Briefly:

(January 13, 2006) RBC Financial Group has added two new deposit notes to the company’s product lineup. Designed for risk-adverse investors seeking an alternative to GICs and greater portfolio diversity, the RBC IA Leon Frazer Yield Deposit Notes, Series 3 and 4 invest in a portfolio of Canadian equities, income trusts and bonds.

The equity and income trust sub portfolios, managed by Leon Frazer & Associates, will have similar investment objectives as the IA Canadian Conservative Equity Fund. The Series 3 notes provide monthly coupons equivalent to 100% of the distributions received on the equity and income trust portfolios. Series 4 notes give monthly principal repayments equivalent to distributions received.

The notes are available for sale until February 24. Principal is guaranteed by RBC if the notes are held until maturity on February 28, 2014. Advisor commissions are 5%. Minimum investment is $5,000.

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Acuity matches CI in five star ratings

(January 13, 2006) Acuity Funds is now tied with CI Financial for the most funds with a five-star rating from Morningstar Canada.

Acuity’s lineup of five-star funds grew to 12 as of the end of 2005, while CI’s total fell by one. These numbers, reported in Morningstar’s December ratings update, exclude multiple versions of the same funds, such as fund classes, series or clones.

Morningstar vice president Matthew Elder says two CI funds, namely the CI Conservative Portfolio GIF and SunWise CI Global Growth Portfolio both dropped to four-star status, and the SunWise CI Signature Canadian Balanced Full, gained ground by ascending to the five-star category.

Acuity’s gains were the result of three newly rated funds, including the Acuity Pooled Canadian Small Cap, Acuity Pooled Pure Canadian Equity and Acuity Pooled Social Values Canadian Equity funds.

Transamerica Life Canada remained in third place with 10 five-star rated funds, followed by Dynamic Mutual Funds with seven rated funds, up from five in 2004, and Mackenzie Financial with six five star funds.

Dynamic, Transamerica and RBC Asset Management have the highest number of five star funds, as a percentage of their total lineup.

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Investors Group introduces new dividend fund

(January 13, 2006) Investors Group has launched the Investors Global Dividend Fund, aimed at income-seeking investors comfortable with risks typically associated with foreign equity investments.

Designed to produce above average income from equity investments while preserving capital and positioning investors for capital appreciation, the fund invests primarily in large cap value, global dividend paying stocks. The fund may also invest in other instruments, IG says, such as income trusts, bonds and preferred shares without geographic restrictions. The fund’s objectives are to obtain above-average income yield on investments, protect the value of investments and achieve long-term capital appreciation.

“Canadian dividend paying companies tend to have lower current dividend yields than companies in other parts of the world,” says Peter O’Reilly, vice president and portfolio manager of I.G. International Management. “Companies that pay health dividends also tend to have less volatile stock prices.

The fund will be managed by IG professionals based in Winnipeg, Dublin and Hong Kong.

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Fraser Institute calls for corporate tax cuts

(January 12, 2006) The Fraser Institute released a new study today, recommending nearly $60 billion in tax cuts for Canadian corporations as part of a five-year federal and provincial plan to spur investment and improve Canada’s productivity.

The study, entitled Productivity, Prosperity and Business Taxes, recommends reducing the federal corporate income tax rate to 12% from 21%, reducing provincial corporate income tax rates by 30%, eliminating corporate capital taxes entirely at both levels of government and harmonizing provincial sales taxes with the GST or implementing provincial-specific programs that completely exclude business inputs from sales taxes.

The right wing think tank says one of the primary causes of slow productivity growth in Canada is a fiscal environment that penalizes investment. “Canada has one of the highest tax rates on incremental investment in the world, which discourages the investment critical to improving productivity,” say the study’s authors. “The dramatic business tax relief proposed would place Canada in the upper echelons for investment and development among industrialized countries.”

The study recommends governments broaden their tax bases by gaining better control over program spending and eliminating incentives that favour one type of investment over another to offset the net cost of the proposed package of tax cuts.

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RS fines Canaccord trader for improper trading

(January 12, 2006) Market Regulation Services (RS) has fined Canaccord trader Dale Michaud $15,000 plus $10,000 in costs and ordered him to disgorge $210 in profits.

An RS Hearing Panel accepted the settlement agreement after Michaud admitted that he took advantage of information about a client order, for his own benefit, before the information was made known to the market.

In October 2003, Michaud received an order from a Canaccord advisor to buy 1,000,000 shares of Georgia Ventures (GVI) at $0.15 a share for a number of client and non-client accounts. The trade was supposed to be sent to another dealer with market access to be executed as an “arranged cross” with other accounts at the third party dealer. A cross occurs when a broker receives both buy and sell orders for the same security at the same price, and makes the trade between the two separate customers. The practice is only legal if the broker offers the shares publicly at a price higher than the bid.

Within an hour of sending the order, Michaud entered a non-client day order to buy 10,000 shares of GVI at $0.16, while the stock was trading at $0.18 a share, knowing that the Cannaccord order he placed would fill his buy order. He later sold the shares to realize a $210 profit.

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Rogers Associate Financial Partners goes public

(January 12, 2006) John Rogers, president and CEO of Rogers Associate Financial Partners, has announced that shares in the Calgary-based company have begun trading on the TSX Venture Exchange under the trading symbol RAF.

The company closed its initial public offering of 2,574,099 common shares, issued at $0.35 per share, in December. The IPO raised $900,934.35 for the company’s coffers.

“This listing will help the company immensely in realizing our plans for aggressive expansion into markets in Ontario, Quebec and the Maritime Provinces,” says Rogers. “Our growth from one office in 2002, to sixteen today in Canada, with the concurrent growth in revenues, is something we will be carrying forward to other regions of the country.”

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Tories trump Liberals in tax cut analysis

(January 11, 2006) Proposed tax cuts by the Conservative party would have a slightly larger impact on investments than similar Liberal promises, according to an analysis by the C.D. Howe Institute.

Duanjie Chen and Jack Mintz estimated the effective tax rate on capital for Canadian businesses using various corporate and sales taxes.

While the Liberal mini-budget proposals for tax cuts would have a significant impact in reducing taxes on investments, a further one point reduction in the small business rate offered by the Tories gives that party the edge, Chen and Mintz concluded.

The Tories’ proposed GST reduction would also reduce the labour effective tax rate more than the Liberals’ plan to reduce tax rates for low and middle income earners, the analysts said.

Still, “none of the tax proposals in this election would substantially improve the efficiency and fairness of the tax system,” the report cautions.

What’s need, according to Chen and Mintz, is fundamental tax reform that would lower rates and broaden tax bases to make the system more neutral.

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Liquidnet approved to operate in B.C.

(January 11, 2006) Liquidnet Canada has announced that it has been given permission by the British Columbia Securities Association to conduct business as an investment dealer and alternative trading system in the province.

The firm launched in Ontario in July, 2004 and was approved to operate in Quebec last year.

“Effective today, investors in BC-based pension plans, mutual funds and similar vehicles can benefit from improved net returns, as their money managers begin to use Liquidnet,” said the company’s managing director, Robert Young. “Through Liquidnet’s seamless trading platform, members have direct access to 13 global markets through one electronic source, which makes it easier and cheaper to trade international securities.”

Founded in the U.S. in 2001, Liquidnet provides an electronic marketplace where institutions can directly trade large blocks of equities.

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CPP policies criticized by Green Party

January 11, 2005) Green Party leader Jim Harris has criticized the investment policies of the Canada Pension Plan, saying they do not promote Canadian values.

“Do Canadians really want their pension funds invested in Halliburton, Lockheed Martin, NIKE or Wal-Mart?” Harris said in a statement released on Tuesday. “The Green Party thinks not, and it’s not because these investments are significant in the overall assets that the Canada Pension Plan manages, but because it sends a powerful message around the world about who Canadians are, what we believe in, and what we’re ready to stand-up for.”

Harris said the CPP should look to Quebec’s Caisse pension fund as an example of how social investing can be accomplished on a large scale.

Harris says the Caisse requires that its managers take social, ethical and environmental criteria into consideration as part of the investment process and that they attend yearly training on socially responsible investment.

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Croesus to integrate PlanPlus software

(January 11, 2005) Croesus Finansoft has reached a deal to market a version of PlanPlus Web Advisor to it clients. The system will be integrated with Croesus’ latest portfolio management software.

Advisors and their assistants working at National Bank Financial will be the first to benefit from the integration, the two firms said in a release.

“From National Bank Financial’s perspective, it will make the planning process easier and less time-consuming, which should translate into more Investment advisors doing more plans for more clients,” said National Bank Financial senior vice-president Gordon Gibson.

“The gain in operational efficiency will be tremendous for the users considering that advisors are busy and don’t have the time to deal with re-entering so much data that already exists in their other systems,” added PlanPlus president Shawn Brayman. “The integration between our PlanPlus Web Advisor solution and the Croesus Portfolio Management software allows an average advisor to do more robust planning in a fraction of the time.”

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Nearly 500 pass latest CFP exam

(January 10, 2006) Four hundred and eighty-one financial planners successfully completed the November sitting of the CFP exam, a pass rate of 52%, the Financial Planners Standards Council says. Nine hundred and eighty-one individuals wrote the test, down slightly from last year, when 1,040 individuals took the exam and the pass rate was 53%.

Last summer, 961 individuals wrote the exam and 454 were successful, for a pass rate of 47%.

“This is the 10th year of CFP certification in Canada. Once again, it is a great pleasure to acknowledge those who have voluntarily stepped up to prove themselves against a rigorous measure of professional competence, knowledge, judgment and analytical skills,” says FPSC executive vice-president Cary List.

The six-hour financial planning exam is held twice a year in both official languages. The next CFP exam is set for Saturday, June 10. Registration closes on May 10. About 16,000 Canadians now hold the CFP mark.

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CSI launches pilot CE podcast program

(January 10, 2006) Financial education provider CSI has launched a pilot podcasting program to provide online audio files to students. A select group currently enrolled in the Canadian Securities Course has been invited to participate and evaluate program.

“Introducing podcasting as a learning tool demonstrates CSI’s commitment to make our material more accessible,” says CSI president, Roberta Wilton.

The program consists of 10 podcasts covering a range of topics related to the CSC, all designed to supplement online study tools currently available through the CSI website.

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Stuart leaves BluMont

(January 10, 2006) Hedge fund and alternative investment provider BluMont Capital has announced that chief executive officer Toreigh Stuart has left the company, effective immediately.

Until recently, Stuart was president and CEO of Blumont until the firm announced last week it was separating the two roles and appointing hedge fund consultant Stephen Kangas as president.

The company has not yet named a new CEO. BluMont chair Thomas Simpson, another recent appointment, says he will work closely with Kangas and senior management in the interim.

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Hedge fund index end 2005 on an upbeat note

(January 10, 2006) Indexes managed by The Barclay Group show hedge funds gained 2.37% in December and 10.88% in 2005. The company says even though fund of fund managers tend to underweight the strategy, directional funds did well in December “and had an excellent 2005” overall, says Sol Waksman, founder and president of The Barclay Group.

“Equity markets outside the U.S. had a good year in 2005,” says Waksman. “Given all the bad press focused on relatively low returns for fund of funds investors, it wouldn’t be surprising if portfolio managers took on a bit more risk in the coming year in order to increase returns.”

The company actively tracks more than 5,200 hedge funds and managed futures programs. Barclay has created, and regularly updates, 18 hedge fund indices and eight managed futures indices. Among the hedge fund indices, only the Convertible Arbitrage Index generated negative returns for the year.

“Historically diversified fund of funds managers have tended to be risk adverse. Their portfolios have been over-weighted in arbitrage strategies and underweighted in directional strategies. We may well see some rebalancing in 2006,” says Waksman.

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Retirement savings top priority, survey suggests

(January 9, 2005) In a reversal from past years, saving for retirement is now the number one financial goal for Canadians, according to a survey released today by RBC.

When asked to identify their biggest financial concern, 38% chose saving for retirement. Twenty-eight percent said they were focused on paying down debt and 27% said they were just trying to keep their heads above water, a choice which was often first in past surveys conducted by the bank. General savings came in fourth, at 25%.

Those over the age of 35 were more likely to put retirement savings at the top of their financial priority list.

“As the population ages, perhaps it’s no surprise that Canadians are placing more focus on saving and planning for their future life phases,” said Dave Richardson, vice-president, RBC Asset Management. “Many of us are in an age range that will be rounding that corner in the next five to 10 years.”

The RBC study also notes that two-thirds of Canadians currently have an RRSP, unchanged from last year, but up 9% compared to 2002. Average planned RRSP contributions for 2005 were $5,700, $140 higher than last year. Ipsos Reid surveyed 1,250 Canadians in November.

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TD introduces new income trust fund

(January 9, 2005) TD Asset Management is launching the new TD Income Trust Capital Yield Fund, which the bank says is one of the first Canadian income trust funds to offer a capital yield tax-advantaged structure in an open-ended mutual fund.

The fund is designed to provide a steady source of cash flow that is highly tax-efficient, TD says, as its distributions should largely consist of return of capital. The fund will be available in Advisor, F and Investor series.

TD also announced today its TD Monthly Income Fund and TD Income Advantage Portfolios would be available in new T, S, and H series, designed for higher distribution payout and tax efficiency.

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T.E. financial units given new name

(January 9, 2005) T.E. Wealth is the new brand name encompassing T.E. Financial Consultants and T.E. Investment Counsel, the fee-only firm has announced.

T.E. Wealth will provide financial planning, investment counsel, investment management, insurance, estate planning, as well as income tax planning and compliance.

“Five years ago we launched private client services and made financial planning and investment services available to individuals,” said company president Kostas Andrikopoulos “Now we are formally expanding the private client service to meet the needs of the maturing baby boomer clients who, through either asset accumulation or wealth transfer from their parents find themselves responsible for complex financial planning and management. Often they simply don’t have the time to manage their wealth.”

The Jovian affiliate has $1.75 billion in assets under management.

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IDA to sell off CSI

(January 9, 2005) The IDA has approved a deal to sell financial education provider CSI to private-equity fund manager ONCAP — an affiliate of Onex Corporation — and members of CSI’s senior management team. Financial terms were not released.

“We are delighted to partner with ONCAP,” said CSI president Roberta Wilton. “It will allow us to strengthen our leadership in financial services education and we are confident that our students and the industry will benefit from this relationship.”

“ONCAP’s capital investment will support CSI’s established content development infrastructure and expertise to deliver additional products within its current markets as well as expand into contiguous markets,” added ONCAP’s Jeremy Thompson.

The IDA and CSI, formerly known as the Canadian Securities Institute, say they will continue to work together to provide educational courses to IDA member firms and advisors.

“An integral part of our investor protection mandate as a self-regulatory organization is to set high proficiency standards for market participants,” said IDA president Joe Oliver. “The sale will preserve and enhance CSI’s ability as an educational provider to meet those standards.”

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