(January 27, 2006) Mackenzie Investments has announced changes to the management of two of its funds, effective March 1, 2006.
Jerry Javasky, head of Mackenzie’s Ivy Funds team, will become co-manager of Mackenzie Select Managers USA Capital Class. He will be joined by Alan Pasnik, vice president of investments and lead portfolio manager of Mackenzie Maxxum Global Explorer Capital Class.
Mark Grammer, vice president of investments, will assume responsibility for one of the five co-portfolio manager duties on Mackenzie Select Managers Japan Capital Class fund. Also effective March 1, Mackenzie will reduce both of the funds’ management fees by 25 basis points for Series A, F and I.
“These changes will achieve a better balance between value and growth managers in the portfolio,” said David Feather, President of Mackenzie Financial Services Inc. “What’s more, it adds accomplished investors to a roster that already includes two highly respected and successful managers from the United States.”
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Laurentian offers new GIC
(January 27, 2006) Laurentian Bank of Canada has launched a new GIC, called the Xtra Multi-Rater GIC, which offers a five-year average annual return of 3.808%.
The GIC pays 2.70% in the first year, climbing gradually to 3.40% in the fourth year before paying 7.00% in the fifth. The minimum investment is $500 if held within an RRSP, or $1,000 if held in a non-registered account. It also includes a feature that allows investors to reinvest on each anniversary date, should interest rates rise.
“This investment offers better returns over a five-year period while ensuring some degree of flexibility thanks to the additional reinvestment option,” says Bianca Dupuis, Senior Manager, investment product development, Laurentian Bank.
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D’Alessandro lauded for investor relations
(January 27, 2006) The president and CEO of Manulife Financial has received the IR Magazine Canada Award for Best Investor Relations by a CEO, following a survey of 572 portfolio managers, analysts and retail investors.
“I am delighted to win this award,” said Dominic D’Alessandro. “It is particularly gratifying coming from a group keenly interested in our company – both those that analyze us and those that invest in Manulife. Credit also belongs to my senior management and investor relations teams who reach out to this important constituency.”
Survey respondents cited D’Alessandro’s strong leadership and willingness to speak with shareholders in choosing him. He won the same honour in 2004.
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Real estate remains hot investment
(January 26, 2006) Despite rising interest rates, many Canadians are still looking at residential real estate as an investment, according to an online survey by realtor RE/MAX. One in six respondents said they planned to make that move within 12 to 24 months.
“We believe purchasers view residential real estate as a simple, sound and safe investment — something that is very familiar to them,” says Michael Polzler, Executive vice president, regional director, RE/MAX Ontario-Atlantic Canada. “The risk factor is greatly reduced compared to other financial vehicles.”
The survey found 43% of those planning to invest in real estate were under the age of 40. Nearly 30% of survey respondents said they already owned one or more residential investment properties.
“Real estate speaks to a broad range of purchasers,” says Polzler. “You don’t have to be a millionaire to invest in housing. According to reported household income levels, today’s investors are solidly within the middle class, with one in five earning $50,000 – $60,000 a year and one in three earning $75,000-$100,000.”
Real estate values climbed an average of 10% last year, suggesting investors may once again be chasing returns.
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Canadians second to Japanese in post-retirement work
(January 26, 2006) Canadians are an industrious bunch, a trait which apparently continues into retirement, according to a survey conducted by global insurance giant, AXA.
In a survey of nearly 7,000 people in 11 countries, the survey found that 14% of Canadian retirees were engaged in some form of income-earning activity, second only to the 40% of Japanese retirees. Europeans were among the least likely to do so, with France coming in last at 4%, while 8% of Belgian and Spanish retirees continued earning an income.
Canadians also want to enter retirement later in life than comparable cultures. In Canada, the study found a consensus for retirement starting at age 67, while Americans said 61 and Australians said 58 was a good age to retire.
Perhaps reflecting cultural attitudes toward the aged, respondents in Asia considered “old age” to begin far earlier than Westerners. To those in Hong Kong and Japan, old age starts at 59 and 57 respectively, while North Americans consider 75 to be the start of old age.
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BoC updates monetary policy report
(January 26, 2006) The Bank of Canada today released its update to the October Monetary Policy Report, to discuss current economic and financial trends in the context of Canada’ inflation control strategy.
The bank says Canadian and world economies are evolving in line with the Bank’s expectations and the outlook for growth and inflation in Canada is similar to that in October’s report.
“The Bank continues to judge that the Canadian economy is operating at its production capacity and will grow roughly in line with its production potential through 2007,” say the report’s authors. Annual GDP growth is expected to be 3.1% this year and 2.9% in 2007, driven by domestic demand and export gains.
Total inflation will continue to be affected by the price of crude oil and natural gas. The Bank predicts that total inflation will be about 2.5% in the first half of 2006, easing to 2% by the first half of 2007. Core inflation, measured at 1.6% in the fourth quarter of 2005, should also return to 2% by the first half of next year.
The report says projected risks are balanced, but there is some downside risk that global imbalances could involve a slowdown in world economic activity. “Some modest further increase in the policy interest rate would be required to keep aggregate supply and demand in balance and inflation on target over the medium term.
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Empire enhances seg fund guarantees
(January 26, 2006) Empire Life Insurance has introduced an optional 100% maturity guarantee for clients investing in its segregated funds. The guarantee applies to new deposits with at least 15 years remaining before the maturity date.
Any deposits made with less than 15 years until maturity will be guaranteed at 75%. In October, the company introduced a 100% death benefit guarantee on its Elite Investment Program.
“Now with the choice of a 75% or 100% maturity guarantee option, a 100% death benefit guarantee, and the ability to reset guarantees to lock in growth, we feel we have one of the most comprehensive guarantee packages in the industry,” says Jim Gibson, director, individual marketing at Empire.
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BoC should focus on a lower inflation: CD Howe
(January 25, 2006) The C.D. Howe Institute says the Bank of Canada should steer interest rate policy with a 2% inflation target in mind, regardless of regional economic disparities.
In a report entitled Two Economies, One Exchange Rate: How the Bank of Canada Should React to the High Canadian Dollar, David Laidler and William Robson argue that inflation is above that target, Canada’ unemployment is at a 30 year low and demand is growing faster than the economy’s capacity to produce, all of which is making a clear case for further increases in the overnight rate.
Critics say the Bank is being overly accommodative and concerned about manufacturing in Ontario and not taking economic conditions in Newfoundland and Western provinces seriously enough when making its interest rate decisions.
“When so many other indicators point to economic over-heating, it is hard to make a case for easier money to hold the exchange rate down,” say the authors.
The complete brief is available at www.cdhowe.org.
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Canadian export prices retreat: Scotiabank
(January 25, 2006) The Scotiabank Commodity Price Index, measuring price trends in 32 of Canada’s major exports, declined for the second consecutive month in December, falling by 0.9% month over month. The Oil & Gas Index lost ground for the second month in a row while the Metal & Mineral Index surged to new record highs. Metals and minerals are expected to post an even bigger record in January.
Rebounding cattle prices contributed to significant gains in agriculture, while increased lumber purchases ahead of the U.S. spring building season, along with rising newsprint costs, both pushed up the Forestry Products Index.
The All Items Index closed 24% higher, year over year in 2005, notably outpacing year end gains of 19% and 17.4% in 2004 and 2003.
Investment inflows during that time advanced from about US$10 billion in 2002 when commodity prices were just beginning to pick up, to US$80-85 billion in 2005.
Interest in exchange traded gold securities (ETFs) also skyrocketed during the year. Gold held in trust by two U.S. ETFs that are available for investors, soared from 260,000 ounces in November 2004 to 10 million ounces in early 2006. Similarly, gold held in trust by all ETFs worldwide, including two similar funds in Canada, has surged, fueled by international tensions and U.S. dollar vulnerability.
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Manulife Mutual Funds ranks first in advisor customer service
(January 25, 2006) Environics Research Group says Manulife Mutual Funds, a division of Elliott & Page, has been named the best in Canada for customer service. The research firm’s 2005 Call Audit study measured customer service representatives at 14 mutual fund companies on various attributes, including professionalism, wait times and overall value-added service to clients. It also measured departments on aspects of client service efficiency.
The study, conducted throughout the year, is the result of nearly 4,500 telephone calls to all client service departments by advisors, brokers and their assistants, to develop an overall ranking.
Manulife ranked highest in the study with an overall score of 87.92 out of a possible 100 points, up from their 2004 score of 85.99.
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TD complete Ameritrade transaction
(January 25, 2006) TD Bank Financial Group today announced that is has completed the sale of TD Waterhouse USA to Ameritrade Holding Corporation to create TD Ameritrade. In connection with the transaction, TD Waterhouse Canada has acquired 100% of Ameritrade’s Canadian brokerage operations.
TD’s current ownership position in TD Ameritrade stands at 32.5%. Under the shareholders agreement entered into in connection with the transaction, TD agreed to commence a cash tender offer for approximately 7.4% of outstanding Ameritrade shares in the coming year.
“In order to retain a fifth seat on the TD Ameritrade board we are required to own 37.5% of TD Ameritrade one year following the completion of the transaction,” says Ed Clark, TD Bank president and chief executive officer. “Assuming appropriate market conditions, our preference would be to reach this level within a year or so.”
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National Bank launches RRSP line of credit
(January 25, 2006) National Bank of Canada introduced the new National Bank RRSP Line of Credit today to give investors the opportunity to increase their RRSP contributions.
The product encourages clients to use credit to make larger RRSP payments, then use the tax refund at the end of the year to pay off the balance. The product is designed exclusively for use with registered plans and offers flexible use and payment terms that allow clients to pay off the balance gradually or in a lump sum at tax time.
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Bank of Canada raises rates
(January 24, 2006) The Bank of Canada has raised its trend-setting overnight rate by 25 basis points to 3.5%, saying that both the Canadian and the global economy were “evolving essentially in line with the Bank’s expectations.” The major commercial banks promptly announced they would raise their prime lending rate.
Inflation, as measured by the consumer price index, was lower than expected in fourth quarter. The CPI increased by 2.3% as lower gasoline prices helped keep inflation in check and core inflation was only 1.6% for the year.
The Bank says the Canadian economy is operating “at capacity” and risks remain balanced for 2006, with a bias toward the downside in 2007. The Bank will release its Monetary Policy Report Update on 26 January 2006.
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No U.S. housing bubble…yet, says BMO
(January 24, 2006) The American housing market has not entered “bubble” territory at the national level yet, but there are storm clouds gathering on the horizon, according to BMO Financial Group’s economics department. Local pockets of overheating appear to be cropping up, especially in parts of the west.
“Bubble conditions may not be present yet but are approaching such and thus require close monitoring going forward,” says Paul Ferley, assistant chief economist, BMO Financial Group. “To allay this concern, housing price increases will need to start to moderate soon from recent sharp increases. Our expectation is that this should occur, since rising mortgage rates should slow the growth in housing prices to a rate below gains in income.”
Until recently, upward price pressures appear to have been largely driven by economic improvements, but Ferley says some recent price gains may to reflect more speculative pressure. While interest rates have been rising in the U.S., the rate of increase has been gradual and rates are still relatively low. As a result, the environment is more conducive to continued — though slower — economic growth, which could help avert a sudden decline in demand.
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RBC refunds excess mortgage fees
(January 24, 2006) RBC Royal Bank has announced it will deliver refunds to about 23,000 mortgage customers who were accidentally overcharged on their mortgage prepayments penalties between 1999 and 2004.
“We regret this situation and have been working diligently since it was discovered to fully identify all affected accounts,” said Catherine Adams, head of RBC home equity products. “We immediately conducted an in-depth review and our employees have also been correcting the situation on an individual basis. The review is now complete and refunds have been initiated for the remaining accounts affected.”
A total of $7.2 million, which includes interest payments, will be refunded and has been accounted for on RBC’s 2005 financial statements.
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ASC fines, suspends Trevor Wm. Park
(January 24, 2006) The Alberta Securities Commission (ASC) has slapped Trevor William Park with $55,000 in administrative penalties and costs, along with a 15-year trading ban. The penalties stem from the illegal distribution of about $8.5 million worth of securities in a B.C.-based numbered company.
“While we are satisfied that Park was not the mastermind behind the illegal distributions of 526053 (B.C. Ltd.) securities, he nonetheless actively participated in one of the largest illegal distributions of securities ever brought before this Commission,” the ASC said in a release. “Park knowingly or recklessly put investors’ economic interests at risk. Park harmed these investors and subjected the investing public and our capital market generally to harm.”
Park must also resign any position that he holds as a director and officer of any issuer in Alberta and is banned from becoming or acting as a director or officer of any issuer in Alberta for 15 years.
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Sun Life offers tools to group RSP advisors
(January 24, 2006) Sun Life Financial has launched a set of business-building tools for advisors of group RSPs, aimed at strengthening their relationship with plan sponsors.
“Plan advisors have a great opportunity to provide the support plan sponsors need to reach compliance,” explains Catherine Mitchell, Director, Plan Advisor Market Development and Communications, Group Retirement Services, Sun Life Financial Canada. “We are bringing these industry guidelines to life for plan advisors by providing practical tools to help them help their clients assess, improve and document their practices.”
The new tool set, entitled Building Bridges, is an interactive CD ROM that features practice management and marketing tools, including templates for a Request for Proposal, document retention policy, client needs assessment, product and services brochure and presentation and sales letters.
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Pension plan solvency in decline
(January 23, 2006) Although Canadian equity markets surged ahead of most major markets in 2005, longer term interest rates dropped for a fifth year in a row, leading to a reduction in the funded position of pension plans in Canada overall.
The Mercer Investment Consulting Pooled Fund Survey found that growth stocks outperformed value during the year, but reversed the trend in the fourth quarter when value shares outperformed growth stocks. Energy sector shares outperformed during the year, but also reversed the trend in the last quarter, falling from the list of top overall performers, to the list of worst performers during the quarter.
The review of Canadian capital market performance found that energy stocks were the key driving force in equity market returns during the year.
Also no surprise is the fact that large cap securities outpaced small caps and best performing sectors — notably energy, utilities and financials — outpaced worst performing sectors, including information technology, health care and consumer staples.
For the last quarter of 2005 however, the best performers were materials, financials and utilities while the worst performance showed up in consumer staples, telecommunications services and energy sector shares.
In the pension universe however, long term interest rates lead to a decline in the Mercer Canadian Pension Health Index, an indicator of capital market impact on the financial position of Canadian pension plans. The numbers show a solvency rate of 80% at the end of December 2005, down from the December 2004 solvency rate of 84%.
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Western Financial and Sawchuk take over Northcountry Insurance Agencies
(January 23, 2006) Western Financial Group and Sawchuk Group have entered into a strategic partnership in the ownership of Northcountry Insurance Agencies, which operates out of northern B.C.
Western Financial will acquire a minority interest in Northcountry, with the option to increase its stake in the future. Scott Tannas, president and CEO of Western Financial, said he hopes to participate in other insurance ventures with the Sawchuk Group.
Sawchuk Group, in addition to their holding in Northcountry, own and operate the largest insurance business in Northeastern B.C., with eight locations.
Western Financial operates in towns and small cities across the West to more than 250,000 customers with insurance, investment and banking products.
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Year of the Dog is anything but in China: survey
(January 23, 2006) It may be the year of the dog on the Chinese calendar, but almost every executive in that country expects strong economic growth according to an annual online poll conducted by Accenture.
About 98% of Chinese executives polled say they expect growth in their industry. Canadian executives were less optimistic, with 79% expecting their company to grow.
According to the survey, Canadian execs see organic growth as the key to company expansion this year. Most executives said they expect to grow their operations through deeper relationships with existing customers and by launching new products and services. That doesn’t mean executives think mergers and acquisitions will be off the table. Almost 60% of Canadian executives see consolidation in their future.
“As optimism for the global economic climate improves, top executives are more apt to focus on improving their own businesses by spending for programs that might have been curtailed or postponed and by hiring new employees to carry out their growth plans,” said Mark Foster, chief executive of Accenture’s products operating group in a release.
It’s no surprise then that nearly 40% of Canadian senior executives said they are already hiring. Almost half of the new staff will be to fill critical and vacant positions.
In Canada, the health of the global economy is now viewed as being a bigger threat than competitors within an industry. Executives here are also still concerned about their ability to attract and retain top talent.
More than 900 senior executives responded to Accenture’s annual poll to identify their top concerns this year. Respondents represented all major industries and the public sector and included executives at the highest levels of senior management as well as heads of key functional areas, such as human resources.
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New RBC products immune to currency flux
(January 23, 2006) RBC Asset Management has developed two new products aimed at minimizing the effects of currency fluctuations between the Canadian and U.S. dollars.
RBC’s investment banking arm has launched the RBC U.S. Equity Currency Neutral Fund and the U.S. Mid-Cap Equity Currency Neutral Fund. Brenda Vince, president of RBC Asset Management, points out that many investors want exposure to the broad U.S. market, but are worried about the currency risk.
“Now, investors can invest in the U.S., while minimizing their exposure to rate fluctuations,” she says. “The end result is more choice for investors.”
The U.S. equity fund invests in a diversified portfolio of large, growth oriented stocks with a selective and strategic exposure to some mid-cap stocks. The mid-cap offering will rely more on the management team to identify stocks due to the more limited analyst coverage of these companies.
The bank is offering Series A and Series F units in each fund. Series A units will charge a fee of 1.75% while the Series F units will charge 0.75% plus operating costs. The minimum investment in these funds is $500 in a registered portfolio and $1,000 in a non-registered account.
In addition to the launch of these two funds, the bank is also lowering the MER of the RBC U.S. Mid-cap equity fund to 1.75%, from 2%.
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Dynamic launches three new deposit notes
(January 23, 2006) Dynamic has launched three new principal protected notes, which will be issued by the Bank of Montreal.
The notes will offer investors up to 200% exposure to a portfolio of six Dynamic Funds, with 100% principal protection at maturity. The return of the deposit notes will be based on the performance of the fund portfolio. It will be structured in a way to take advantage of market upswings while protecting the principal investment.
The new PPNs are identified as: Yield Class, Series 2, which pays taxable distributions, if any; R.O.C. Class, Series 2, which pays tax efficient distributions, if any; and Total Return Class, Series 1, which is geared towards maximizing growth.
The fund portfolio will be comprised of Dynamic Power Canadian Growth, Dynamic Power American Growth, Dynamic Focus+ Diversified Income Trust, Dynamic Dividend Value Fund, Dynamic Income Fund and Dynamic Canadian High Yield Bond Fund.
Investors in the Yield class will be paid monthly coupons while investors in the R.O.C. class will receive principal repayments equivalent to 75% of distributions received from the fund portfolio, with the remaining 25% reinvested back in the funds for growth. The Total Return Class reinvests 100% of distributions for capital appreciation. The return on the R.O.C Class will be reduced by a percentage of the amounts you receive prior to maturity.
The notes will be issued by BMO on or about March 15 and will mature on or about March 23, 2015.
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B2B Trust to provide to provide RRSP loans to Assante clients
(January 23, 2006) B2B Trust, a third-party supplier of investment and RSP lending products to the financial advisory community and a Laurentian Bank subsidiary, has signed an agreement with Assante to distribute RRSP loans. Under the agreement, RRSP loans will be made available to Assante’s team of 1,000 financial advisors for clients purchasing their products.
“Easy access to RRSP loans is important in supporting our advisors and their clients” said Clive Smith, vice-president, Insurance and Financial Services in a release. “B2B Trust offers a very competitive program and we are excited to welcome them to our existing lineup of partners.”
The specifics of the loan program were not stated in the release.
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PricewaterhouseCoopers resigns as auditor of TD Bank
(January 23, 2006) TD Bank Financial Group has selected Ernst & Young to be the sole auditor for its 2006 fiscal year to replace PricewaterhouseCoopers.
PWC resigned as one of the bank’s auditors immediately after completing the 2005 audit of the bank and all its subsidiaries. Back on May 26, 2005, the board opted to go with Ernst & Young as its main auditor. A vote by shareholders to accept the recommendation is scheduled for TD’s annual general meeting March 30.
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BMO Financial named world leader in Yuan trading in China
(January 23, 2006) BMO Financial Group has been ranked the top bank in the new Foreign Exchange currency pairs trading system in China. No other North American institution made the top 10.
The ranking published by the China Foreign Exchange Trading System looks at the volumes traded by banks during the first six months of the new trading platform. The system enables only those banks selected by the CFETS to make a market in US dollars against a number of other currencies.
BMO is looking to provide a greater range of foreign exchange and investment products in China, which is undergoing a gradual liberalization of its capital markets.
“This further underlines BMO’s commitment to becoming a key provider of banking services in China,” said Yvan Bourdeau, CEO, BMO Nesbitt Burns and head of its investment banking group.
BMO is the only Canadian and one of only two North American banks of the 13 market makers (eight local banks and five foreign banks) in China. The banks are responsible for “fixing” or setting the USD/CNY spot rate each morning at 9:15 a.m. local Chinese time and quoting bid/ask of the local currency.
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IDA bans former Rampart brokers
(January 23, 2006) The Investment Dealers Association of Canada (IDA) today announced it has imposed discipline penalties on Sean Shanahan, Stephan Katmarian and Nicole Brewster for their involvement in a trading scheme and a locked-in RRSP stripping scheme.
Shanahan has been permanently banned from the IDA, fined $325,000, must disgorge $50,009.50 and pay $107,344.08 in costs. Katmarian is banned from the IDA for 15 years and must re-write the Conduct and Practices Handbook exam as a condition of re-approval. In addition, he is fined $275,000, must disgorge $47,983.50 and pay $85,875.27 in costs. Brewster meanwhile, is banned from the IDA for five years, must also rewrite the IDA exam as a condition of re-approval, and pay a $25,000 fine plus $21,468.80 in costs.
In its decision, the IDA hearing panel said serious sanctions needed to be imposed in this situation because the type of conduct related to the trading scheme was intentional, involved a high degree of planning and organization and involved a large number of clients.
Shanahan, Katmarian and Brewster are no longer registrants with any IDA member firm.
(01/27/06)
