dembinsky, of Rogerscasey. In the paper ‘Bidding Adieu to QE2,’ he says although the Federal Reserve’s second round of quantitative easing (QE2) wound down at the end of June, the debate continues with regard to the effectiveness of this controversial support mechanism and what will happen to financial markets without a massive built-in buyer of Treasury debt. QE2 injected a massive amount of liquidity into the system, which in turn served as a support for risk assets. Without the Fed as a major asset buyer and provider of liquidity, the question remains as to what will happen to risk asset prices, interest rates, and ultimately economic growth. However, since both the Fed’s intentions and the timeframe for the program’s end have been entirely transparent, “we do not expect any overwhelming short-term impacts.” Over the course of the next 12 months, the retraction of the excess liquidity and economic stimulation that QE2 provided will introduce higher volatility to risk assets and interest rates, reduced market liquidity, and a hindrance on economic growth.

Yacht Costs £3 Billion
An anonymous Malaysian businessman has spent £3billion on a yacht made from solid gold and platinum. The History Supreme was assembled using 100,000 kilograms of the precious metals throughout the boat. The base of the vessel is wrapped in solid gold and the metals are found on the deck, rails, and anchor. Its luxurious master bedroom is adorned with platinum and has a wall feature made from meteoric stone and a genuine T-Rex dinosaur bone. The History Supreme is the handiwork of Liverpool-based jeweller Stuart Hughes, who took three years to complete it.

Aussie ETF Launched
Jovian Capital Corporation and its subsidiaries Horizons Exchange Traded Funds Inc. and BetaPro Management Inc. have launched the Horizons Australian Dollar Currency ETF, an exchange traded fund which offers investors direct access to foreign currency investing. The ETF seeks to reflect the price in Canadian dollars of the Australian dollar, net of expenses, by investing primarily in cash and cash equivalents that are denominated in the Australian dollar.

Adventures In Fractional Ownership
For those who want to own a cottage, but don’t see the point in buying and maintaining another property, fractional ownership may be a solution. In ‘Adventures In Fractional Ownership’ (, lawyer and author Sheryl Smolkin ( describes her experience with this form of vacation property ownership.

Money Pours Into Hedge Funds
Despite volatile negative performance, investors poured $29.5 billion into hedge funds in the second quarter, an increase of 1.1 per cent on a quarter-to-quarter basis, says Hedge Fund Research. For the six months ended June 30, net inflows to hedge funds totalled $62 billion, the highest half-year inflows since the second half of 2007, when net asset inflows were $75 billion. In comparison, net inflows in calendar 2010 totalled $55.5 billion. Hedge fund assets now stand at a record $2.044 trillion.

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July 18, 2011

Millionaires Keeping High Net Worth With Real Estate
High net worth individuals are increasing their investment in real estate, says a 'World Wealth Report.' The percentage of their combined global wealth that was invested in real estate rose to 19 per cent last year, which was well off the low of 14 per cent in 2007. The report also showed that despite ongoing economic challenges, the total wealth of the world's millionaires grew by almost 10 per cent in 2010, in contrast to the world's GDP, which grew by just over five per cent. Asia, the region with the highest number of millionaires (3.3 million), has been particularly aggressive in the past two years in pursuing returns in real estate, which accounted for 28 per cent of their aggregate portfolio at the end of 2009 and 31 per cent last year.

South-Central African Country Most Expensive For Expatriates
Expatriates living in Luanda, Angola, face the highest cost of living, says Mercer's '2011 Cost of Living Survey,' which put the city in the top position. Tokyo remains in second position and N'Djamena in Chad is in third place, followed by Moscow, Russia; Geneva, Switzerland; Osaka, Japan; Zurich, Switzerland; and Hong Kong, China. New entries in the top 10 list of the costliest cities in the world are Singapore, China; and Sao Paolo, Brazil. Karachi, Pakistan, is ranked as the world's least expensive city. Recent world events, including natural disasters and political upheavals, have impacted the rankings for many regions through currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices.

Big Spenders Becoming Cautious With Purchases
Consumers are being more conscientious when it comes to splurging on luxury items such as jewelry and are, instead, placing more importance on craftsmanship, the use of locally grown products, altruism, and value for money. A 'New Consumer Realities' report by Boston Consulting Group found jewelry buying among consumers is being affected by the notion that it is frivolous and superfluous. Consumers instead are looking for products that have health, safety, and environmental benefits. This cautious jewelry buying habit coincides with the statistic that reveals 48 per cent of Australian respondents plan to cut their spending over the next 12 months, while the UK, Greece, and Brazil also reporting more cautious spending patterns.

Canadian Men Spend On Cars, Boats, And Suits
Think about paying $6 million for a Mercedes-Benz Maybach Exelero car. How about owning a 66,395-square-foot home, complete with a sports pavilion? While average Canadians continually hear from government about the fragility of the economy, young Canadian men have been cited in studies as among the most prolific spenders on high-end items such as expensive clothes and cars. McGill University professor Tom Naylor urges big spenders to get a better grip on rampant consumerism in his book 'Crass Struggle: Greed, Glitz and Gluttony in a Wanna-Have World.' Luxury spending has skyrocketed, especially in China and the United States, even as the world struggles with a debt crisis. Naylor says real incomes have been pretty much flat for a majority of people for the last 30 years, however the level of consumption keeps rising and transfers into consumer and mortgage debt. He makes it clear he's worried about the social cost of the excess, citing the environmental and human misery that comes from mining such items as diamonds and gold, and points out that the lust for luxury poses more risks for average consumers than it would appear.

Better Service Needed By Money Managers
Clients are more cautious and less trusting, and demanding better service from their advisors to provide added value and performance, says PwC's '2011 Global Private Banking and Wealth Management Survey.' Some key industry topics emerged including client evolution, regulation impact, operational excellence, and effective change. The survey found regulatory agendas are continuing to challenge existing business models, demanding stronger risk management to protect consumers. Also, far greater operational efficiency and effectiveness are required in the form of services, outsourcing, and new technologies to improve the overall quality of the client experience.

Emerging Markets Best Opportunity
Canadians believe China, India, and other emerging markets present the best investment opportunities in the current market environment, says a survey by Franklin Templeton Investments Corp. It found 38 per cent see emerging markets as the greatest investment opportunity over the next decade. A quarter of respondents identified Canada as the market with the best opportunities. Canadians are less confident about the prospects in other developed markets. Just six per cent see opportunities in Britain, Germany, and Japan, and only three per cent in the United States.

Gold Can Benefit Portfolios
Higher allocations to gold could benefit portfolios in both inflationary and deflationary scenarios, says a study by Oxford Economics. 'The impact of inflation and deflation on the case for gold' says that gold performs relatively well compared with other assets in a high-inflation scenario as well as in a deflationary period. Because of its lack of correlation with other financial assets, the report shows that gold has an important role to play in stabilizing the value of a portfolio, even where the conservative assumption of a modest negative real annual return is made. As well, gold offers protection against extreme events such as high inflation and financial market distress.

Income Bond Fund Launched
RBC Global Asset Management has launched the BlueBay Global Monthly Income Bond Fund, sub-advised by BlueBay Asset Management. The fund is available for purchase by individual and institutional investors in Canada. It invests primarily in global high yield debt, emerging market government and corporate debt securities, and global convertible bonds. Acquired by RBC in 2010, BlueBay Asset Management is a UK-based specialist manager of fixed income credit, offering long-only and alternative products across the major sub-asset classes of emerging markets, high yield, loans, convertibles, and investment grade bonds.

Accomplishment, Control Satisfy Business Owners
Almost 90 per cent of the small business owners say they are satisfied with the balance between their personal and professional pursuits, says a poll by Intuit Canada. The majority (84 per cent) also feel they have a better balance than if they worked for someone else. Work-life balance is often measured by comparing the amount of time spent on the job against time spent on personal pursuits. However, 97 per cent of small business owners said their view differs from the norm, as 46 per cent work more than 40 hours a week. Their sense of ownership over their work and ability to set their own schedule help contribute to their sense of work-life balance.

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July 11, 2011

SERP Not Standalone Document
The Ontario Court of Appeal has dismissed an appeal, upholding a lower court's earlier declaration that an employee who was terminated at age 52 was not entitled to an unreduced pension at age 62, says Aon Hewitt’s ‘Radar.’ In Revios Canada Ltd. v. Creber, the appellant was a member of an employer registered pension plan and a Supplemental Executive Retirement Plan (SERP) designed to top up benefits on retirement. According to the plan provisions, members with at least 10 years of continuous service could take early retirement at age 55 and were entitled to a deferred pension. If taken before age 65, but not before age 62, this deferred pension would be unreduced. As a result of a reference to early retirement in the SERP, the appellant argued that he was entitled to receive an unreduced deferred pension at age 62, despite the fact that his employment was terminated before he had attained age 55. The court found the plan was the principal pension document with the SERP only providing "supplemental" benefits. As such, the SERP could not create substantive rights that were at odds with the conditions for entitlement created by the plan, such as the right to receive an unreduced deferred pension when termination occurred before age 55. As noted by the court, "the fact that the member can choose to begin receiving his or her pension early is not the same thing as early retirement.”

Employee Share Purchase Tax Credit Revised
Manitoba is providing new employee share purchase tax credit for employee purchases of shares through a registered employee share ownership plan (ESOP). Aon Hewitt’s ‘Radar’ says the amount of the credit is equal to 30 per cent of the cost to the employee of all shares in the capital stock of an issuer issued to the employee in a taxation year. The government may also make regulations prescribing requirements that must be met for an ESOP to be eligible for registration, as well as the duties and requirements for issuers and plan administrators, such as recordkeeping and reporting.

Ottawa-Gatineau Family Income Highest
Ottawa, ON/Gatineau, QC, was the census metropolitan area with the highest median total family income ($89,410), followed by Calgary, AB ($88,410), Edmonton, AB ($86,250), and Regina, SK ($83,550), says Statistics Canada. Using data derived from 2009 personal income tax returns, it found the largest percentage increases in median total family income between 2008 and 2009 in metropolitan areas were in St. John's, NL (five per cent), Saint John, NB (2.9 per cent), Ottawa-Gatineau (2.3 per cent), Regina (2.3 per cent), and Saguenay, QC (2.1 per cent). Notable decreases in median total family income occurred in Greater Sudbury, ON (5.7 per cent) and Windsor, ON (4.9 per cent).

Complex ETFs Concern Regulators
Securities regulators say they are concerned that investors may not understand how exchange-traded funds, particularly complex leveraged and inverse ETFs, work, or the potential risks they may face. The North American Securities Administrators Association says that not all ETFs are created equal and while some traditional funds may be appropriate for long-term investors, others, including exotic leveraged and inverse ETFs, may require daily monitoring. Its advisory outlines several risks associated with ETFs including a possible lack of liquidity; fees, particularly in leveraged and inverse ETFs, which must be traded all the time, therefore incurring substantial brokerage fees and commissions; and tax consequences, noting that leveraged and inverse ETFs may be less tax efficient due to daily resets that can result in significant short-term capital gains that may not be offset by a loss.

Wealth Actually Business
Affluent families incorrectly view their hard earned wealth as a ‘Savings Pool’ instead of a ‘Wealth Business,’ says Mark Barnicutt, president of HighView Financial Group.In the article ‘Welcome To The Family Wealth Management Business’ at, he says in many cases, their investable asset base is of a sufficiently significant size and complexity that it is beyond being considered a traditional savings pool earned from employment activities. Instead, it should be viewed as a ‘mini’ wealth management business that is a bi-product of their successful entrepreneurial business activities. As a result, they need to manage their wealth like any other business.

Scotia Partners With TIGER 21
Scotia Private Client Group has entered into a strategic partnership with TIGER 21 (The Investment Group for Enhanced Results in the 21st Century), a peer-to-peer learning group for high net worth investors. Through the partnership, members of TIGER 21 Canada will have the ability to take advantage of investment opportunities with Scotia Private Client Group's borrowing platform. The ‘Total Wealth Credit Solution’ is a flexible credit product that simplifies borrowing by allowing members to consolidate different types of investment holdings as collateral for a single investment line of credit.

Investor Confidence Slips
After a brief recovery in May, State Street’s ‘Investor Confidence Index’ fell back below 100 to settle at 99.2. This represents a decline of 5.1 points from May’s revised reading of 104.3. The decline was most pronounced among North American investors whose confidence fell 5.8 points to 100.4 from May’s revised level of 106.2. Asian investors also reduced their risk appetite with investor confidence falling 3.7 points to 93.2 from a revised May reading of 96.9. Perhaps somewhat surprisingly, European investor confidence rose 8.5 points from May’s revised level of 79.4 to reach 87.9.

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June 27, 2011

RIM Duo No Longer Billionaires
BlackBerry co-CEOs Jim Balsillie and Mike Lazaridis no longer are among the ranks of the world's billionaires. The plunge in Research In Motion Ltd. shares in recent several weeks has seen their wealth drop by more than half. Both made the Forbes annual ranking of the world's billionaires in March when RIM was trading at more than $60 a share. Then, Lazaridis was worth $1.9 billion and Balsillie at $1.8 billion. Today, they are worth about $800 million each.

Canadian HNWIs Grew Fastest
The population of high-net worth individuals (HNWI) grew faster in Canada than in most other leading countries in 2010, says a report from Merrill Lynch Global Wealth Management and Capgemini. The report defined as individuals high-net worth individuals as those with investable assets of $1 million or more excluding primary residence, collectibles, consumables, and consumer durables. The number of these individuals in Canada grew from 251,000 in 2009 to 282,000 in 2010, a 12.3 per cent year over year growth rate, surpassing all of the nations that rank in the top 10 for high-net worth individuals populations. Canada remains in seventh spot in the overall rankings, which are led by the U.S, with 3.1 million high-net worth individuals. Japan is a distant second with 1.7 million and Germany ranks third with 924,000.

Beefed Up Disclosure Proposed
Advisors and dealers are facing beefed-up disclosure requirements related to the costs and performance of their clients’ investments under rules proposed as part of the second phase of the Canadian Securities Administrators’ ‘Client Relationship Model.’ The proposals would require dealers and advisors to provide investors with “clear and complete disclosure of all charges associated with the products and services they receive, and meaningful reporting on how their accounts perform.” They would be required to provide each of their clients with annual reports on the dollar amount of charges paid for the products and services provided by the dealer or advisor and how well their investments have performed that year and over longer periods. The cost disclosure would need to include details on the compensation received by an advisor and registered firm, particularly relating to trailing commissions and deferred sales charges.

Past Performance Leads To Disappointment
Rogerscasey continues to believe that selecting asset managers based on past performance, especially within the equity space, will lead to disappointing results. Its 2010 performance persistence study shows that within the equity universe, four of the six peer groups failed to demonstrate persistence. One of the most notable observations of the study is the lack of persistence for U.S. small cap growth and value managers. Clearly, it says, investors should steer clear of relying on trailing five-year performance numbers when selecting U.S. small cap equity managers. Three peer groups that have not historically demonstrated persistence did so in 2010 ‒ U.S. core plus fixed income, U.S. large cap value, and U.S. large cap core.

Stocks More Volatile In Long Run
When taking an investor’s perspective, stocks are, contrary to conventional wisdom, more volatile in the long run than the short run, says Lubos Pastor, Charles P. McQuaid Professor of Finance at the Booth School of Business, The University of Chicago. In a session ‘Are Stocks Really Less Volatile in the Long Run?’ at Dimensional Fund Advisors' ‘Toronto Investment Forum,’ he said the belief that stocks are less volatile over long investment horizons is based on the premise that return predictability is possible as a result of mean reversion. However, he contends the observable predictors imperfectly deliver the conditional expected return and the effect of mean reversion is more than offset by the combined effects of various uncertainties faced by investors. This means, he said, long-horizon investors need to reconsider their stock allocations.

Auspice Launches Energy Program
Auspice Capital Advisors Ltd. has launched its ‘Energy Program,’ a managed futures strategy focused on global energy commodities. The program represents an opportunity for investors to access the institutional experience of its portfolio managers who previously managed energy portfolios for global energy company Shell Trading. The strategy is designed for investors looking to capture price movements in global energies such as crude, natural gas, heating oil, and also non-traditional energies such as carbon emissions and bio-fuels.

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June 20, 2011

Stock Based Compensation Creates Volatility
Stock based compensation for senior executives was supposed to align shareholder interests with those of the company’s management when they were first put in place in the mid-1970s. However, all they really do is cause volatility in stock prices and 50 years from now this period will be considered quaint because of the use of the practice, says Roger Martin, dean of the Rotman School of Management and a professor of strategic management. Speaking at the Canadian Coalition for Good Governance’s annual general meeting, he said if stock based compensation did work and did align these interests, the results should bear this out. However, since they first started being used, shareholder return is 15 per cent lower than in the previous era. As well, there have been two historic financial meltdowns. Again, in the previous era while there were downturns, they were nothing of the magnitude of 2001 and 2008. The problem is that the practice makes stock prices rise based on shareholder expectations, not company performance. And it means executives realize that they need to manage expectations to cash in on their options, not manage the company, he said.

Rules For IPPs May Tighten
The Canada Revenue Agency (CRA) is tightening the rules for Individual Pension Plans (IPPs), says Eva Krasa, of Borden Ladner Gervais. While CRA has a successful record in the courts in attacking aggressive tax planning arrangements involving IPPs, it is particularly concerned when they are established for an individual by their corporation to facilitate the transfer of the commuted value of a pension entitlement. If the proposals in the recent federal budget are adopted, they could, under certain circumstances significantly reduce the tax advantages of future new IPPs. IPPs are pension schemes for executives, business owners, and incorporated professionals that offer greater contributions, deductibility of investment costs, considerable past service contributions at implementation, and significant additional contributions after commencement of pension by the employer.

Canada Will Outperform
Canada’s economy will continue to outperform those of most big advanced nations, says the International Monetary Fund. However, it also warns that global risks are intensifying. Its global forecast shows economic growth lower for both advanced and emerging nations this year. For Canada, the forecast has changed little since April, with growth this year at 2.9 per cent and next year at 2.6 per cent. Among G7 nations, only Germany does better with an expected 3.2 per cent expansion this year. The second quarter of this year ‒ the March-June period ‒ is far weaker than the first, but it is hopeful the setback is temporary. However, it warns of a heightened potential for negative consequences from the European debt crisis and other negative legacies from the 2008-2009 financial crisis. These risks, if they materialize, could seriously impair funding conditions for banks and corporations.

Retail Investors Get Dark Pool
Alpha Group is launching a dark pool aimed at retail investors. IntraSpread will be available for trading June 20. Available for all securities that trade on Alpha, it will allow its subscribers to match immediately tradable orders with dark orders resting on Alpha. The benefit for liquidity providers using dark orders is the ability to access un-intermediated retail flow, while buy-side traders are gaining access to a new liquidity pool, in addition to the upstairs market and the lit markets. Alpha Group operates an alternative trading system for Canadian securities and is owned by nine of Canada’s leading financial institutions.

Canadians Keep Bulk Of Money Here
Almost one-third (30 per cent) of high net worth Canadians (those with investable assets of $1 million or more) were not born in Canada, says a study by BMO Harris Private Banking. However, it also confirmed that 96 per cent of affluent new Canadians keep the bulk of their wealth in Canada. It also found while the majority of high net worth Canadians keep the majority of their money in Canada, 37 per cent allocate a portion of their wealth outside the country. It says that more affluent Canadians are putting their money into tax-efficient investments than in the past (92 per cent today versus 73 per cent in 2008 and 67 per cent in 2005) and less than half feel that they are treated fairly when it comes to taxation.

Vanguard Offers Active EM Fund
Vanguard has introduced an actively managed emerging markets equity fund. The Emerging Markets Select Stock Fund will employ four global advisory firms ‒ M&G Investment Management Limited, Oaktree Capital Management, L.P., Pzena Investment Management, LLC, and Wellington Management Company, LLP. The fund is now accepting investments during a two-week subscription period that is expected to conclude June 27. Fund assets will be allocated equally among the four investment advisors who will seek to provide long-term capital appreciation by investing in equity securities of small-, mid-, and large-capitalization companies located in emerging markets. The fund will be available to individual retail investors who invest directly with Vanguard and will require a $3,000 minimum initial investment.

Standard Life Allies With Qtrade
The Standard Life Assurance Company of Canada and the Qtrade Financial Group have formed a strategic alliance which will allow their customers to benefit from an enhanced product and service offering. A series of joint projects are expected to be launched over the next year. The two will first work on offering the Qtrade Investor online brokerage platform to Standard Life’s independent advisors outside Quebec. The Qtrade Financial Group provides brokerage and wealth management solutions to the retail public as well as the clients of more than 200 financial institutions across Canada including credit unions, regional banks, financial planning firms, trust companies, and portfolio managers.

Supervisor Influences Engagement
An individual's supervisor and the amount of employee communication in an organization are the top two influencers of employee engagement, says a survey by the International Association of Business Communicators Research Foundation and Buck Consultants, A Xerox Company. It found an immediate supervisor can influence an employee's engagement level both positively and negatively. Forty-four per cent said their supervisor strongly increased employee engagement, while 41 per cent said supervisors strongly decreased employee engagement. Thirty-nine per cent indicated the amount of employee communication is a strong contributor to employee engagement and 47 per cent said it had a moderate influence. Other factors contributing to increased engagement include change in leadership (31 per cent) and rewards/recognition programs (18 per cent). Factors contributing to decreased employee engagement are poor morale (49 per cent), poor management/leadership (48 per cent), downsizing (38 per cent), and change in leadership (26 per cent).

Frame Your Euro
If you have a Euro, frame it because it is not going to be around much longer, says Bruce Campbell, of Pyrford International. Speaking at a BMO Asset Management seminar, he said the currency makes no sense. In the past, countries could devalue their currencies to get out of default situations since interest rates reflected sovereign risk. Between 1978 and 1999 when the Euro arrived, countries such as Spain, Ireland, Greece, and even France all used currency devaluation to get out of default positions. When the Euro arrived, and all European nations using it had the same short-term interbank rate, it allowed some governments to go on a spending spree. He expects sovereign defaults (disguised as restructuring or reprofiling) will occur within the Euro-zone and European banks should be avoided because they will be hammered.

Non-Core Tasks Plague Entrepreneurs
Canadian small businesses admit to spending a big part of their day on menial tasks such as office administration, cleaning, and repairs to maintain the status quo, says the quarterly American Express ‘Small Business Monitor.’ It says entrepreneurs recognize planning, hiring, and marketing as key business functions, but are caught between the two focuses. More than half (59 per cent) of respondents say their business would be in a much better position if they could spend more time doing what they're good at and 48 per cent report they can't concentrate on growing their business because they are spending too much time running it. Nevertheless, they are reluctant to outsource for a number of reasons including a desire to maintain quality (38 per cent), issues of managing contractors (24 per cent), and the expenses involved (24 per cent).

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June 13, 2011

Unfamiliarity Barrier To ETF Use
Unfamiliarity with Exchange Traded Funds is the key barrier to increased adoption rates in Canada, says a survey by BMO Asset Management Inc. The survey found that 46 per cent of respondents who hold investments indicate that they have not invested in ETFs because they remain unfamiliar with them. However, when told about the benefits of ETFs, including low management fees, transparency, and tax efficiencies, 59 per cent of Canadian investors indicated they would add them to their investment portfolios. “It’s not surprising to see that, once Canadians learn about the advantages of ETFs, they are more open to investing in them,” says Kevin Gopaul, vice-president and CIO, BMO Exchange Traded Funds. “Exchange traded funds offer efficient and effective access to a wide variety of asset classes and global markets, providing investors with an innovative product that meets their needs.” While the study indicates 58 per cent of Canadians currently invest, only 15 per cent of them are familiar with ETFs and only four per cent hold ETFs.

Fragile Parts Exposed
One of the things that bothers Kenneth R. French, director, head of investment policy and director of investment strategy at Dimensional Fund Advisors and a professor of finance at Dartmouth College, is that no-one wants to fix the fragile parts of the financial system exposed by the financial crisis of 2008. In a keynote presentation, ‘Value and Growth Around the World’ at the IMN's ‘10th Annual Canada Cup of Investment Management,’ he said no-one knew how fragile the system was at the time and that was one of the reasons people started to run. In fact, he said, “you were crazy if you didn’t run.” As an example, he said with money markets it has been suggested that financial institutions which back them should have some cash behind them. At first, they fought this. Then when it became clear it would be regulated, they embraced the idea, but tried to gut it by reducing the amount of cash required to about a 10th of what was recommended on the grounds no-one lost money during the crisis. While he acknowledged this was true, he qualified it by adding “this time.”

Vanguard Establishes Canadian Business
Vanguard has established a Canadian business ‒ Vanguard Investments Canada Inc. Its initial focus in Canada will be to offer investment products to Canadian investors through investment advisors. “Extending our reach to the Canadian market in a significant way is an important step in the development of our global business,” says William McNabb, its chairman and CEO. “Although Canada has a very well-developed asset management market, we believe our unique value proposition of low-costs, client alignment, and enduring investment solutions will resonate with Canadian investors.” Vanguard is a leading provider of high-value, low-cost investment products and services in the United States and globally. The Canadian operation is led by Atul Tiwari, formerly an executive with BMO Financial Group and past-president/CEO of Harris Insight Funds.

Investors Need To Play Safe End
Investors need to play the safe end of the credit space by shunning duration risk as rising inflation hits yields, says PIMCO’s Bill Gross. He says treasuries are failing to compensate investors for the risks they are taking, given the inflation outlook. As a result, investors should look to "cheap" bonds in other segments of the market and focus on ‘safe spread,' which means buying more floating and fewer fixed rate notes. They should also buy into additional credit components such as investment grade, high yield, non-agency mortgage, or emerging market related debt, and shade their portfolios in the direction of non-dollar emerging market currencies.

Real Estate Losing Steam
Real estate markets in most of the developed world are losing steam and, in some cases, starting to revert into negative territory, says the Bank of Nova Scotia. "Increasing nervousness over global economic prospects alongside rising food and fuel prices and persistently high unemployment are keeping potential buyers on the sidelines," says a bank research report. Booming real estate markets have helped many of the world's most influential economies grow since the recession ended. But now the slow process of trimming debt levels because of rising interest rates will take the fire out of red-hot real estate markets across the globe. Canada is no exception to the trend. Though it has retreated from its highs of 2005 through 2007, it is still supported by steady job creation and still attractive borrowing costs. But a tightening of mortgage rules, coupled by higher interest rates expected to come, are keeping first time buyers out of the market now.

Commodity Prices Help Economic Growth
Canada's economy will grow by 3.2 per cent this year, helped by high commodity prices and a continued recovery in the United States, says RBC Economics. It expects gross domestic product will grow at a respectable 3.1 per cent pace in 2012. Although consumers were the mainstay of growth coming out of recession, the key driver will switch from households ‒ as consumer spending slows and household debt levels rise ‒ to business-driven growth as corporate investments pick up, the report says. It projects that lingering global economic crises ‒ such as European debt and tensions in North Africa and the Middle East that are driving oil prices higher, and disappointing U.S. economic indicators ‒ will begin to fade in coming months.

Verschuren Chairs Leadership Conference
Annette M. Verschuren, formerly president of The Home Depot Canada and Asia, has been appointed chair of the board of directors of the Governor General’s Canadian Leadership Conference. She oversaw the growth of Home Depot’s Canadian operations from 19 to 180 stores between 1996 and 2011. She also led its entry into China. The Governor General's Canadian Leadership Conference brings together 230 of Canada’s brightest young leaders from business, labour, public administration, and the community sector for an intensive two-week program that touches every part of Canada.

Designer Creates Home Goods Line
Los Angeles, CA-based interior designer Elisabeth Weinstock has extended her much-sought-after creative vision to a new line of extravagant home and exotic skin leather goods. The line features an exclusive range of delicately handcrafted items made from the finest leathers and exotic skins. Weinstock credits her long-time love of exotic travel as the inspiration behind the super-chic line. Luxury materials sourced worldwide and interpreted by the designer's unconventional point of view find their way to Anaconda luggage tags, iPad cases, desk accessories, and precious jewelry boxes in faux or authentic boa. Signature pieces include a black python Semainier jewelry cabinet ‒ the Luxembourg ‒ standing 48" tall with eight drawers, side opening panels, gang lock, and concealed mirror.

Hackers Hit Citibank
Hackers have stolen information from thousands of Citibank customers in the U.S. The violation, which took place last month, exposed customer names, account numbers, and other contact information. However, key data such as date of birth and security codes may not have been compromised, says the bank. About 200,000 customers were affected, although the bank had previously said it could affect up to one per cent of its 21 million users.

HSBC Closing Climate Change Fund
HSBC Global Asset Management (Canada) Limited will close and wind up its Global Climate Change Fund this August. Effective immediately, new investments into the fund will no longer be accepted. The decision to close the fund is based on the small fund size and relatively small number of unitholders.

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June 6, 2011

DC SERP Use Increases
While there has been an increase in Defined Contribution SERPs, surprisingly there is little commentary from the tax authorities on this issue, says Kathryn Bush, a partner at Blake, Cassels & Graydon LLP. She says as an administrative matter, CRA has previously accepted that SERPs providing participants with a choice between a stream of periodic payments and a lump sum will not necessarily be salary deferral arrangements (SDAs). There is a list of arrangements that are expressly exempted from the SDA definition, including registered pension plans. However, non-registered pension plans are not exempted so there is a risk that a non-registered plan, such as a SERP, could be an SDA. In order for SERPs to be SDAs, one of the main purposes must be to postpone tax that would otherwise be payable. The fact that postponement of tax does result where an employer provides an executive with rights to benefits under a supplemental pension plan, rather than additional current employment income, could support the conclusion that the postponement of tax that occurred was intentional. However, the postponed tax must relate to “salary or wages.”

All Jobs Need Assessments
Organizations need to thoroughly assess what each job must do for the company to succeed and ask whether the person in the job can deliver, says Jim Beqaj is the founder of Beqaj International, Inc. In his article ‘The Fit Factor’ (, he says if this isn’t done at every level and for every position, then the level of success defaults to the weakest fit in the structure. “And like a sports team, your business will be left behind the competition.”

Goal Is National Standard
Five financial planning organizations have banded together to form a coalition to establish a common set of national standards for financial planners. The Coalition for Professional Standards for Financial Planners includes the Canadian Institute of Financial Planners, the Financial Advisors Association of Canada (Advocis), Financial Planning Standards Council, the Institute of Advanced Financial Planners, and the Institut québécois de planification financière. The coalition aims to create professional standards and oversight for any individuals who hold themselves out as financial planners. Currently, financial planning credentials in Canada are voluntary, with the exception of Quebec. Elsewhere in the country, anyone can claim to be a financial planner without meeting requirements for qualifications or professional oversight.

Case For Credit Bullish
The case for credit is bullish, says Maryam Muessel, head of credit at BNP Paribas Investment Partners. Speaking at its ‘Be prepared! …global credit strategies for dealing with rising rates’ seminar, she said there are a number of reasons for this including the fact she believes the global recovery is sustainable because failure is not an option. Governments will do everything possible to sustain the recovery. As long as gas prices remain in check, oil prices do not exceed $150, and China manages a soft landing, “we will remain on a trajectory of growth. She said the long-term trajectory of interest rates is up due to inflationary pressure. While the curve remains flat, they expect it to steepen. Against this, one credit strategy is a safe carry that is not reliant on price appreciation for return and is combined with systemic tail projection strategies to safeguard portfolios from sudden systemic pullbacks. She said spreads are now fair compared to default expectations as corporate balances sheets are strong and corporate borrowers are well-positioned to meet their debt payments for the next several years even in the absence of growth.

Confidence Hits High Level
Investor confidence rose globally to its highest level since December, increasing 6.8 points in May to 104.1 from April’s revised reading of 97.3, says the State Street Investor Confidence Index for May 2011. The increase was led by North American investors, among whom confidence rose 7.7 points to 106.3 from April’s revised level of 98.6. After weakening in recent months, European investor confidence increased, rising 5.2 points to 79 from April’s level of 73.8. Asian investor confidence fell 2.7 points to 96.7 from April’s revised level of 99.4. It has found the low level of confidence among European investors has begun to turn around over the last two months. However, in contrast, the slight reduction in Asian growth prospects has lowered confidence in that region.

Financial Plan Creates Premium
Those who have a financial plan in place enjoy a clear 'planning premium' with hard financial benefits, yet 65 per cent of Canadian respondents reported not having a financial plan for their future, says a global survey from HSBC. The sixth ‘Future of Retirement’ study, ‘The Power of Planning,’ found, on average, Canadian planners have amassed 245 per cent more money in their retirement plans compared to non-planners. As well, of those Canadians who worry about coping financially when they retire, 63 per cent report not having saved enough as their number one concern. Only 49 per cent of global respondents shared this worry. Canada had one of the lowest percentages of respondents who indicated having a financial plan for their future. Of the 17 countries surveyed, Canada placed 14th, behind Malaysia, China, India, and Taiwan. The only countries that scored lower than Canada were France, Mexico, and Argentina.

Small Businesses Lacking Confidence
Canadian small business owners are not as optimistic about the economy as they have been in the recent past. The Canadian Federation of Independent Business barometer is at its lowest point nationally in seven months. CFIB representative Richard Truscott says the drop is not a major worry at the moment and that most of the concern is about energy costs and finding skilled workers in the labour market. Confidence levels were highest in resource rich provinces such as Alberta.

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May 30, 2011

Committee Re-releases Retail Structured Product Principles
A collection of industry associations is calling on firms to follow principles they developed for managing the provider-distributor relationship and the distributor-investor relationship in the sale of retail structured products. The Joint Associations Committee on Retail Structured Products is reaffirming principles, originally published in July 2007 and July 2008, which were drafted to achieve fair treatment for individual investors and clarify the roles and responsibilities of the various parties involved in the creation and distribution process. It says many of its principles address many of the same issues as those being addressed by regulatory reform initiatives launched in the wake of the financial crisis. It is re-releasing the principles in order to both encourage their usage and help inform the current debate.

Harrods ‒ There’s An App For That
Harrods, the famous London, UK, department store has launched an app, which is simply called Harrods. It gives shoppers a chance to browse news on luxury items such as four-poster beds for pets. It also includes a restaurant guide, including menus from all 29 Harrods restaurants; a history section on the store; and all the latest gossip and special deals going on at Harrods.

Lufthansa Adds Beds To First Class
Ten aircraft of Lufthansa’s Boeing 747 fleet are being progressively equipped with its new First Class product. The seat concept will differ from that of the remaining fleet and from the Airbus A380. For this fleet, in addition to a seat, each passenger in First Class will have an adjacent full-length, permanent lie-flat bed with a top-quality mattress. Sound-absorbing curtains and sound-deadening insulation beneath the carpet will also ensure that passengers enjoy peace and quiet. As well as a redesigned interior design and fittings, the First Class cabin includes comfort items such as temperature-regulating blankets and pillows plus an amenity kit from Porsche Design.

Canadians Interested In ‘Career Monogamy’
Canadian employees are interested in career "monogamy," says Tracy Malcolm, a senior consultant at Towers Watson. Speaking at the Conference Board of Canada’s ‘HR Service Delivery Excellence’ session ‘From Research to Your Reality ‒ Adapting HR to a Changing World,’ she said its surveys show that employees are interested in staying with their current employer if they get the right support in areas such as career management. Employees are focusing on the employment deal, she said, and are interested in a range of rewards. For example, even among the young demographic in workplaces, pensions come up as an important retention tool.

Answer Somewhere In Middle
While the debate issue was ‘Inflation or Deflation: Which Risk Should You Prepare For?’, the debaters both agreed the reality is somewhere in the middle. AIMA Canada’s 8th annual luncheon debate saw Hubert Marleau, co-founder of Palos Management, arguing for an inflationary future and Derek Holt, vice-president of Scotia Capital Economics, taking the deflationary view. Marleau, during the debate, said there was ‘no doubt’ that “we’re entering into an inflationary era” He noted that the Consumer Price Index and Producer Price Index in the U.S. have both been going up for the last six months and accelerating in the past three months. As well, inflation takes place when monetary policy is stimulative when it ought to be tight and this is the current situation in the U.S. “There is an inflationary bias in the economy,” he said, and “there’s going to be far more inflation in the future than we currently have right now.” Holt suggested that the economy is more likely to endure deflation than inflation. The economy is experiencing a “balance sheet recession” as companies continue to deleverage in the aftermath of the financial crisis which is going to “keep inflation at bay for many, many years.” As well, fiscal woes in the U.S. and Europe will weigh heavily on those economies in the coming years. The U.S. economy will begin feeling this pressure in 2013 when it’s required to unveil a fiscal austerity plan. “There is going to be sharp, decisive fiscal drag,” he said, with tax increases and cuts to program spending reducing U.S. GDP growth by up to 2.5 per cent, which will prevent inflation.

Luxury Grab Bars Launched, a manufacturer of stainless steel grab bars, is launching a family of modern and elegant grab bars. These designer grab rails are made with the most modern style bathroom in mind. The Architectural Angle bar features a prominent angle where the bar connects to the wall mount for a strong style statement. The Infinity Mount grab bar is designed to appear as though it isn't mounted at all, but floating on the wall. The final new luxury style is the Wave bar, with a curved design, perfect for a vertical shower stall installation. All three designs are available in a variety of lengths and both the brushed and chrome plated finishes.

Aviva Gets Okay From China
Aviva Investors has received approval for a Qualified Foreign Institutional Investment (QFII) quota of $100 million from the State Administration of Foreign Exchange of China. The approval follows the granting of a QFII licence by the China Securities Regulatory Commission in December 2009 and means Aviva can now invest directly in Renminbi denominated bonds and A shares.

Real Assets Need Consideration
Investors would be well-served to start thinking about how exposure to real assets (TIPS, real estate, commodities, natural resources, infrastructure, etc.) can help position their portfolios for rising inflation, says a report from State Street’s SPDR University. ‘Real Assets, Inflation Protection Solutions with Exchange Traded Products’ suggests that rising food and gas prices are slowly beginning to push inflation higher. However, stocks and bonds tend to generate meagre returns during periods of rising inflation. This means investors may seek to generate positive returns by investing in assets that are potentially driving inflation, such as oil, or providing portfolio diversification during turbulent economic times, such as gold. It says “These real assets have historically outperformed stocks and bonds during periods of accelerating inflation and provided additional potential diversification benefits for investors seeking to control portfolio volatility.”

TD Offers Low Volatility Funds
TD Asset Management Inc. (TDAM) has launched a fund that meets the rising demand for exposure to equities represented by the MSCI All Country World Index. The TD Emerald Low Volatility All World Equity Pooled Fund Trust was initially launched to meet the specific needs of a large pension plan which seeded the fund with $100 million in capital. Robin Lacey, vice-chair, says that “The low volatility strategy has established itself over the past 18 months in the Canadian market and this risk-focused approach can also be a prudent way to deploy capital in emerging markets which have potential for enhanced returns, but where the risk levels are also potentially high.” This is the third low volatility fund launched by TDAM since September 2009.

Global Economy Affecting Canadian Housing
Canada's housing market faces a risk of sliding prices from the current global economic rebound. A report from the Organization for Economic Co-operation and Development says the world economy is in an uneven recovery and confronting far more "downside" than "upside" risks, including the possibility of an inflationary rise in oil and other commodity prices, a deeper slowdown in China's economy, continued deficit problems and housing market weakness in the United States and Japan, and mounting sovereign debt problems facing in. Canada’s rebound is expected to moderate due to the impact on global trade of the Japanese disaster, combined with reduced spending from heavily indebted households dealing with softening housing markets. The report said the high Canadian dollar and Canada's ongoing "sluggish" labour productivity are negative factors.

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May 24, 2011

Affluent Canadians Have Home Market Bias
Canada’s affluent investors are not feeling compelled to seek out international investment opportunities, says a ‘Global Investing Study’ by Brandes Investment Partners & Co. Canadians with more than $250,000 in investable assets hold only 15 per cent of their equity portfolios in international markets, compared to 85 per cent in Canada and the U.S. The study says key reasons for this home market bias include a belief in supporting Canadian companies, a feeling that Canadian markets offer enough diversification and comfortable familiarity, and a confidence that Canada will continue to outperform global markets. It found that 95 per cent of affluent investors do not know there are no longer foreign content limits within RRSPs. “You would, of course, expect Canadians to have a home market bias, but when two-thirds of their equities are here, along with their real estate and jobs, that’s putting a lot of eggs in one Canadian basket,” says Oliver Murray, president and chief executive officer of Brandes’ Canadian operation. It also found that two-thirds of those surveyed believe Canadian markets will outperform international markets (67 per cent), while a similar proportion of respondents feel that global markets are riskier.

Sales Activity Surges For Luxury Homes
Improved financial standing among high net worth individuals is the major factor driving strong sales activity at the top end of Canadian housing markets, says a report by RE/MAX. It found that luxury sales have surged in close to two-thirds of housing markets between January 1 and April 30 of this year, compared to the same period in 2010. Leading in terms of percentage increases over the four-month period were Greater Vancouver, BC (118 per cent), Ottawa, ON (59 per cent), Calgary, AB (51 per cent), Halifax-Dartmouth, NS (27 per cent), Winnipeg, MB (24 per cent), Hamilton-Burlington, ON (13 per cent), and Greater Toronto, ON (nine per cent). Six of the seven major cities, with the exception of Calgary, are poised to set new records in top-end activity by year-end. "The strength of the upper-end segment continues to defy expectations," says Elton Ash, regional executive vice-president, RE/MAX of Western Canada. "That demand remains largely domestic speaks to the solid underpinnings of the market, while underscoring the appeal of Canadian real estate on an international stage. Western Canada, in particular, will continue to see the upside benefit of investment from abroad."  

Entrepreneurs Need RRSPs
Establishing a Registered Retirement Savings Plan (RRSP) and maximizing contributions to it is essential for entrepreneurs, says a BMO survey of small business owners. It found many entrepreneurs count the value of their business as a key component of personal net worth and a significant contributor to retirement income. However, they may be counting too much on the sale of their business to fund their retirement. The article is at

Nearly Rich Not Spending As Much
The nearly rich aren’t spending nearly as much as the wealthiest Americans on luxury brands, says data from Unity Marketing Inc. Those earning from $100,000 to $249,999 a year spent 20 per cent more in the first quarter on items from Honda Motor Co. Acuras to Coach Inc. (COH) handbags compared with the same period in 2009. The nearly rich are being constrained by falling home prices, income gains that lag behind inflation, nine per cent unemployment, and a reluctance to dip into savings after the recession

Fractional Ownership Conference Returns
With fractional ownership generating huge amounts of interest as consumers are becoming increasingly aware of its many benefits over whole ownership, Fractional Life will hold its second annual ‘Shared Ownership Fractional Summit Middle East.’ Fractional ownership enables people to be part owner of items from supercars, aircrafts, racehorses, and yachts to luxury overseas properties. The event, which was launched last year, is designed to promote awareness of shared and fractional ownership real estate in the MENA region. It takes place November 21 at the Burj Al Arab in Dubai. For more information, visit

Richardson Partners With TIGER 21
Richardson GMP has formed a strategic partnership with co-exclusive wealth management partner with TIGER 21 Canada (The Investment Group for Enhanced Results in the 21st Century). Richardson will bring its understanding and wealth planning capabilities in servicing. TIGER 21 is launching exclusive groups in Vancouver, BC; Calgary, AB; Toronto, ON; and Montreal, QC.

American Express Sells Luxury Items Online
American Express is the latest player to join the growing field of sites offering shoppers luxury items at discounted prices. Its site, which has yet to be named, will be up-and-running late this year or in early 2012. The company says it won't be exclusive to Amex cardholders, anyone will be able to join.

Porsche Completes Black Edition
Completing a trio of 2012 Black Edition models, started this spring with the launch of the 911 Black Edition and Boxster S Black Edition, Porsche's Cayman S Black Edition arrives in Canadian dealerships this fall. The special-edition Cayman, limited to 500 units worldwide, is powered by a 3.4 litre six-cylinder boxer engine with power output increased by 10 hp to 330. This improves 0-100 km/h acceleration times by a tenth of a second ‒ 5.1 seconds with the six-speed manual and just 4.8 seconds with the optional PDK double-clutch transmission and the launch control function of the optional Sport Chrono package. Top track speed is up by two km/h to 279 km/h with the manual transmission and 277 km/h with PDK.

ETF Association Launched
Three of Canada's leading exchange traded fund (ETF) companies have agreed to collectively launch the Canadian ETF Association (CETFA), an independent national association that will represent and promote the Canadian ETF industry. The focus of the CETFA is to help educate institutional and retail investors as well as the advisor community on the benefits and uses of ETFs, provide industry statistics and commentary on ETF related issues to the Canadian financial media, and advance industry issues with regulators, government agencies, and interested third parties. Over the last five years, assets in Canadian-listed ETFs have grown an average of 27 per cent annually, from $12.3 billion in December 31, 2005, to $40.8 billion currently. There are almost 200 ETFs listed on the TSX as of April 30, 2011. The ETF providers involved are BMO ETFs, Claymore Investments Inc., and Horizons Exchange Traded Funds Inc.

Sarona Commits To Private Equity Funds
Sarona Asset Management’s Sarona Frontier Markets Fund I has committed $3.5 million to two private equity funds. It has committed $2 million to the South Asia Clean Energy Fund and the remainder to the Fanisi Venture Capital Fund. "Investments in frontier market SMEs that serve the needs of increasing domestic and regional consumer demand will allow for the growing prosperity, health, and wellness of millions within the middle and lower middle classes," says Gerhard Pries, its president.

LinkedIn Doubles In Trading
LinkedIn more than doubled in its first day of trading after its initial public offering. The stock closed at $94.25 on the NYSE, trading under the symbol LNKD. LinkedIn sold 7.84 million shares. LinkedIn’s performance is reminiscent of some of the hottest stocks in the dot-com boom. Yahoo! Inc. rose 154 per cent on its first trading day in 1996, a year after Netscape Communications more than doubled in its debut.

Growth Outlook Confidence Dips
Investor confidence in the outlook for global growth and corporate profits has dipped, says a survey of fund managers from BofA Merrill Lynch. It reports that the proportion of its survey panel believes that the world economy will strengthen in the next 12 months has fallen to a net 10 per cent, down from 27 per cent in April and 58 per cent as recently as February. Similarly, only nine per cent now expect corporate profits to improve in the coming year. This retreat in confidence is most evident in Europe, the survey notes. Expectations there turned negative in May with a net eight per cent expecting the region’s economy to weaken in the next year. Just two months ago, 32 per cent forecast that it would strengthen. Managers continue to favour emerging markets equities, despite expectations that growth will weaken there. The survey finds that a net 28 per cent of regional fund managers expect China’s economy to weaken in the coming year, up from 15 per cent in March.

Access Provided To Covered Call Strategy
Horizons Exchange Traded Funds Inc.’s ‘AlphaPro Enhanced Income Financials ETF’ offers access to a covered call strategy on Canada’s largest financial sector stocks. The investment objective of the exchange traded fund is to provide unitholders with exposure to the performance of an equally weighted portfolio of Canadian banking, finance, and financial services companies, and monthly distributions of dividend and call option income. It will invest primarily in a portfolio of equity and equity-related securities of Canadian companies that are primarily exposed to the Canadian banking, finance, and financial services sectors.

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May 16, 2011

Succession Must Be Planned
Entrepreneurs concerned with ensuring the continuity of their business, preserving their employees’ jobs, maximizing their retirement income, protecting their company’s heritage, and providing for their family’s and partners’ financial security must take the time to plan for the succession of their business, says Annie Boivin, manager, wealth and estate planning, at Richardson GMP. Writing in the Private Wealth Canada article ‘Business Planning: An Entrepreneur's Key Success [Planning] Tool,’ she says the sooner you start planning, the more options, strategies, and successors you will have to choose from. However, each case is different, so proper planning allows you to find a customized solution that will ensure the continuity of your business and protect your assets. The article is at

Termination Date For Share Buyback
The Ontario Court of Appeal has ruled that an employer's right to buy back a senior executive's shares was triggered on his termination date; not the end of the reasonable notice period, says a Fasken Martineau ‘The HR Space.’ In Love versus Acuity, the employee had argued for the later date as his shares had substantially increased in value during the notice period. While the trial judge ruled that reasonable notice for the employee after 2.5 years with the company was five months, the Court of Appeal disagreed saying the short service record had been overemphasized and his senior position, equity ownership, and lack of availability of similar employment underemphasized. As a result, it increased the reasonable notice award to nine months. The bigger issue was the value of the shares and the shareholder agreement gave the company the right to buy the employee’s shares when he "ceased to be employed.” The appeal court focused on this and ruled that there was nothing in the agreement that permitted the employee to hold onto his shares past the actual termination date.

Canadian Luxury Market Rebounds
The Canadian luxury market rebounded last year and continues to grow despite higher oil prices, says American Express. Spending on luxury fashion, accommodation, and dining grew 14 per cent in 2010 and another 11 per cent in the first quarter of this year. That was better than in the U.S., but not as good as in emerging economies such as Brazil and India. Much of the gain was driven by ‘newcomers’ to the luxury market ‒ existing Amex cardholders who hadn’t purchased luxury items in the year before the recession. They now account for 50 per cent of all luxury spending. This same group is also spending more at discount or ‘mass’ retailers, reflecting a wider consumer trend toward splitting purchases between indulgences and basics.

Rare Whiskey Coming For Father’s Day
Starting this June, in time for Father's Day, Canadian whisky lovers in Alberta, British Columbia, Ontario, Manitoba, and Saskatchewan are in for a rare and special treat. Calgary, AB-based Alberta Distillers Ltd., the producer of Alberta Premium, will release its Alberta Premium 30 Year Old Limited Edition, a must-have addition to any whisky lovers' collection. What makes this a unique whisky is both its age and limited availability. It has been aged for 26 years in charred oak casks until its smooth and unique taste emerged, decanted and then casked again for four more years. Rob Tuer, director of operations at Alberta Distillers, says whisky fans can expect it to deliver a unique blend of wood, spice, chocolate, and a hint of smoke.

Porsche Unveils Carrera 4 GTS
Building on the well-received Carrera GTS, with its extra power, visual panache, and extensive extras for an attractive price, Porsche AG has unveiled the Carrera 4 GTS. A 408-hp coupe or cabriolet with intelligent all-wheel-drive designed for all seasons and all road conditions, the Carrera 4 GTS wraps an aggressive wide body around a long list of performance, comfort, and cosmetic enhancements. Like every all-wheel-drive 911 model, the Carrera 4 GTS features a body with 44-mm wider wheel arches at the rear. It is also distinguishable by its SportDesign front apron, black side skirts from the 911 GT2, red reflective strip between the rear lights, and a black panel between the rear tail pipes. On sale this fall, the Carrera 4 GTS coupe will be available in Canada at a base price of $125,700, while the Carrera 4 GTS cabriolet will be priced at $137,000.

Fortunes Turn For UK’s Wealthiest
The fortunes of Britain's wealthiest individuals appear to have turned. The 1,000 richest people in Britain increased their collective wealth by 18 per cent in the past year and are now worth $647.8 billion, says a list published by the Sunday Times newspaper. Steel magnate Lakshmi Mittal's family members held onto their position as the wealthiest people in Britain with a fortune of £17.5 billion, but they are 22 per cent poorer than a year earlier thanks to a drop in the share price of ArcelorMittal. Fellow metals mogul Alisher Usmanov, a Russian who has a stake in English football club Arsenal, saw the biggest increase in wealth. He climbed six spots on the list to No. 2 after adding £7.7 billion to his fortune. He is now worth £12.4 billion, according to the list. The Duke of Westminster fell out of the top three for the first time since 1999 despite adding £250 million to his fortune. The Briton owns huge parcels of land in central London and elsewhere. For the first time, more than 100 women made the cut, a feat that this year required a fortune of at least £70 million pounds. In 2010, the bar was set at £63 million while in 2008 it was £55 million.

Dressing For Golf
Although it may sometimes seem like there are more rules in a golf course dress code than colourful lines on a plaid sweater, here are a few tips to help ensure your look is par for the course. First, find out the club’s dress code. Phone the club or check its website. Beyond that, choose a collared shirt. A golf or tennis shirt with a collar and short sleeves is always acceptable.  Stay away from denim and short shorts. If you wear shorts, they should be Bermuda shorts, which are usually straight cut and to the knees, with no bulky external pockets. Long pants in general are always okay, as long as they are not jeans. Go with a pair of slacks. For women, it may not be best to use LPGA events as an example of appropriate golf attire. Many professional women golfers wear short skirts. To be safe, skirts should be only a couple of inches above the knee. Finally, don’t let the cliché about bright checks and tartan outfits on the golf course deter you. When it comes to plaid, anything goes.

Harris Chairman Of Magna
Former Ontario premier Mike Harris is chairman of auto parts maker Magna International. He had been lead director at the company and has served as a director since 2003. He takes over from Magna founder Frank Stronach, who remains honorary chairman and a director.

Managers Opt For Safety
Geopolitical unrest and the earthquake in Japan dominated the news headlines during the first quarter of 2011 leading to a flight to safety, which benefitted investment managers who were more defensively positioned, says the ‘Russell Active Manager Report.’ It found that 59 per cent of Canadian large cap value managers beat the S&P/TSX Composite Index’s return of 5.6 per cent in the first quarter of 2011 compared with just 22 per cent of growth managers. The data is even more striking when compared to the fourth quarter of 2010 when 45 per cent of value managers and 74 per cent of growth managers beat the index. Dividend-focused investment managers also performed well in the quarter with 55 per cent beating the benchmark.

Iannicelli Stepping Down
Joseph Iannicelli, president and CEO of The Standard Life Assurance Company of Canada, will leave the company by the end of 2011. After a 19-year career with Standard Life, he wishes to pursue new and different interests, the company reports. The Canadian operation is the largest operation of Standard Life plc outside the UK and contributes strongly to the group's earnings. A search for his replacement has started.

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May 9 , 2011

Surge Coming For Canadian Millionaire Households
The number of millionaire households in Canada is set to surge by 38 per cent by 2020, and total wealth will more than double, says a Deloitte report on global wealth. The number of millionaire households in this country will jump from 1.74 million to 2.41 million over the next nine years and total wealth will rise from $3.35 billion to $6.77 billion. Total wealth in millionaire households globally will grow from $92 trillion in 2011 to $202 trillion in 2020. The U.S. is likely to remain the world leader in terms of total wealth, followed by Japan and Italy. In 2020, 43 per cent of the world's wealth held by millionaire households is predicted to be in the U.S., while the number of millionaire households in the U.S. is projected to increase from an estimated 10.5 million in 2011 to 20.6 million in 2020. Canada currently ranks seventh in the world in terms of total wealth and is likely to slip back to eighth by 2020, despite the gains in the number of homegrown rich households. China, which currently ranks 12th, is forecast to jump to seventh place. Among the super rich, those with wealth of more than $30 million, the U.S. tops the list, followed by China.

Calgary Gets Tiffanys
Calgary, AB, has joined Toronto, ON, and Vancouver, BC, as a luxury retail destination. It has become home to a Tiffany & Co. jewelry store. “Calgarians are bringing us here,” says Andrea Hopson, vice-president, Canada, for Tiffany & Co. “Of course, economically this province has been extraordinarily impressive and exciting. It’s a vibrant and young population who do crave the very best in the world thus Tiffany and other brands have identified this as an important market.” The store’s facade features architectural details of Tiffany’s Fifth Avenue flagship store, including a wheat leaf pattern in carved stone and stainless steel rim. Inside is an atmosphere of intimate jewelry salons with light grey wood panelling, custom furnishings in a palette of warm neutrals, pearlescent wall coverings, and stainless steel framed showcases.
The price range for its jewelry is from $100 to a rare solitaire Lucida engagement five-carat, D-colour, internally flawless, diamond ring at $1 million. Tiffany’s opened its first Canadian store in November 1991 in Toronto.

Chinese Buy More Luxury Goods
Luxury goods sales in China are projected to soar to $17.04 billion, a 25 per cent increase from last year, says a Bain & Company forecast. However, many Chinese are purchasing luxury products outside the country. In November last year, a luxury market study by Bain discovered overseas purchases by mainland Chinese accounted for 56 per cent of the whole luxury spending in 2009. High duties on luxury items making them much more expensive than overseas and a shortage of luxury items on the Chinese market are the main reasons for this. It predicts luxury sales growth of eight per cent in the Americas and seven per cent in Europe, putting global luxury sales at $273 billion this year. The increase is eight per cent more than last year's $253 billion.

SRI Weathers Crisis
Socially responsible investment (SRI) in Canada has weathered the turmoil of the international financial crisis, and continues to represent about one-fifth of assets under management in Canada, says the ‘Canadian Socially Responsible Investment Review 2010.’ Its survey of assets shows that for June 2010, assets managed under SRI guidelines in Canada were $530.9 billion. The Social Investment Organization (SIO), which compiled the report, estimates this represents about 19 per cent of the total assets of the pension industry, the asset management industry, and the mutual fund industry. "SRI has shown resilience in the face of tough times brought about by the financial crisis of 2008," says Eugene Ellmen, executive director of the SIO.

Crestpoint Acquires Shopping Centres
Crestpoint Real Estate Investments Ltd. (Crestpoint), a business dedicated to providing institutional and high net-worth investors with direct access to commercial real estate assets, has acquired two Quebec-based shopping centres. Located in t St. Eustache in the greater Montreal area, Carrefour Grande-Côte and Centre 25E comprise more than 98,000 square feet of retail leasing space. Carrefour Grande-Côte is anchored with tenants such as Maxi (Loblaws) and Pharmaprix (Shoppers Drug Mart). Centre 25E, a fully leased strip plaza includes Dollarama, M&M Meats, and Global Pet Food amongst its tenants.

Investors Somewhat Unsettled
A slight shift towards greater concern about retirement is an indication that Canadian investors are feeling somewhat unsettled by recent global events, says the ‘Russell Financial Health Index.’ It shows the overall financial health of Canadian investors decreased to 48.1 in the first quarter of 2011 from 51.12 in the first quarter in 2010. However, this number is only marginally down from the last three months of 2010, when the index was at 48.51. “We are encouraged that much of the global economy continues to transition from recovery to expansion, and we are seeing increasingly stronger fundamentals,” says Keith Pangretitsch, director of national sales at Russell Investments Canada. “Nonetheless, recent Black Swan Events, such as Japan’s earthquake and nuclear crisis, as well as the ongoing crisis in the Middle East, seem to be giving some Canadians pause.”

Bond Market Repressed
U.S. treasuries and the bond market are being repressed, capped, or simply overvalued compared to the previous 30 years, says Bill Gross, PIMCO’s managing director. He says treasuries will continue to short-change investors even after the end of QE2 stimulus in June. “We have warned for several years of the deteriorating creditworthiness of America’s AAA rating, our de minimis treasury positions had less to do with much more immediate issues than America’s balance sheet prospects. We are highly sensitive to the pocket-picking policies that governments in general deploy to right the ship.” Urging investors to “revolt” against the U.S. government by ditching treasuries, he is urging investors to look globally for better yield opportunities. They need to look to emerging market debt as low rates and rising inflation present an immediate threat to portfolios and treasuries are set to be "overvalued for decades."

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May 2 , 2011

Canadian Business More Upbeat
Some 78 per cent of Canadian businesses are feeling more upbeat about their companies' prospects than they were six months ago, says Ernst & Young’s ‘Capital Confidence Barometer.’ This compares to 70 per cent of their global counterparts who feel the same way about their own businesses. But it's not all smooth sailing the report finds. Tony Ianni, a partner in its advisory services practice, says “that optimism varies among sectors and regions. Companies that weathered the financial storm well are now on the prowl for new acquisitions and opportunities. Businesses that were hardest hit are turning inwards, choosing to focus on operational efficiency, organic growth." He compares booming commodities businesses in Alberta to still-struggling manufacturers in Ontario as a key example. "In many ways, the post-crisis Canadian economy is characterized by 'haves' and 'have nots’,” he says.  He says the haves are flush with cash and have access to available credit. The survey finds one-third of them are looking to buy. The have-nots, on the other hand, are still struggling to get access to credit, are looking to sell or are cleaning up their balance sheets to make themselves more attractive to buyers.

Self-directed Had Better Returns
Gen X affluent investors saw their investable assets grow by roughly 11 per cent in 2010. However, self-directed affluent Gen X investors – those who rely on their own knowledge and judgment – experienced 28 per cent asset growth in 2010, while those who turned to a financial adviser reported that their investable assets climbed only three per cent, says a Cogent Research study. However, this discrepancy in asset growth between advised and self-directed investors in Gen X appears to be an anomaly as advised investors in every other age group measured in the study (1st Wave Baby Boomers, 2nd Wave Baby Boomers, and Silent Generation) were able to outperform their self-directed counterparts during the same time period. The Gen X demographic is those between the ages of 29 and 44.

Lack Of Confidence Barrier To Growing Wealth
Fear of negative outcomes and a lack of confidence in heirs are two of the biggest barriers to families sustaining and growing wealth over time, says an SEI Wealth Insight Initiative.  It says since very few creators of wealth actually inherited wealth themselves, they often doubt that their heirs have the same motivation or ability. As a result, family leaders come to the table with that fear and often end up playing not to lose rather than playing to win, says David McLaughlin, senior managing director for the SEI Wealth Network. Some of the top pitfalls wealthy families should try to avoid include not establishing accountability and unhealthy wealth communication. The reality is that most families lose wealth when future generations continue to spend to support their lifestyle, but are ill-prepared to continue to create wealth. By comparison, the most successful families spend time establishing an expectation that the inheritors are accountable to build upon their success and improve the lives of future generations. As well, in many families the topic of money is considered taboo. Future generations might know they’re affluent, but they often don’t know how much, where it came from, or what the plan is to sustain it. Wealthy families must get comfortable with the idea that talking about money candidly is not rude, it’s necessary.

Sun Life Adds Mutual Funds
Sun Life Global Investments (Canada) Inc. has added three Canadian mutual funds to its product platform. The new suite includes a Canadian equity and Canadian balanced mutual fund sub-advised by BlackRock Asset Management Canada Limited and BlackRock Institutional Trust Company, N.A. The products, composed of index strategies and iShares exchange-traded funds, draw on the approach to risk management of both Sun Life and BlackRock. The bond fund will be sub-advised by McLean Budden Limited and is the first Canadian fixed income investment solution offered by Sun Life Global Investments.

Bond Funds Should Be Evaluated
Higher yields don’t necessarily mean higher returns, says the CFA Institute. It advises investors looking to diversify their portfolio with bond mutual funds that yield is not the same as total return; it’s one characteristic of the overall portfolio and is not a representation of fund earnings. Its other tips for evaluating bond funds include matching the fund with liquidity needs, and diversifying with municipal bond funds. However, it warns that investing in bond funds isn’t a guarantee of safety. They should be considered in the context of a broader investment plan that accounts for personal preferences and risk tolerance.

China’s Rick Fleeing
China is not only facing an aging population, its rich are fleeing. The ‘Bain & Co and China Merchant’s Bank Private Wealth Report 2011’ found that while the number of high net worth individuals rose 19 per cent in 2010 compared to 2009, 60 per cent of them are considering emigration or are already doing so. Their major reasons for immigrating include a desire to get a better education for children, to ensure the safety of personal wealth, and to prepare for retirement.

Suite Meets Tax-deferral Opportunity Needs
Invesco Trimark is launching Invesco Intactive, a suite of product to meet the needs of investors who are seeking tax-deferral opportunities. Collectively, each of the new corporate class portfolios offers features and benefits including strategic asset allocation through complementary investment styles, asset classes, and geography and tactical asset allocation on a portion of each portfolio. They are also designed to capitalize on near-term opportunities and provide added downside protection. A combination of actively managed funds and index-based strategies they are also available within a mutual fund corporation structure, allowing investors in non-registered accounts to switch between funds in the corporation without triggering an immediate taxable disposition.

Porsche 911 Arrives Late This Year
The Porsche 911 GT3 RS 4.0, one of its most popular, coveted, and successful race-inspired production cars, should arrive in Canada late this year. Limited to 600 vehicles worldwide, it brings together in a road car all the attributes that have made the Porsche 911 GT3 a serial winner on the race track. Equipped as standard with light weight components such as carbon-fibre sport bucket seats, carbon-fibre front fenders and luggage compartment lid, and weight-optimised carpets, the limited edition 911 is painted white as standard and emphasizes its proximity to motor racing by its low vehicle position, large rear wing with side plates, central twin tailpipe, and the aerodynamically optimized body. It carries a price tag of $211,100.

Investor Confidence Falls In April
Globally, investor confidence fell slightly by 0.3 points from a March revised reading of 97.3 to 97 in April, says the State Street Investor Confidence Index for April 2011. The confidence of North American investors declined by 3.9 points to a level of 98.4 from March’s revised reading of 102.3. In other regions, investors were more upbeat. Sentiment among Asian investors increased 2.7 points to 99.2 from the March number of 96.5. In Europe, investor confidence bounced off its recent lows, rising 6.3 points from the March level of 66.9 to settle at 73.2. “We see some generalized evidence that institutional investors have shifted into a neutral gear with the global, North American, and Asian confidence indices all hovering in the neighbourhood of 100,” says Harvard University professor Kenneth Froot, one of the developers of the index.

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April 25, 2011

Affluent Made Money On Their Own
The vast majority of affluent Canadians have made their money on their own rather than inheriting it, says a study by BMO Harris Private Banking. The study found that 94 per cent of affluent Canadians ‒ those with investible assets of $1 million or more ‒ have made their money on their own (self-made professionals and/or business owners). Only six per cent report that they have inherited the majority of their wealth. The study also revealed that 80 per cent report that they enjoy greater wealth than their parents; 77 per cent say they are currently the same or better off, financially, now compared to before the onset of the 2008 recession; only a slight majority (58 per cent) believe that their children will be able to manage their inheritance; and 76 per cent of wealthy Canadians believe it is important to give back to their communities, with 59 per cent saying the recession has had no impact on their donating habits.

Planning For Taxes Different
When it comes to tax planning, affluent Canadians have a very different approach than other Canadians, says a study for Scotia Private Client Group. The study, which assessed Canadians’ attitudes toward tax planning, shows the affluent focus is on minimizing the taxes they pay (62 per cent). The average Canadian hopes to maximize their tax refund (57 per cent). In addition, affluent Canadians are more than twice as likely as other Canadians to have a written tax plan or strategy in place to help minimize the taxes they pay (32 per cent versus 15 per cent). “It’s not surprising that wealthy Canadians tend to look at reducing their taxes over the long term,” says Adam Salahudeen, director, taxation advisory services, wealth management. Strategies they use include reviewing their investment portfolios to maximize after-tax dollars (69 per cent) or for tax-loss selling opportunities (48 per cent) and allocating investment income to registered and non-registered accounts (68 per cent). They are nearly twice as likely to have considered ‘building investments for retirement’ when planning their taxes (72 per cent versus 41 per cent) than average Canadians.

Porsche Improves Cayenne, Panamera
Porsche has made improvements to the Cayenne and Panamera model lines for the 2012 model year. The 380-horsepower Cayenne S Hybrid now has an enhanced hybrid manager. If the conditions are right, it is now possible even from a cold start to drive at low speed on electric power alone. Previously, driving on electric power after starting the engine was only possible once operating temperature had been reached. The new model year also heralds the availability of new Porsche Exclusive options for the Cayenne models. As with the Panamera Turbo, a power kit is now offered and the resulting greater power required improvements to the braking system. Other enhancements are a SportDesign package with painted wheel arch extension, Bi-Xenon headlights with dynamic lighting system with black housings, and quad sports tailpipes and dark-tinted LED rear lights.

Focus Should Shift To Short Term
Investors need to focus on shorter investment horizons and seek to generate specific, or “targeted” returns, says Steve Shafer, chief investment officer for Covenant Financial Services, LLC. The ‘buy-and-hold’ formula for successful investing is outdated, he says, because the economy now surges and swoons over increasingly shorter periods. He says this approach is needed as a result of truncated peak-to-trough economic cycles, heightened volatility, and aging baby boomers.

Standard Life Offers Stock Option Administration
Standard Life has added stock and stock options plans administration solutions to its group savings and retirement offering to Canadian publicly listed companies: The first feature enables employees to make online withdrawals from their stock plan directly from the VIP Room, Standard Life's transactional website. The second feature allows employers to access a variety of stock option arrangements that will help their employees administer and exercise options. The integration of the new stock option plan feature is made possible through an arrangement with Buck Consultants Limited, a wholly owned subsidiary of ACS, A Xerox Company.

BlackRock Launches New ETFs
BlackRock Asset Management Canada Limited has launched six new iShares Exchange-Traded Funds (ETFs). Several of these funds have been constructed to meet investor demand for income while others offer access to local and global sectors ‒ in some cases, for the first time in Canada. Mary Anne Wiley, managing director, head of iShares distribution, says the new funds “offer investors even greater opportunity to target their portfolios by sector both within and beyond our market." The funds are the S&P Global Healthcare Index Fund, the S&P/TSX Global Base Metals Index Fund, the S&P/TSX Capped Utilities Index Fund, the S&P/TSX Capped Consumer Staples Index Fund, the S&P/TSX Equity Income Index Fund, and the J.P. Morgan USD Emerging Markets Bond Index Fund.

‘Ultimate Flushing Experience’
Piano music, foot warmers, and "the ultimate flushing experience" are all features of Kohler Co.’s high-end Numi toilet.  When it senses your presence, the toilet automatically raises an adjustable-height cover. A night light in the bidet guides you to its heated seat. If you stay a while, you can plug in your iPod or turn on the built-in FM radio. Then the amount of water used to flush adjusts, depending on how long you've been sitting. A floor-level vent blows warm air to keep your toes warm. The catch is its price tag ‒ $6,400. It will be released this fall.

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April 18, 2011

OECD Calls For Tougher Action On Fraud
Canadian businesses may soon face more vigorous fraud investigations as a result of an Organization for Economic Co-operation and Development report that urged Canada to boost its anti-corruption enforcement efforts, says Ernst & Young. While Canada is generally considered one of the least corrupt countries in the world, and many Canadian businesses already conduct international business safely above the minimum standards set by law, the OECD report identified some areas for improvement. If implemented, the recommendations could mean increased risk of prosecution for Canadian companies. The OECD had concerns that Canada has had just one prosecution in the 10 years since its anti-corruptions laws were passed. It also suggested that policymakers prevent convicted persons from enjoying any further benefit from government contracts and to identify methods that will encourage more violations to be reported to law enforcement.

Porsche Shows Off Hybrid SUV
Porsche Canada put the spotlight on its new-for-2011 Cayenne S Hybrid SUV at the Green Living Show in Toronto, ON. The sports car maker's first production hybrid vehicle, the Cayenne S Hybrid delivers the performance Porsche drivers expect with surprising fuel efficiency. What makes the Cayenne S Hybrid unique from other hybrids on the market is its ability to cruise at high speeds on electric power alone. The gasoline engine can be completely switched off and disengaged from the drivetrain at speeds of up to 156 km/h.

Employees Cited As Reason For Success
Employees (62 per cent), customer loyalty (60 per cent), and hard work (59 per cent) are what entrepreneurs attribute their success to, says a survey from the Canadian Federation of Independent Business (CFIB). "While most studies focus mainly on the personal characteristics of the successful entrepreneur, this is a one-of-a-kind, insider's perspective into the winning recipe for a business venture and it speaks volumes about the character of small business owners that they give top billing to their employees and customers," says Catherine Swift, CFIB president. The results also show that entrepreneurs are deeply connected to their communities and contribute in a number of ways, including employing locals (85 per cent), financial donations (74 per cent), donating goods or services (72 per cent), sponsoring sports teams (59 per cent), promoting local charities (47 per cent), and donating their time (47 per cent).

ETFs Use Covered Call Strategies
AlphaPro Management Inc. has launched two exchange traded funds that use covered call strategies to generate income and mitigate risk. The Horizons AlphaPro Enhanced Income Energy ETF provides unitholders with exposure to an equally-weighted portfolio of large, liquid Canadian oil and gas companies trading on the TSX. The Horizons AlphaPro Enhanced Income Gold Producers ETF provides exposure to the performance of an equally-weighted portfolio of North American-based gold mining and exploration companies. To mitigate downside risk and generate income, both ETFs will generally write covered call options on 100 per cent of the portfolio securities, or fewer, depending on market volatility and other factors.

Emerging Technology Brings Unparalleled Benefits
Emerging technology will enable investors to see unparalleled benefit through greater automation and capacity on demand, says a State Street Corporation ‘Vision Report.’ ‘The Evolving Role of Technology in Financial Services’ looks at the impact that next generation technology such as cloud computing is expected to have on the industry. Unlike today, the financial services industry will soon deploy increasingly sophisticated, forward-looking technology tools and analytics that will enable investors to understand and model actual precursors of performance. For example, instead of today’s simple descriptions related to risk position and market stability, investors will soon be able to see more acute and intricate insights and the actual factors that contribute to those risk positions. 

Inflation Likely In Near Future
Institutional investment managers increasingly see inflation as likely in the near future, with oil prices and market volatility also rising over the next six months, says a quarterly survey by Northern Trust. Approximately 70 per cent of managers believe that the risk of inflation will increase over the next six months and a majority of managers (62 per cent) expect market volatility, as measured by the VIX Index, to increase over the next six months. More than half of those surveyed believe that oil prices will continue to rise over the next six months, with 90 per cent of managers expressing the view that increased oil prices will negatively impact economic growth.

Despite Higher Loonie, Canadians Pay More
Popular U.S. products still cost Canadians more in their country despite a higher loonie, says a BMO Economics report. It estimates that U.S. goods, such as mobile devices and books, are on average more than 20 per cent more expensive in Canada than south of the border. The appearance of that price gap is despite a Canadian currency that has gained 30 per cent in value compared to the U.S. dollar since 2009.

New Government Should Help Small Business
When it comes to small business, a new government likely won’t be any different from the old, says Greg Kopchuk, of ActionCOACH Canada, a business coaching firm in Canada. With weeks to the May 2 federal election and following the recent leaders’ debate, he says “Governments help big business, even when they are failing miserably, because they cannot afford to lose the votes of the people in those industries.” If the candidates for Canada’s new government really care about helping small business, he says, it’s time they stopped talking about how great small business is for the country and actually started helping them. Measures he suggests the new government should take include real tax breaks for small business, instituting a bank for small business in Canada, and bringing an end to harmonized sales taxes.

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April 11, 2011

Chinese Behind Only U.S. And Japan
The total value of Chinese households' wealth is $16,500 billion, says Credit Suisse's ‘Global Wealth Report.’ The report, based on its mid-2010 data, puts China behind only to the United States and Japan. China should overtake Japan as the second largest wealth management market in the world by 2015. At the end of 2009, China had 670,000 households with more than $1 million in wealth, up 60 per cent from 2008. The country's composite wealth grew by some 28 per cent ‒ to $5.4 trillion ‒ from the end of 2008 to the end of 2009. Its personal wealth market is characterized by extensive concentration. The country's entrepreneurs, executives, professionals, professional investors, and independent wealth groups control most high-net wealth, especially after the establishment of the medium and small enterprise market, with 70 per cent of the country's personal wealth being owned by 0.4 per cent of the population.

Russell Adds Frontier Markets
Russell Investments Canada Limited is adding a frontier markets mandate to its Emerging Markets Equity Pool, which is part of the Sovereign Investment Program and a new addition to the LifePoints Program. David Feather, president and CEO, says “Recent market events have made this region more attractive for long-term investors, and we believe the relatively unexplored frontier region has great potential.” Frontier markets are nations with generally lesser developed economies who have significant growth potential such as Argentina, Bangladesh, Kuwait, Nigeria, Ukraine, and Vietnam.

Executives Still See DB Funding Crisis
Recent improvements in economic conditions have had virtually no impact on executives’ perception of a Defined Benefit pension plan funding crisis, says a Towers Watson survey. The survey of more than 150 Canadian pension plan sponsors indicates that just over half (51 per cent) of the private sector DB plan respondents have now converted their plans to Defined Contribution arrangements for current or future employees ‒ up from 42 per cent in 2008 ‒ and this trend shows no sign of relenting. The percentage of respondents who agree that there is a pension funding crisis has remained at historic highs since the financial downturn of 2008. The survey found that more than half of respondents (56 per cent) believe that the funding crisis will persist for the long-term compared to 34 per cent who held this view in 2008 before the onset of the recession. Ian Markham, Canadian retirement innovation leader at Towers Watson, says “this year’s survey results show that employers planning a conversion to DC are intent on doing so regardless of whether economic conditions improve or a more sponsor-friendly legislative environment appears, or even in lieu of less dramatic changes to plan design or investment strategy.”

Canadians Face Tough Choices
The amount Canadians spend on healthcare is set to rise rapidly over the next two decades and Canadians need to face up to tough choices to deal with this “spending disease,” says a C.D. Howe Institute study by David A. Dodge, former governor of the Bank of Canada, and Richard Dion, a former economist at the Bank of Canada. ‘Chronic Healthcare Spending Disease: A Macro Diagnosis and Prognosis’ examines the trajectory of total healthcare spending – public and private – in Canada and the policy choices Canadians must make in response. Among their findings are that in the base case, healthcare spending rises from 12 per cent of GDP in 2009 to 19 per cent in 2031. In the optimistic case, with new policies and cost-reducing technologies bringing down the cost of healthcare, the rise in spending is more limited than the baseline, but significant nonetheless, because it would bring the spending ratio to over 15 per cent of GDP by 2031. As a result, Canadians must choose some combination of a sharp reduction in public services, other than healthcare; increased taxes to finance the public share of healthcare spending; increased individual spending on healthcare services currently insured by provinces, through some form of co-payment or through delisting of services that are currently publicly financed; or a degradation of publicly insured healthcare standards – longer queues and services of poorer quality. The study is at

Warning Offered On Securitization
The future of securitization in the Canadian market is very bright as long as it sticks to its roots, says Paul Sandhu, vice-president and director at Marret Asset Management Inc. However, he warned a session on ‘Securitization in Canada: Past, Present and Future’ at Euromoney’s ‘The Canada Forum,’ that not a lot has changed since the market collapsed in 2007. He said the risk structure and compensation systems have not changed and there is still a lack of regulatory oversight. As well, there is still a conflict of interest in the way ratings agencies are paid for rating these products. “We are seeing the things that made us cautious and caused aggravation coming back,” he said.

BetaPro Offers US Dollar ETF
BetaPro Management Inc. has launched a U.S. dollar currency ETF that offers investors direct access to foreign currency investing. The fund seeks to reflect the price in Canadian dollars of the U.S. dollar, net of expenses, by investing primarily in cash and cash equivalents that are denominated in the U.S. dollar.

Asset Managers See New Period Of Growth
CEOs of asset management companies are predicting a new period of growth for their companies, fuelled by emerging markets, an aging population, and a general heightened awareness among investors to put more away for their retirement, says PwC’s 14th annual global CEO survey. The survey, of 1,200 business leaders in 70 countries, shows 68 per cent “very confident” about their company’s growth prospects over the next three years. However, in order to encourage people to invest their growing savings in fund products rather than simply putting them in deposit accounts, it says asset managers will need to provide investment vehicles that combine reasonably secure income with sufficient yield to pay for longer retirements.

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April 4, 2011

Rough Times Loom For Succession Plans
Wealth managers with family business owners for clients may want to prepare for some rough transitions ahead, says a PricewaterhouseCoopers survey. It found that 27 per cent expect to change hands in the next five years. However, 47 per cent of the companies had no succession plans in place and 34 per cent of companies based in North America expect to bypass their families altogether for succession. Many entrepreneurs leave their business to their children, even if it’s not their best interests, because they don’t think to explore other options. Another succession problem, particularly given the last recession and its slow recovery, is whether the parents who started the business can afford to turn it over to the next generation. Falling real estate values have thrown debt ratios out of synch at banks, causing them to pull back on credit lines to family businesses. If the businesses are cash-starved, there may not be enough wealth to pull out for retirement.

Election Impact A Cliché
The outcome of the federal election will have little effect on market performance, says a report from CIBC World Markets Inc. Avery Shenfeld, its chief economist, says “Although the cliché is that markets abhor uncertainty, elections in the past few decades have not typically shaken market confidence. If anything, the period from the dissolution of parliament to the day after the vote has been one in which Canadian equities have fared well and outpaced those stateside, Canadian bond spreads have narrowed to Treasuries, and the Canadian dollar has gained modestly.” There is also no evidence of a “post-election hangover, as judged by currency, bond and equity market performance in the weeks following a vote.” The report says that for the bond market, the most important issue is whether the election result could take Canada off its deficit elimination track. It notes that historically there have not been any consistent turns in fiscal direction-as measured by the cyclically-adjusted budget balance-after changes between Liberal and Conservative parties, or between minority and majority governments.

Canadians Bullish On Canada
Canadians have a bullish outlook on their stock market when compared to the rest of the world, says ‘The Franklin Templeton Global Investor Sentiment Survey.’ Forty-three per cent of respondents think Canada’s stock market performance in 2011 will be better than the rest of the world, an optimistic outlook surpassed only by respondents in India (61 per cent), Brazil (52 per cent), and Chile (46 per cent). Italians were the most pessimistic with only 11 per cent expecting their country’s stock market to trump global returns this year. It also found enthusiasm for global markets is expected to climb over the next decade. Half of the more than 13,000 respondents plan to invest outside their home country in 2011. Those numbers increase over the long-term, with 62 per cent of all respondents planning to invest in global markets over the next 10 years. At present, only 34 per cent of respondents invest outside their domestic market.

Confidence Falls Sharply
Consumer confidence fell sharply in March in most of the country as Canadians grew more worried about their finances, says the Conference Board of Canada. Its monthly report found consumer confidence fell to 83.7 from 89.3 in February, a level lower than March 2010, but higher than six months ago. The board said attitudes towards current finances were “worrisome,” as about a quarter of Canadians ‒ 2.4 percentage points more than last time ‒ said their finances had worsened over the last six months. Along with the cost of gasoline rising and the uncertain pace of economic recovery, consumers are also worried about food price inflation and the impact of rising interest rates on high consumer debt.

Market Conditions Behind Invasion
Americans retailers are coming to Canada because they think it is a sound place to do business, but, more importantly, because of market conditions in the U.S., says Jerod Dinkin, director of real estate at Bed Bath and Beyond. Speaking at the International Council of Shopping Centers’ ‘Toronto Next Generation Program’ entitled ‘Growing Pains: The Challenges U.S. Retailers Face When Coming to Canada,’ he said between 2003 and 2008 U.S. retailers were in a period of massive growth, driven in part by Wall Street. Bed Bath and Beyond was opening 80 stores a year during this time because if it didn’t, Wall Street would see it as a negative, he said. Today, Wall Street views it as a failure if retailers are not scaling down or closing stores. Canada becomes an attractive market for them because of factors such as a common language, similar business practices, geographic proximity, and similar governments.

Business Account Launched
Scotiabank has launched the Scotia Power Savings for business account, a high interest account specifically designed for small businesses. This account provides small business owners with a high yield, liquid alternative to term deposits for surplus balances. There are no monthly maintenance fees and customers can access their money at any given time as there are no term restrictions. Businesses will receive unlimited free self-service transfers to and from their other Scotiabank accounts when they use Scotiabank's Automated Banking Machines (ABMs) or online, telephone, and wireless banking services.

Infrastructure Index Series Launched
FTSE Group has launched the FTSE Infrastructure Index Series (FIIS); a comprehensive and complementary set of nine indices diversified across six infrastructure sub-sectors, to reflect the market’s evolving definition of infrastructure. The FIIS enables investors to research, benchmark, and gain exposure to both physical infrastructure assets and the important networks, support, and conveyance services that underpin global infrastructure development. The new index series provides investors with balanced exposure to global infrastructure whilst reducing the risk of over-concentration in individual sectors.

Investor Confidence Grows
Globally, investor confidence rose 6.5 points from February’s revised reading of 91.8 to reach 98.3, says the ‘State Street Investor Confidence Index’ for March 2011. The increase was most pronounced among North American institutional investors, whose confidence registered at 103, 10.5 points higher than February’s revised reading of 92.5. Investor confidence also increased among Asian institutional investors, rising 8.7 points to 100.2 from February’s revised level of 91.5. It was a different story among European investors, whose risk appetite declined 15 points to 64.3, from the February level of 79.3.

Emerging Markets Rise More Than BRICs
The rise of emerging markets is more than just a Brazil, Russia, India, and China (BRIC) story, says research from State Street Global Advisors’ (SSgA) active emerging markets investment team. It shows that since January 1997 BRICs have underperformed a group of smaller countries within the emerging world. As of March 2011, non-BRIC smaller emerging market countries outperformed BRICs by 39 per cent. The smaller emerging countries consist of Chile, Colombia, Czech Republic, Egypt, Hungary, Israel, Peru, Poland, the Philippines, Thailand, and Turkey. The research also shows that with stocks trading at 11 times forward earnings, the broad emerging market asset class is not in a bubble.

Belief Systems Need To Change
Investors need to change their belief systems, says Jean-François Tardif, a former lead portfolio manager for Sprott Asset Management hedge funds.  Speaking at AIMA Canada’s ‘How the Pros Hedge their Books’ session, he said the belief that markets would always go up may no longer be true. “We’re in a different world,” he said. There have never been so many issues such as the massive debt and deficit in every developed country. The U.S. deficit is so large that it has to increase revenue by 50 per cent just to break even. On top of that, there are financial woes facing Ireland, Greece, and Spain. To compensate for these problems, central banks all over the world are printing money and it’s not just the U.S., he said. “China has been printing money for years and years” and this is why its foreign reserves are so high. As a result, asset managers are facing issues and problems they have never before seen in their careers.

Caution Issued On Chasing Emerging Market Performance
Given the strong absolute and relative investment returns of the emerging markets in 2010 and subsequent torrent of cash flow to emerging market funds, Vanguard is cautioning investors against chasing performance. An article ‘Practice portion control with emerging markets’ advises investors to revisit their exposure to emerging markets and to question their reasons for holding the segment. “Emerging markets can be an important part of an overall investment portfolio, but we suggest that investors use market capitalization as a yardstick for the appropriate amount of an investment,” says Joseph H. Davis, its chief economist. “Today, emerging markets make up 25 per cent of the international stock market, so we recommend that emerging markets represent no more than 25 per cent of an investor’s international equity holdings.” He also warned that the past strong economic growth of emerging markets may not necessarily lead to exceptional stock returns in the future as the average cross-country correlation between long-run GDP growth and long-run stock returns has been effectively zero.

New Materials Dominate Timepieces
The new status symbol for bankers and Russian oligarchs is a sober, featherlike timepiece made from carbon fibre, magnesium, or aluminum. Meanwhile, Perramond has unveiled a watch which stops time. The ‘temps suspendu’ (suspended time) model, starts at $19,700. These were among the watches unveiled at Basel's annual watch fair. Those embracing the trend for new materials such as carbon fibre, magnesium, or aluminum  include Hublot, one of the fastest-growing brands, and its younger rival Richard Mille, whose barrel-shaped watches, starting at $85,00, are regarded as some of the most expensive.  In fact, Hublot has bought a carbon fibre plant to secure supplies and is investing in new methods of dyeing metals and various materials.

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March 28 , 2011

Time Management Problem For CFOs
If time is money, finance executives may have something to worry about, says a Robert Half Management Resources survey. More than one-third (38 per cent) of chief financial officers interviewed cited time management due to competing priorities as their biggest work challenge. Keeping up with technology and accounting regulations garnered 30 per cent and 19 per cent of the response, respectively. To get more value out of a workday, CFOs should focus efforts on projects that will save the most money, grow the most revenue, or open doors to the most new business; understand the limitations of their staff in terms of time, knowledge level, and experience; avoid micro-managing; and practice the golden rule by showing respect for others' time.

Seven Per Cent Return Likely
Diversified portfolios are likely to return five to seven per cent per year on average over the next 10 years, says a TD Economics report. It says that an economic approach to evaluating future financial returns suggests that well-diversified portfolios are likely to return between five per cent for income-focused portfolios to just under seven per cent for growth-focused holdings. These estimates are based on predictions that cash will likely provide an average annual return of 3.4 per cent, bond returns will be about four per cent, and equities are forecast to return roughly 7.5 per cent on average. The forecast for equity returns applies to Canadian, U.S., and global equities. The report indicates that emerging market equities should be able to deliver a double digit return, “but this reflects the greater risks associated with such investments.” However, it attached several caveats to the equity return forecasts. There will likely be large swings in equity valuations over the next 10 years and the estimates assume no increase in price-to-earnings ratios. The forecast also ignores currency effects.

More Brit Millionaires
The number of millionaires in Britain is growing by more than 100 every day, says figures from Barclays Wealth. It says that there are currently 619,000 millionaires in the UK – up from 528,000 two years ago. A combination of the stock market recovery, private enterprise, and an influx of rich foreigners has meant an increase of more than 120 super-rich a day. Of the total, about 86,000 have more than £5million in assets – up 19 per cent over the same period.

Order Book Open For 918
Order books are open for Porsche’s 918 Spyder. Featuring a V8 engine with over 500 horsepower in addition to two electric motors that will produce at least 218 hp, the plug-in hybrid supercar is estimated to consume just 3.0 L/100 km on the New European Driving Cycle (NEDC). Available for order at a price of $845,000, production of the 918 Spyder will begin in September 2013 and will be limited to a maximum of 918 units. Orders from around the world will be produced, in the sequence they are received, at Porsche's main factory in Stuttgart-Zuffenhausen, Germany. The first Canadian deliveries are anticipated at the end of 2013.

Managers Favour Canadian Equities
Canadian equities remain in favour with a majority of investment managers. However, an increasing number of managers expect U.S. equities to provide growth in the second quarter, says the ‘Russell Investment Manager Outlook’ for February 2011, prior to the disaster in Japan. Sadiq S. Adatia, chief investment officer of Russell Investments Canada Limited, says “Four-in-five believe the Canadian market is now fairly valued. Canadian small cap stocks, which tend to perform well during periods of economy recovery, are now favoured by exactly 50 per cent of managers with 24 per cent of managers bearish.” Given Canada’s economic resilience and strong market performance, it seems likely that investors are starting to look elsewhere for new under-valued opportunities. The U.S. may be just the place, with bullish sentiment towards U.S. equities climbing from 54 per cent to 64 per cent this quarter, and bears accounting for just 15 per cent of managers.

Knowledge Of History Can Help Investors
Investors should educate themselves on the history and pratfalls of bubbles, work on managing their emotions while making investment decisions, focus on the long term, and seek independent points of view, says research from Vanguard. In ‘Market Bubbles and Investor Psychology,’ Vanguard researcher Steve Utkus examined market bubbles ranging from the Dutch tulip bulb crisis in the 1600s to the recent mortgage crisis. He found four key psychological stages leading up to and following a bubble. In the ‘initial forecast,’ individuals make initial forecasting errors due to rational mistakes or because they judge the situation to be the same as a similar one, failing to take into consideration all of the evidence that the two situations are actually different. Then comes ‘overconfidence’ where they create excessively rosy forecasts because they tend to be overconfident and project recent positive news into the future without taking into consideration long-term information. In the ‘group transmission’ stage, decision-making biases tend to become amplified at a group level. People exhibit “groupthink” when they go along with the group rather than looking for alternatives and more information. And due to a phenomenon known as ‘group polarization,’ a group makes riskier decisions than the individuals in it would make on their own. Finally, ‘recalibration’ occurs where forecasts are deflated by actual experience, leading to a recalibration of expectations and the concurrent revisions downward. Interestingly, group polarization can work in reverse at this point, causing the group to collectively become even more risk-averse than the individual participants believe is realistic.

Fee-only Integrates All Areas Of Personal Finance
Fee-only financial planning brings the integration of all areas of personal finance to the forefront and makes it the sole goal of the client-advisor relationship, says Jason Heath, a certified financial planner for E.E.S. Financial Services Ltd.In the article ‘Fee-only Financial Planning’ (, he says true fee-only financial planning ensures that the planner and their company are compensated solely by agreed upon fees paid by the client.

Beating Benchmarks Goal A Bad Habit
Convincing investor clients that their goal should be to try to consistently outperform the various stock and bond market indices is an “incredibly” bad habit, says Mark Barnicutt, of Highview Financial Group. In the article ‘The Only Relevant Investment Benchmark’ (, he says the relative performance of a client’s investment portfolio (ie: beating the indices) has absolutely nothing to do with the real investment performance benchmark which is meeting a client’s future consumption requirements. Instead, investment managers and their clients should devote themselves to developing well-reasoned, sensible investment policies designed to achieve the client’s realistic and specified long-term investment objectives

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March 21 , 2011

Canadian Growth To Remain Strong
Recent events in Japan have added to growing concerns about the strength of the recovery, but should not push either the Canadian or global economies back into recession, says a report from CIBC World Markets. It predicts growth will remain relatively strong in Canada despite a slowing in many other countries due to rising oil prices and restraint in government spending. The report forecasts real GDP growth of four per cent in the first quarter of 2011. While it will take time before information is available to make a complete and accurate assessment of the implications of the events in Japan, including the crisis at its Fukushima Dai-ichi plant nuclear plant following last week’s massive earthquake and devastating tsunami, the report notes that the global economy was already facing increased uncertainty on a number of fronts even before the disaster. These include surging gasoline prices and restrained growth as a result of increased government fiscal restraint, particularly in the United States.

Standards Transition Raises Concerns For Investors
Investors should be mindful when considering the financial statements of Canadian companies transitioning to International Financial Reporting Standards (IFRS) from Canadian Generally Accepted Accounting Principles (GAAP), says a study by the Certified General Accountants Association of Canada (CGA-Canada). The study notes that, in theory, ratios would be the same if there was no difference between IFRS and pre-changeover Canadian GAAP. In practice, the adoption of IFRS changes accounting figures and, therefore, financial ratios. The CGA-Canada recommends that investors be particularly careful in distinguishing between business performance changes caused by the changeover to IFRS and those caused by changes in business.

HSBC Offers Sharia Services
HSBC Securities Services and HSBC Amanah have rolled out a sharia-compliant securities service. HSBC Amanah Securities Services will be offered globally to Islamic investment managers and traditional investment managers managing Islamic funds. It will provide sharia-compliant fund accounting and administration, global custody, transfer agency, banking, and treasury services in 17 markets in the Middle East, Asia-Pacific, Europe, and the Americas.

Warning Issued On Pre-IPOs
FINRA has issued a warning about potentially fraudulent schemes to sell purported shares of Facebook and other popular, well known private companies through ‘pre-IPOs.’ ‘Pre-IPO’ speculation involves buying unregistered shares in a private company before the initial public offering of securities and it can range from risky deals to outright frauds. On the legitimate end of the spectrum, a company can sell its unregistered shares in private transactions (often called ‘private placements’) and such sales to investors are an essential source of capital for businesses, particularly small firms. However, unregistered shares offered could be part of a fraud. FINRA says the bottom line is that many pre-IPO scams involve unlicensed individuals selling unregistered securities, making it critical to check out both the promoter and the investment. 

Businesses Not Passing To Next Generation
Nearly half (49 per cent) of Canadian family business owners have not chosen their next business leader, exposing a lack of succession planning, says the PwC ‘Global Family Business Survey.’ The study found less than half (48 per cent) of Canadian family business owners plan on passing their family business onto the next generation – a significant drop from 90 per cent in 2007. Many, as a result, are making non-traditional decisions about their business. Within the next five years, it found 27 per cent of owners anticipate a change in ownership. Among those, 33 per cent plan to sell to a private equity investor, up from 14 per cent in 2007, while 22 per cent plan to sell to a management team. Half of respondents say their companies were owned by the first generation, 34 per cent by the second generation, and only 16 per cent by the third or more generations.

Net Worth Rises To Record Levels
Household finances improved in the fourth quarter and net worth is rising to record levels, says Statistics Canada. Canadian household net worth grew by 2.2 per cent in the fourth quarter of 2010 to $6.2 trillion. The gain pushed Canadians’ net worth to a new record high, 4.1 per cent above the pre-recession peak seen in the second quarter of 2008 and 14.6 per cent above the recessionary trough seen in the first quarter of 2009. The improvement in household balance sheets reflected strength in equity markets that pushed the S&P/TSX composite index up and led the market value of household financial assets (which include equities, bonds and pension assets) to rise by 2.7 per cent ($112 billion).

Enhanced Income ETF Launched
AlphaPro Management Inc. has launched the Horizons AlphaPro Enhanced Income Equity ETF, creating a tax-efficient, monthly distribution on a portfolio that holds a selection of 30 of Canada's largest stocks. The ETF trades under the symbol HEX. The investment objective will be to provide exposure to the performance of an equal weighted portfolio of large capitalization Canadian companies and monthly distributions of dividend and call option income. To mitigate downside risk and generate call option income, the portfolio manager will write covered call options on the portfolio securities.

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March 14 , 2011

Social Media Reshape Investment
Social media are re-shaping the financial world and how, when and where consumers receive their financial information, says an Investors Group poll. It found that more than four-in-10 Canadians who save and invest (42 per cent) use social and online media to find information to assist with their decision making. Next to their financial advisor (66 per cent), Canadians who save and invest are most apt to get financial information from websites belonging to financial services companies and from online media belonging to traditional media and investment firms (40 per cent). The research also reveals that Canadian investors view online saving and investing information sources as being more credible than family and friends or traditional TV, radio, and print media formats.

Client Interests Must Be First
An investor advocacy group is calling on regulators to require advisors to put their clients’ interests first when providing investment advice. The Canadian Foundation for Advancement of Investor Rights (FAIR Canada), along with the Hennick Centre for Business and Law and the Toronto CFA Society, say regulatory requirements need to be changed to better align with consumer expectations. FAIR Canada points out that the United States and the United Kingdom have moved ahead of Canada in their initiatives to strengthen investor protections within the client-financial advisor relationship. The U.S. Securities and Exchange Commission recently published a staff report calling for the adoption of a uniform fiduciary standard for anyone providing investment advice. In the UK, regulators are shifting to a more intrusive approach to consumer protection, including the banning of embedded commissions, in an effort to prevent more consumer harm.

Manulife Offers Real Estate Funds
Manulife Real Estate, the real estate arm of Manulife Financial, is forming a new Real Estate Funds platform and launching a Canadian Real Estate Funds offering. The funds provide accredited investors with an opportunity to participate in a strategy that targets a steady flow of income and long term capital growth through investments in Canadian commercial real estate. Structured as a private, two-tier limited partnership, they provide separate real estate investment options from a single source of real estate assets. Investors can participate through direct investments in a portfolio of income producing commercial real estate properties or in a combination of investments in the property portfolio together with investments in publicly traded Canadian real estate securities and Canadian money market securities.

Female Leadership Strategies Lacking
Despite efforts among Canadian public and private sector organizations to achieve a diverse workforce, the overwhelming majority of them – 82 per cent – do not have a clear strategy or philosophy for the develop­ment of women into leadership roles, says Mercer’s ‘Women’s Leadership Development Survey.’  It says when it comes to strategy for developing women leaders, Canada trails both the U.S. and the world. American and international results show that 70 and 71 per cent respectively lack a strategy, compared to 82 per cent in Canada. This lack of strategy is evident to the women working in North American organizations. More than half (53 per cent) of Canadian women and 38 per cent of their U.S. peers believe their organization provides ‘no’ or ‘minimal’ support for their leadership development.

Economy Ends Year On High Note
On the back of solid net exports in the final quarter of 2010, Canada's economy finished the year on a high note recording stronger than expected gains, says an ‘RBC Economic Outlook.’ The biggest support for the economy came from net exports which added a full 4.5 percentage points to the quarterly growth rate. Continued consumer spending also played a vital role in driving overall GDP, marking the fastest increase in spending since late 2007. RBC expects real GDP to increase at 3.2 per cent in 2011 as U.S. demand for Canadian exports increases. Growth in 2012 is forecast to rise by 3.1 per cent.

Crestpoint Provides Direct Access To Real Estate
Connor, Clark & Lunn Financial Group has formed a business dedicated to providing institutional and high net worth investors with direct access to Canadian commercial real estate assets. Crestpoint Real Estate provides direct access on either a pooled or segregated account basis. It is being headed Kevin Leon, who will serve as president and chief investment officer.

Office-holder Earnings Not Pensionable
Attendance and per diem fees paid to persons holding an office are not pensionable for purposes of the Canada Pension Plan, as the amounts received in any year could not have been known in advance is the result of two recent court cases – Real Estate Council of Alberta versus the Minister of National Revenue and Her Majesty the Queen in Right of Ontario versus the Minister of National Revenue. A Hicks Morley ‘FTR Now’ says the Tax Court of Canada decisions call into question whether certain amounts paid to board members, council members, and other office-holders should be treated as pensionable earnings and subject to CPP contributions. Based on the court’s reasoning in both cases, office-holders whose earnings are not fixed and not reasonably ascertainable in advance (because they are based on attendance at meetings or for providing services that cannot reasonably be known in advance) will not be considered engaged in pensionable employment and no CPP deductions should be made from their remuneration. However, as both decisions are under appeal, the treatment of such earnings for CPPpurposes is not yet settled.

Derivatives Threat To Markets
CFA Institute member respondents in eight out of the 16 largest markets say that derivatives are the most serious issue facing global markets. The ‘CFA Institute Financial Market Integrity Outlook Survey’ found members worldwide feel that improved enforcement of existing laws and regulation (31 per cent) and improved regulation and oversight of global systemic risk (23 per cent) are the most needed regulatory/industry actions to help improve global market trust and integrity.

Economic Uncertainty Hurts Confidence
Economic uncertainty and market volatility have contributed to lower levels of investing confidence and generally more conservative investing behaviour among participants. Among women in particular, says a MassMutual retirement services division survey, confidence in investment decisions and the stock market is much lower than for men and the gap is widening. The survey also indicates that anxiety about having adequate savings to retire is increasing. Participants of both genders are also becoming more conservative in terms of their investing behaviour. Among participants who made a change in their approach to investing in the last 12 months, 61.7 per cent became more conservative compared to 38.3 per cent who became more aggressive.

Small Businesses Reluctant To Take Risks
Canadian small business owners are still waiting for the economic recovery and are increasingly reluctant to take risks with their business, says the quarterly American Express ‘Small Business Monitor’ conducted by Angus Reid. Willingness among Canadian small business to take ‘significant’ or ‘above average’ risks has fallen to 16 per cent from 25 per cent a year ago. Respondents said they were less willing to make significant capital investments, dig into lines of credit, or extend payment terms to customers than they were three months ago. Only two per cent   were willing to take on ‘significant" risk. Fewer than half (47 per cent) categorize themselves as ‘hopeful’ that their financial position will improve, down eight points over the past year. More than a third said that their most important priority is to maintain their current business, while 28 per cent have made growth their main priority. Being more innovative was the main priority for 14 per cent. And less than a quarter (23 per cent) have sought new or increased credit in the last six months, suggesting any ‘Dream Big’ plans are on hold.

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February 28 , 2011

‘High Net Worth’ Face RPI Audit
While the Canada Revenue Agency has not formally released its criteria for defining a 'high net worth individual,' it appears to be focusing on individuals and their related groups having a net asset value of approximately $50 million or more and who have related groups consisting of 30 or more entities, says aMeyers Norris Penny ‘Tax Alerts & Insights.’ Those who meet this may be selected to be audited as part of its ‘Related Party Initiative (RPI),’ a program designed in response to what it considers to be the collective tax risk posed by groups that frequently employ special-purpose entities to achieve favourable business and tax results. The purpose of this audit initiative is to gain an understanding of how high net worth individuals structure their affairs and to identify the type and magnitude of compliance issues and tax at risk. The objectives are to develop a compliance strategy for such taxpayers and to identify legislative or program changes required to address such compliance issues.

Dedicated Managers Have Best Returns
Those who ignore currency do so at their own peril, says Adnan Akant, head of currencies at Fischer Francis Trees & Watts, a BNP Paribas Investment Partner. Speaking at a BNP Paribas ‘Information Breakfast Meeting,’ he said currency adds another dimension where returns can be earned. And, with more investors diversifying cross borders, currency hedging becomes more critical as international assets grow. He cited an example of the importance of currency to Canadian investors who were in European equities in 2010. While the asset class earned 11.8 per cent, a failure to hedge currency meant the return for Canadians was almost zero. He also noted that currency cannot be managed passively as holding cash means it generates no return.

Marriott Splitting Off Timeshare Company
Marriott International Inc. will split off its timeshare development and management company from its lodging management and franchising operations later this year. It says the move will help both companies focus on opportunities in their respective industries. Marriott will continue to receive franchise fees from the timeshare company's use of the Marriott and Ritz-Carlton brands. The Marriott family will hold a roughly 21 per cent stake in each company.

Registered Firms Involved In Scams
Approximately 78 per cent of the fraud losses suffered by investors involved firms or individuals registered with securities regulators, but only 17 per cent of the losses were with firms that were also members of a self-regulatory organization such as the Investment Industry Regulatory Organization of Canada or the Mutual Fund Dealers Association of Canada, says the Canadian Foundation for Advancement of Investor Rights (FAIR). Its report on 15 high profile cases of financial fraud from across the country over the last 10 years shows investors with non-SRO registrants sustained higher losses and were not likely to recover most of their money. This is because most of the investment scams involved firms that were not members of the compensation fund and of the four that were, three fell outside the scope of coverage. FAIR makes several recommendations to improve fraud prevention, provide earlier detection of fraud, conduct more effective prosecution, and provide better compensation for victims. These include launching a national education campaign to educate consumers on avoiding financial fraud; making investment firms responsible for misconduct by rogue advisors even when they sell non-firm products; and offering financial incentives to encourage reporting of fraud to regulators and police.

CCGG Sets Out Director Compensation Principles
The Canadian Coalition for Good Governance (CCGG) has set out some principles for boards to consider when structuring their own compensation plans. It says since directors are fiduciaries, they have a conflict of interest in establishing their own compensation. The principles for boards should ensure that their interests are aligned with those of the equity owners of the company. It recommends that director compensation be designed to promote a high degree of objectivity, independent thinking, and a direct alignment with the interests of the shareholders and other stakeholders of the company. It also says since aggregate director compensation and the structure of director compensation plans will vary, depending upon company-specific factors such as company size and complexity, individual director compensation should reflect the time expected of the director as well as the overall expertise and experience required. Director compensation should include appropriate director indemnity and insurance coverage and the reimbursement of reasonable out-of-pocket expenses (such as travel and educational costs), but should not include retirement benefits, change of control or severance provisions, healthcare coverage, charitable donations, vehicles, clubs, pensions, or other such perquisites. Finally, a board may choose to use a compensation consultant independent of management when contemplating material changes to a director compensation policy or for benchmarking purposes.

Investor Confidence Falls In February
Globally, investor confidence fell 9.2 points in February from January's revised reading of 100.8 to reach 91.6, says the ‘State Street Investor Confidence Index.’ Declines were evident across all regions. The risk appetite of North American institutional investors fell to 92.5, a 6.8 point decline from the January level of 99.3. Confidence among Asian investors fell by a similar margin, slipping 4.3 points from January's revised number of 96.5 to 92.2. In Europe, where the most telling signs of retrenchment are evident, institutional investor confidence declined 13 points, from 92.8 to 79.8. Political turmoil in the Middle East and North Africa, policy tightening in emerging markets, and qualms about the pace of the recent run-up in developed markets equities are likely at the root of this, it says.

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February 21 , 2011

Owners Unaware Of Estate Tax Impact
The majority of Canadian family business owners are not fully aware of the domestic and international tax obligations that will arise in their estate on the shares of their business, resulting in many passing on heavy tax burdens to their surviving family members at the time of their death, says PwC’s ‘Global Family Business Survey.’ It found one of the top three external issues Canadian family business owners felt they would face in the next 12 months is international and domestic tax implications. A staggering 95 per cent of respondents were unaware of the possible international inheritance tax implications, which is concerning given the large number of business owners who are U.S. citizens or have children living in the United States. Moreover, less than half (45 per cent) of Canadian owners had their business valued domestically within the past 12 months to gauge their exposure to tax, and 41 per cent said they were unaware of capital gains tax implications to their estate in respect to the shares of their business. One way owners can defer tax on death is to plan their wills so that the tax is not payable until their surviving spouse passes away. Another is to opt for an estate freeze, which ensures the tax liability for the owner’s shares in the company will not increase after the freeze is in place. The report is at

Case Law Littered With Stock Options
The last thing employers want is for employee stock options to find their way into a wrongful dismissal claim, but it happens regularly, says a Fasken Martineau DuMoulin LLP ‘HR Space.’It says case law from across the country is littered with decisions that include employee stock option plans in calculating the compensation due for wrongful dismissal. From the outset, this presents problems as damages are always paid in cash. This means that one of the goals of equity compensation – conserving cash – is thwarted when employee options find their way into claims decided in the courtroom. Worse, case law acknowledges that there is no standard way to calculate damages arising from lost equity compensation. But if an option plan is a significant part of an employee's compensation and is part of a claim for wrongful dismissal, the court has little choice but to try and assess the damages.

TSX Seeks Comments On Restricting Inducement Compensation
The Toronto Stock Exchange (TSX) proposes to limit the security-based compensation that can be issued, without shareholder approval, to officers as an inducement to enter into employment with the issuer. Currently, subsection 613(c) of the TSX Company Manual provides that no shareholder approval is required if the securities issuable to an officer as an employment inducement do not exceed two per cent of the number of securities outstanding. The TSX is concerned that the limit of two per cent per person could result in excessive dilution without shareholder approval, particularly if several officers are issued securities as part of a corporate re-organization. Pursuant to the proposal, no shareholder approval will be required if the aggregate number of securities made issuable to officers as employment inducements in any 12-month period does not exceed two per cent of the number of securities outstanding, prior to the date this exemption is first used during such 12-month period.

Toronto Ritz-Carlton Now Open
Toronto's newest and most anticipated hotel has officially opened its doors. Located in the heart of the downtown core, the 53-storey hotel features 267 guestrooms including 56 corner suites, two deluxe suites, and The Ritz-Carlton Suite at over 2,400 square feet. With unimpeded north or south facing views of the city or Lake Ontario, each guest room or suite offers floor-to-ceiling windows with heated perimetres, rich African Anigre wood, and Portuguese Estremoz marble that complements the neutral, yet contemporary decor. Spacious bathrooms feature heated marble flooring, dual vanities embedded with 22" HD television screens, private rain showers, and soaker tubs with bath caddies.

Coalition Voices Executive Compensation Concerns
While the Canadian Coalition for Governance applauds the Canadian Securities Administrators (CSA) for bringing the proposed amendments to the Statement Of Executive Compensation And Consequential Amendments forward, it does have some concerns. The coalition says the amendments will improve the executive compensation information available to shareholders. However, it says while companies are required to disclose performance goals or conditions, the proposed amendments should include provisions that require companies to specifically explain why certain performance metrics were chosen. While it does not object to removing the requirement to disclose non-compensatory amounts that named executive officers may elect to make to their Defined Contribution pension plans with funds received from their salary, it says if an employee is allowed to contribute additional amounts to their Defined Benefit plan, those amounts should also be disclosed as they may increase the future pension obligations of the company,

White Paper Analyzes Accumulation Strategies Inc. has collected various strategies including asset allocation strategies (strategic, age based, target date, rebalancing methods, effect of alpha), fixed index annuities, and other similar products in a white paper. In ‘Capital Accumulation Efficiency (CAE),’ these are analyzed using a non-Gaussian approach. It measures how effectively a method, a strategy, or a product measures against an optimized investment portfolio for accumulation purposes for different time horizons. It can be found at

Trust In Business Stable
In a year marred by corporate crises and financial turmoil around the globe, Canada enjoyed stable levels of trust in business, says the ‘11thannual Edelman Trust Barometer,’ an international trust and credibility study of informed publics aged 25 to 64. Yet despite this stability, conclusions drawn from the data indicate that trust is now different and conditional, and is premised on what a company does and how it communicates. In fact, informed publics in Canada now trust non-governmental organizations much more than business (72 per cent versus 50 per cent, respectively), demonstrating a strong need for corporations to create value in a way that aligns with society's interests, not just profits. Overall, Canada climbed to the fifth spot ‒ up from the seventh, among the 12 countries surveyed in 2008. Canada now significantly surpasses the U.S., which sits in the bottom three with the UK and Russia. Canadian-headquartered companies also continue to maintain high levels of trust around the world (75 per cent), and remain one of the top three trusted "headquarter countries," along with Germany and Sweden.

PIMCO Using State Street
State Street Corporation and International Financial Data Services have been appointed by PIMCO to provide a range of investment services for PIMCO’s newly-launched Canadian retail funds. State Street will provide fund accounting, fund administration, custody, and trustee services and IFDS will provide transfer agency and unit-holder recordkeeping services for the eight new funds. 

Smaller Asian Economies Expected To Grow
Asset management, private equity, and hedge fund executives expect growth over the next year to come from smaller Asian economies such as Hong Kong, Singapore, and South Korea, says a study by RBC Capital Markets. In a sign that asset managers have adapted to the impact of the sovereign debt crisis in their portfolios, the survey reveals a significant shift in expectations since a similar survey conducted in May 2010. It found asset managers are optimistic about Asian equity markets with 69 per cent expecting a rally over the next year. Asset managers are more optimistic about the performance of European equity markets (only 26 per cent expect the markets to fall, a significant shift from the 40 per cent who expressed this in the previous survey) and the Euro (30 per cent expect a higher valuation, versus 16 per cent in the previous survey). They also are more optimistic about seeing a reduction in inflation in their own countries over the coming year (18 per cent expect it versus seven per cent in the previous survey). Finally, they are less optimistic about the U.S. equity markets (54 per cent expect gains versus 66 in the previous survey) and the dollar (53 per cent expect a devaluation versus 24 per cent in the previous survey).

Investors Can Buy Gold
GoldMoney, a global provider of physical bullion for retail and institutional investors, and Standard Life have joined forces to provide a practical way for Standard Life's self-invested personal pension (SIPP) owners to hold physical gold bullion. They have integrated their respective systems so that Standard Life’s customers can now trade and store physical gold bullion within their SIPPs. Investors worldwide view gold as an effective way to preserve their purchasing power over long periods of time.

RRSPs Offer Business Security
About 13 per cent of small business owners in Canada don’t know how the value of their business may have changed since the recession, says a BMO survey. However, a varied approach to planning for retirement, including an RRSP, can help entrepreneurs ensure a secure retirement income. “Many small business owners rely on the sale of their business to fund their retirement, which can be a risky approach if you can’t sell for the price you need or are forced to step away from the business sooner than you planned,” says Gail Cocker, senior vice-president, BMO commercial banking. Owners need to look at the “bigger picture” and have a diversified financial plan that includes an RRSP. RRSPs allow owners to establish a diversified source of income independent from their business. Along with the tax benefits, RRSPs offer security during downturns, especially conservative investments such as Guaranteed Investment Certificates (GICs), government bonds, or Treasury bills. With the strength of an RRSP behind them, they also provide bargaining power as owners are better positioned to hold out until they find the right buyer for their business. They can offer protection in case of unexpected health problems and reliability since owners can convert to an annuity that will provide them with a guaranteed income for life.

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February 14 , 2011

Social Media Guidelines Spelt Out
The Investment Industry Regulatory Organization of Canada has issued a draft guidance spelling out how firms and advisors should address compliance and supervision issues when using social media websites for business purposes. The updated guidelines deal with the review and supervision of advertising, sales literature, and correspondence that address that the increasing use of social media, such as Facebook, Twitter, and blogs. It aims to address “the unique compliance and supervisory issues” that may arise when reps use social media to communicate with clients and the public for business purposes. It is also intended to provide dealers with guidance for designing policies for reviewing, supervising, and retrieving various forms of communications.

Strong Year For Profits
Canadians businesses are in for a strong year of profits, says The Conference Board says. Its leading indicator of industry profitability rose 0.6 per cent in January, following an identical gain in December. This marked the strongest consecutive monthly gains since the index was established in 2001. However, it only partially reverses falls between March and September of 2010 and is only back to where it was a year ago. Key factors in recent improvements include the dramatic increase in raw material prices, better employment conditions, and stock market gains.

Written Designation Trumps Other Documents
A New Brunswick Court of Queen’s Bench decision in Tower Estate v. Tower Estate serves as yet another reminder that a prescribed written beneficiary designation trumps other less specific documents purporting to revoke or substitute a named beneficiary, says Douglas Rienzo, of Osler, Hoskin & Harcourt LLP. In the case, a deceased employee of Correctional Services Canada designed his then-wife as beneficiary of his death and pension benefits. However, the couple divorced and while they did reach an agreement over the pension and death benefits, the employee did not change his beneficiary designation. The court held that in order to effect a beneficiary revocation under the PSSA, it is necessary to comply with the relevant statutory requirements, which included filing a prescribed form. Rienzo says as a result of this decision, plan administrators should be wary of administering changes to pension plan beneficiary designations based on separation agreements containing only broad and general language releasing claims to benefits. Instead, they should ensure that plan members file the proper documentation in accordance with legislative requirements and the plan terms.

Commodities Offer Diversification
Investors benefit from the diversification that direct commodity exposure brings to their portfolio since commodity prices are negatively correlated to stocks and bonds over long periods of time, says Keith Black, associate director of curriculum at the Chartered Alternative Investment Analyst Association. Speaking at the AIMA Canada and the Chartered Alternative Investment Association ‘So you think you know commodities? Think again.’ session, he said “Even though commodities have a similar volatility as equities, adding a commodity futures program to your equity portfolio can serve to reduce portfolio volatility without hurting your returns.” However, he also said it’s important for investors to diversify their commodity holdings since there is generally low correlation between different types of assets and investors who have concentrated on one commodity area such as gold have missed out when food products or energy rally.

Action Needed On Financial Literacy
Urgent action on financial literacy is needed in Canada, says the Task Force on Financial Literacy. It recommends a national strategy to strengthen financial literacy in this country and recommends efforts to educate Canadians on the benefits of getting professional financial advice. The strategy features five priority areas ‒ shared responsibility, leadership and collaboration, lifelong learning, delivery and promotion, and accountability. The strategy would incorporate formal education, federal government programs, online tools and a campaign to raise awareness. Under the plan, the formal education system would provide a foundation for financial literacy, but education would also extend beyond the classroom into workplaces, the financial services marketplace, and online with the creation of a single-source website providing unbiased information.

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February 7 , 2011

Quality Of Life Future Benefit
The future of benefits for executives will be programs that enhance the quality of life for executives and their families, says Bill Brown, of The Williamson Group. He told a session entitled ‘Past, Present & Future: Executive Benefits Trends & Best Practices’ at its ‘Global Benefits Forum 2011’ that this will require a proactive approach to keep the executive and their family in good health. And, in the event of illness, it will help them navigate the best healthcare options to ensure proper treatment and access to the right resources to return to good health. This is the only strategy that could help to attract and retain executives, he said, as changes to tax laws have eliminated benefits such as company cars, mortgage loans, and generous retiree group life, health, and dental plans.

Canada’s Year This Year
This year could be Canada’s, says Veronika Hirsch, chief investment officer of BluMont Capital. Speaking at Integrated Asset Management Corp.’s annual general meeting, she said natural disasters will hinder Australia’s efforts to export its commodities during the first quarter of 2011. This puts Canada in a position to outperform Australia this year. As well, events in the Middle East are prompting investors to move from defensive positions in gold to oil. If this crisis spills over into an oil-producing nation and constrains supply, Canada could benefit.  
Large Cap Growth Beats Benchmark
Canadian large cap growth managers in Canada gained 11.1 per cent last quarter, their highest return since the first quarter of 2009, says data from the ‘Russell Active Manager Report.’ That was well ahead of the S&P/TSX Composite Index's return of 9.4 per cent during the same period and ahead of the median value manager's return of 9.1 per cent. Overall, 52 per cent of large cap managers in Canada were able to beat the benchmark in the fourth quarter of 2010, up notably from only 34 per cent in the third quarter and 37 per cent in the second quarter. 

Top Earners Return To Work
Retirees who returned to work are the most likely to be in the top income bracket, says Statistics Canada. Almost two-thirds of returned workers held white-collar jobs which was significantly higher than the rates for the never-retired and partially retired groups. The high incidence of white collar jobs among returned workers is consistent with their higher levels of educational attainment. Those who returned to work had the highest average level of educational attainment. Among this group, 65 per cent had post-secondary degrees compared with 42 per cent of the fully retired. Full retirement generally corresponded to lower income as 60 per cent of people who had fully retired were in the two lowest income brackets in 2009, compared with less than 30 per cent of workers who had never retired. The study was based on data from the ‘2009 Healthy Aging cycle of the Canadian Community Health Survey.’

Consumers Making Statement
Canadian consumers are focusing primarily on cost and quality, says a study by American Express – ‘Consumer Spending Futures: The New Era of Pause and Purchase.’ "We're seeing a 180-degree turnaround from the last decade where consumption was conspicuous,” says Jennifer Hawkins, vice-president and general manager, consumer products and partnerships. “Now people are buying to make a statement about the kind of world they want to live in." The report uncovered four key consumer spending trends. ‘SLEDS’ (Supporting Local Economies Through Direct Spending) buy to be part of their local community and are shopping for more sustainable products. ‘V-tailing’ (Value Retailing) reflects less shopping, choosing products that represent value for money and value from brands that align with their own desire for simplicity and ethical living. ‘SMUGS’ (Socially-Mobile Ultra-Green Seniors), Canada's 55 to 64-year-olds, are challenging traditional notions of the baby boomer generation by valuing individual freedom, luxury, and new experiences. ‘Re(n)tail,’ cost-conscious young consumers aged 18 to 34 who were brought up in an era of online sharing and collaboration, are downsizing and simplifying their possessions and experiencing products and services rather than owning them.

Sovereign Funds Reassess Strategies
Challenges posed by turbulent financial markets over the past few years have caused many of the world's leading sovereign funds to reassess their investment strategies and risk management, says research by State Street Global Advisors (SSgA). It found that as a result of their new assessment, some are making significant changes including a growing shift from active investment management strategies to passive ones and an increasing focus on the emerging market debt as yields on traditional asset classes have fallen. Greater focus is also being placed on the possibility of accessing different and independent sources of economic value such as land and infrastructure to help diversify sovereign portfolios.

China Looms As Luxury Goods Market
China will be the world's biggest luxury goods market by 2020, says a report by CLSA, an Asian independent brokerage and investment group. It says as the Chinese economy booms, an emerging middle class is spending more on high-end items. Over the next decade, Chinese consumers ‒ including a surging number of billionaires ‒ will account for 44 per cent of global spending on goods such as bags, vehicles, watches, shoes, and clothes. The Hurun Rich List, the Chinese equivalent of the Forbes or Sunday Times rich lists, reports there are now 875,000 Chinese people worth more than $1 million and almost 200 of these are billionaires. The nation's luxury goods sector was worth about $25 billion in 2009, or about 10 per cent of the world market, including purchases by consumers in Hong Kong, Macau, and Taiwan.

BRITISH Airways Goes Luxurious
BRITISH Airways’ luxurious new first class cabins will be available in the next couple of months. Designed to allow passengers to "work, sleep, eat, and be entertained in a way that matches their premium lifestyles and expectations,’ the cabins come amenities with such as a personal concierge, Egyptian cotton sheets, and are 12 inches wider than their predecessors.

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January 31 , 2011

Investors Feeling Frozen
Canadian investors are stuck in the snow bank this winter, feeling frozen, helpless, and uncertain – even when they expect that the stock market will continue to rise, says research from Franklin Templeton Investments Corp. It found 39 per cent of investors described their investment personality as either suspicious or timid. Only 31 per cent of investors described themselves as analytical, risk-taking, or opportunistic. It’s the fifth consecutive national survey by Franklin Templeton since 2009 to find strong negative sentiment among Canadian investors. The pessimistic pattern is in stark contrast to market returns over the same period. In 2009 and 2010, the Toronto Stock Exchange soared more than 49 per cent in value and is now only 11 per cent below its record peak. “The markets have recovered dramatically, but investor confidence has not,” says Don Reed, president and CEO. “We’ve spent two years studying investor’s attitudes towards the market and it’s clear that emotions dictate action. Many Canadians failed to seize the opportunity and invest in stocks at bargain prices. Even today, with forecasts of continued growth, many investors are still frozen.”

Next Generation Worries Millionaires
Canada’s millionaires are worried about the next generation’s financial future with 58 per cent believing their children will have a more difficult time making it financially than they did, says research from RBC Wealth Management. Furthermore, almost half (49 per cent) of those surveyed are concerned about their children’s readiness to successfully manage a potential inheritance and one-third (35 per cent) believe their children are too focused on the short term and may take wealth for granted. Over half (53 per cent) of Canadian millionaires – and 67 per cent of those with assets of more than $5 million – feel a responsibility to preserve wealth for future generations. At the same time, many have not yet made any formal efforts to ensure the successful transfer of their assets: 39 per cent do not have an estate plan in place and one-in-five (22 per cent) have not even considered getting one. 
Canada’s Millionaires: Facts & Figures

  • Their average age is 54
  • The majority (59 per cent) are married with grown children
  • They’re well educated – 28 per cent have post grad degrees
  • They accumulated their first $1 million in assets by age 42
  • 31 per cent have household incomes under $150k, one-third (33 per cent) $150k-$300k and 30 per cent  $300k + (seven per cent preferred not to say)
  • 40 per cent are business owners
  • 21 per cent were born outside of Canada (and 29 per cent of those with assets of more than $5 million)
  • Younger millionaires (under 45 with more than $1 million in investable assets):
  • are generally wealthier with 35 per cent having accumulated assets of more than $5 million
  • are increasingly entrepreneurial with over half (53 per cent) owning a business
  • are more likely to have been born outside of Canada (27 per cent, compared to 20 per cent of those aged 45 and over)

Source: HNW, Inc.

Recession Inspired Canadians
Many Canadian investors (45 per cent) are unsure of the annual management expense they are paying for mutual funds and even the basic cost of holding mutual funds in their RRSPs, says a survey by ING Direct. Furthermore, it found 28 per cent were unable to even suggest what they considered to be a fair fee. However, the recent recession seems to have inspired Canadians to take a more active and informed role when it comes to investing. The survey found that in the aftermath of the recession, 39 per cent of respondents are questioning whether they are invested in the right products and nearly a quarter (24 per cent) are looking for a simpler, more proven way to save for retirement.

Study Shows Link To Sustainability
A study by Sustainalytics highlights links between sustainability performance and shareholder value. ‘Sustainability and Materiality in the Natural Resources Sector’ looked at environmental and social practices in the forestry, mining, and oil sectors and found positive correlation to competitiveness in each sector. “After 20 years of assessing corporate responsibility practices, I know that sustainabilty performance should be factored into valuations. The analysis in this report reveals the extent to which environmental and social factors can impact competitiveness,” says Michael Jantzi, its CEO.

Dividend Yields Attractive
Standard Life Investments believes equities that generate meaningful dividend yields are an attractive option at this time and its allocation to equities is the highest it has been in three years. Still, people have to be careful not to overpay for companies that might be overvalued simply because of their high dividend yield, it says. Last week, the Bank of Canada was unequivocal: government and bank balance sheets in Europe were a significant source of uncertainty. The Bank of Canada also noted that Canadian government spending is expected to wind down this year. For these and other reasons, government bonds are not attractive at the moment, except for maybe provincial bonds, it says. In contrast, corporate balance sheets are solid, these companies are generating plenty of free cash, and dividend yields for equities are higher than both corporate and government bonds. You have to go all the way back to the ’50s to witness this unusual phenomenon, it says.

Investor Confidence Slips To Start Year
The State Street Investor Confidence Index for January 2011 fell 3.3 points globally from December’s reading of 104.2 to 100.9, with declines evident across all regions. The risk appetite of North American institutional investors fell to 99.5, a 3.6 point decline from the December level of 103.1. Similarly in Europe, institutional investor confidence decreased 3.9 points to 93.5 from December’s revised level of 97.4. The decline in confidence among Asian investors was somewhat more pronounced, resulting in a decline of 5.4 points in the confidence measure in that region, from 102.9 to 97.5. One reason may be that the indicator window spanned the end-of-year holiday period, a time when investors are often more reticent to deploy new risk.

Income Disparity Shrinking
The career advancement gender gap is closing, says Alice Longhurst, director, mentorship programs, at the Women’s Executive Network. In an article at to mark ‘National Mentoring Month,’ she says while the income disparity between the sexes is shrinking, it is important to recognize and address the remaining barriers to ensure reaching gender parity in the workplace doesn’t take another decade. One possible barrier is access to high-level mentoring relationships, which have always been recognized as a key driver for career advancement. Recent findings indicate that within the selection process of a mentoring relationship, male professionals still have an advantage.

Lotus Launching Clothing Line
Lotus sports car lovers will soon be able to show their affection as the British automaker is launching a line of clothing and fine leather goods for sale online in February. Lotus Originals is another step in positioning Lotus as a lifestyle brand. The racing car’s history is built into the products as selected pieces are textured to signify tire treads, while a white ‘armband" design mimics racetrack markings. Polo shirts and T-shirts will feature vintage Lotus logos, racing stripes, and car silhouettes. Accessories will include hand-crafted luggage in leather or lightweight canvas and calfskin leather driving gloves in tan, black, Lotus green, and yellow.

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January 24 , 2011

Housing Loan Rules Too Harsh
The risk of mortgage rates rising to unaffordable levels in the near future is “negligible'' and recent measures taken by Ottawa to clamp down on housing loans may be too harsh, says Canada's mortgage industry association. Due to the effect of tightened lending rules “housing demand at present and for the near future is probably lower than it needs to be,'' says the Canadian Association of Accredited Mortgage Professionals, which represents brokers and others in the industry. It says that a vast majority of borrowers studied had left themselves room to absorb a hike of as much as one percentage point on fixed rate mortgages and even more on variable rate mortgages. Federal Finance Minister Jim Flaherty altered lending rules to curb higher risk borrowing in the housing sector. Changes coming into effect in March include reducing the maximum amortization period to 30 years from 35 for insured mortgages and limiting how much money Canadians can borrow using their homes.

Essays Contend Depression Coming
The economy is on the verge of entering the greatest depression in history, says ‘The Global Economic Crisis: The Great Depression of the XXI Century,’ the latest book from the Centre for Research on Globalization. The book brings together essays by various researchers, academics, and writers to explain the crisis in a broader global context; its historical origins; and its social, political, and economic repercussions as well as its relationship to wars and military strategy around the world. It also challenges the idea that the global economy is in recovery. Topics include financial deregulation, history of central banking, the shadow banking system, the 'War on Terror', Homeland Security, the bailout, global poverty, and global governance. While the authors approach the subject from a variety of perspectives and propose a number of alternative solutions which aren't heard in the mainstream discourse, all the contributors agree that this is the greatest economic crisis in world history.

Product Guarantees Cash Flow
The Bank of Montreal has launched what it says is an industry-first product that provides Canadians aged 55 and over with guaranteed cash flow for life. Its Lifetime Cash Flow product helps address the concern about outliving retirement savings by introducing a guaranteed lifetime cash flow component that provides continuous payments for the remainder of the product holder’s life while protecting against market volatility. It is a bank deposit backed by the BMO which provides exposure to a portfolio of BMO Mutual Funds and is rebalanced annually to a progressively more conservative mix of funds over time. Any remaining portfolio value is transferred to the estate upon death, providing the client with the opportunity to leave a legacy.

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January 17 , 2011

Security Enforcement Needs Changes
Fundamental changes are needed to securities enforcement practices in Canada including an overhaul of the RCMP’s Integrated Enforcement Market Teams (IMET), says Margaret Franklin, chair of the board of governors of the CFA Institute. In a speech to The Canadian Club of Toronto, she cited failures in Canada’s enforcement practices while making the case – supported by a series of recommendations – that strong and efficient enforcement of the securities industry should be a priority for government, regulators, and investment professionals. Further, Franklin made the case that effective enforcement is essential to restoring the public’s trust in capital markets and the investment profession. “While investing is often seen as elitist and white collar crime is viewed dramatically differently from gun and gang-related crimes, the integrity of, and confidence in, our financial system is critically important to the well-being of this country and should be as much of a priority as dealing with violence in our communities,” Franklin said.

BMO Buys Hong Kong Manager
The Bank of Montreal is buying a Hong Kong-based portfolio manager that focuses on emerging markets. It has acquired Lloyd George Management, an investment manager with about US$6 billion in assets under management. Bill Downe, its chief executive, says this investment reflects an opening up of the Chinese economy, where its businesses will likely be a growing contributor to BMO’s earnings. It hopes this could be a platform for further expansion in developing economies. Lloyd George Management was founded in 1991 and specializes in Asian markets and emerging international markets.

Invesco Trimark Adds Global Funds
Invesco Trimark has launched three funds designed to meet the evolving needs of Canadian investors as the global economy undergoes significant change. The Emerging Markets Debt Fund invests primarily in local-currency-denominated debt issues of emerging market countries, a rapidly growing category. While the average credit quality of local-currency-denominated emerging market debt is rated investment grade, such debt as a category generally provides a yield higher than that of the average investment-grade bond of developed countries like Canada and the United States. The Emerging Markets Class invests primarily in companies located or active in emerging markets. Its Energy Class invests primarily in companies worldwide that engage directly or indirectly in the energy sector.

Recession Lasted Seven Months
Canada's recession may have lasted as little as seven months, making it one of the shortest since the Great Depression, says Statistics Canada. It also says the contraction was less severe than the two prior recessions and milder than in other major economies. Canada has had five other major recessions since the Second World War, and all but one of those lasted at least one year, with the shortest in 1957 at nine months. However, the start and end dates of this recession remain inexact. Swings in monthly gross domestic product and employment data in 2008 and 2009 due to one-time factors make it hard to say with precision when the recession started and when it ended.

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January 10 , 2011

CEO Pay Slips In 2009
The 100 best paid Canadian CEOs earned an average $6.6 million each in 2009, says a study by the Canadian Centre for Policy Alternatives. This works out to 155 times the $42,988 the average Canadian makes annually. Still, CEO earnings dropped from the previous year when they were paid an average of $7.3 million, almost 11 per cent more than 2009. The biggest pay package went to Aaron Regent at Barrick Gold Corp., who made $24.2 million in 2009. In second place was Hunter Harrison at Canadian National Railway Co. at $17.3 million, followed by Gerald Schwartz at Onex Corp at $16.7 million.

Mobius Heads Asian Fund
Franklin Templeton Investments Corp. has launched an Asian Growth Corporate Class fund, managed by emerging markets expert Mark Mobius. The fund will invest in companies across the Asia region, as well as companies positioned to benefit from development in these economies. Mobius, executive chairman of Templeton Emerging Markets Group and lead manager of Templeton Emerging Markets Fund and Templeton Asian Growth Corporate Class, says “Asia represents an important arena in emerging markets investing. While valuations in this region have indeed increased in recent times, growth and profitability still appear strong, indicating, in our view, strong fundamentals.”

Double-digit Returns Expected
Thomas Caldwell, founder of Caldwell Financial Ltd., expects equities to produce double-digit returns in 2011. He says a variety of supportive factors ‒ such as improving economic performance, stronger corporate performance, low interest rates, low inflation, and high corporate efficiencies ‒ are in place to produce this returns. These positive factors will overcome negative factors such new financial industry regulations in the U.S. which are creating confusion in the financial sector and huge levels of government spending that continue to drive up deficits.

Confidence Up In North America, Asia
Globally, investor confidence rose eight points from November’s revised reading of 96.4 to 104.4, says the State Street Investor Confidence Index for December 2010. In North America, confidence rose 7.7 points to 103.1 from November’s level of 95.4. In Asia, like North America, institutional investors were equally optimistic and confidence in that region increased by 7.4 points from a revised November level of 95.5 to 102.9 in December. However, investor confidence was not as positive among European investors with the index decreasing 10.8 points to 99 from November’s revised level of 109.8. The strong decline of European investors’ confidence shows that the region’s investors remain quite jittery in the face of intra-European turmoil. European investors are back again worrying that high sovereign indebtedness may prove destabilizing for the region.

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View Private Wealth News Archive 2010

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