Briefly:

(November 11, 2005) AGF has launched a new fund-of-fund investment, touted as being so tolerant to sharp downward swings, the firm is promising investors up to 0.9% in the form of new units if the fund doesn’t beat its benchmark over a three year annualized period.

The new product is called AGF Elements, and uses a dynamic asset allocation model that seeks to minimize risk-adjusted returns.

The model is designed by Wilshire Associates, creator of the Dow Jones Wilshire 5000 Index, a regular consultant for pension plans and asset managers.

AGF expects this will appeal to investors who suffer from significant dips in their portfolios as a result of overexposure to resource and income trust investments. “AGF Elements will seek to protect investors against those kinds of market shocks,” says Randy Ambrosie, AGF’s executive vice-president, in a release.

The new strategy is broken up into five investment portfolios:

• Conservative: 60% fixed income, 40% equities
• Balanced: 40% fixed income, 60% equities
• Growth: 20% fixed income, 80% equities
• Global: 100% equities
• Yield: 50% fixed income, 50% income-producing equities

The customized benchmarks are established by Wilshire based on the weightings in the portfolios, AGF says.

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Portus hearing delayed until January

(November 11, 2005) The Ontario Securities Commission has again postponed a hearing into allegations of misconduct by Portus and members of the troubled hedge fund firm’s executive team.

The hearing, involving Boaz Manor, Michael Mendelson, Michael Labanowich, John Ogg, Portus Alternative Asset Management and Portus Asset Management, and originally set for November 14, has been delayed to January 17, 2006.

“The adjournment was made to provide the respondents with an opportunity to review the disclosure that was made by the commission,” the OSC said in a statement issued late on Friday afternoon.

However, quasi-criminal proceedings against Portus head Boaz Manor are still scheduled to commence in a Toronto court on November 15.

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AMF freezes trading in Mount Real

(November 11, 2005) A provisional administrator has been appointed by the Quebec finance minister to take over the assets of Mount Real.

In a release, Quebec’s regulators say they have “serious reservations regarding the actual value of the securities guaranteed by Mount Real and its related companies in the amount of $65 million.” Investors filed 15 complaints against the company after they were unable to obtain their interest on these notes or their principal.

The minister, acting on a recommendation by the province’s regulators, also issued freeze and cease trading orders against several companies and directors as a measure to protect investors.

The companies affected by the orders include Gestion MRACS, Real Vest Investments, Real Assurance Acceptance. The directors named in the release are Lino P. Mateo, Laurence Henry, Joseph Pettinicchio, Andris E. Spura, Paul D’Andrea, Laraine Lyttle and Lowell Holden.

Earlier this year, the AMF announced that it was investigating Mount Real and is also seeking to establish the nature of the relationships between Mount Real and Norshield.

The investigation is continuing and could lead to criminal proceedings.

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S&P warns of subdued market performance

(November 11, 2005) Price-to-earning ratios on the S&P 500 are well below their historical average, but Standard & Poor’s warns that rising bond yields may negate any buying opportunity.

The S&P’s current P/E is 16.4 based on trailing earnings, including third quarter results. That’s 18% below the average P/E of 19.7 since 1988, when the ratings agency first started calculating operating results, says Sam Stovell, chief investment strategist of S&P equity research services.

The current trailing P/E of 18.2 is 17% below the 20-year average of 22. “While equity prices look attractive on this basis alone,” Stovell says, “the risk lies with rising bond yields, which could further compress P/E ratios.”

The earnings yield on the S&P 500, the inverse of the P/E, is 6.43% based on estimated 2006 GAAP earnings, which Stovell says indicates that investors believe the yield on the 10 year note will rise above the S&P’s yield forecast of 5.5%.

“If this indicator is correct, stock prices may languish in the months ahead,” he explains. “If, however, investors are overestimating how high bond yield might rise, a rally in equity prices may follow the final interest rate increase by the Fed.”

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Americans continue to buy equities

(November 11, 2005) Equity ownership has grown to 57% of all U.S. households, according to a survey released today the Investment Company Institute and the Securities Industry Association. That’s a three-percentage point increase from the last survey conducted in 2003.

“America has become a society of investors,” the report says. “The number of households owning equities has increased more than three-fold since the early 1980s.”

The study found that half of U.S. households own equities directly through stocks or mutual funds and 90% of equity-owning households also invest in funds.

The growth has been largely fuelled by the increased availability of defined contribution pension plans, particularly 401 (k) plan, the survey notes. “Participants invest heavily in equities, primarily stock funds, inside these plans.”

Average households financial assets are also on the rise, up from a median $50,000 per household in 2002 to $65,000 in 2005.

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U.S. retail recovery to continue through holiday season

(November 11, 2005) The U.S. could be headed for a better-than-expected retail season according to a report by RBC Financial Group.

Consumer confidence continues to rise after its low point in the wake of the two hurricanes that ravaged parts of the southern U.S. two months ago, according to the RBC CASH (consumer attitudes and spending by household) Index.

“The rebound in those expectations speaks to the underlying strength of the economy,” says Vince Boberski, chief economist for RBC Dain Rauscher. “That’s good news for everyone, but particularly businesses that rely on strong sales during the holiday season.”

The RBC CASH Index is based on telephone interviews with 1,000 people across the U.S.

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Hedge fund returns dipped in October

(November 11, 2005) The Standard & Poor’s Hedge Fund Index lost 0.47% in October, as investors lost their taste for risk during the month.

“Hedge fund performance was influenced by a number of factors in October, most significantly by a substantial pullback in the global risk appetite as evidenced by widening risk arbitrage spreads and a sizeable retracement in the energy sector,” says Justin Dew, senior hedge fund specialist at Standard & Poor’s.

“For hedge fund returns to be strong there needs to be a desire by investors to take on risk; that just isn’t happening at the moment.”

Although down for October, the S&P index is up nearly 2% year-to-date.

Losses were felt in the managed futures sector as global equity markets reversed course from earlier in the month (except for Japan), which caused problems for long positions in equities.

Gains were seen in the macro sector during the month, as some managers speculated there was a good chance for a near-term recession in the U.S. prompting them to short U.S. equities relative to Asia.

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OSC alleges insider trading

(November 10, 2005) The Ontario Securities Commission has started court proceedings against two men accused of insider trading. Barry Landen, former vice-president of Agnico-Eagle Mines, faces one count of insider trading and one count of tipping, while chartered accountant Stephen Diamond is charged with one count of insider trading.

The OSC alleges that in September and October of 2003, Landen provided material information to Diamond before the information had been disclosed and that he sold securities of Agnico-Eagle with prior knowledge of that information.

Diamond is accused of purchasing the firms’ securities based on information provided by Landen, who was fired by the gold producer in December 2004.

Their first court appearance is scheduled for December 7.

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CPP reserve fund rises $4.7 billion

(November 10, 2005) The CPP reserve fund rose 4.5% in the third quarter to $91.7 billion. The fund, which includes investment earnings and CPP contributions not needed to pay current pensions, earned $4 billion from its investments in publicly traded stocks, private equity, real estate, infrastructure and government bonds.

The reserve fund’s portfolio as of September 30 was 56% stocks, 31% bonds, 4% cash and money market, 5% real returns assets and 4% private equity.

“We are pleased with the progress we are making in diversifying the reserve fund into a broader range of asset classes,” said CPP Investment Board president David Denison. “One example of this broader investment approach is the recent completion of the purchase of the Olympia and York real estate portfolio by a consortium in which we are a major participant.”

Since 1999, when the CPPIB began its investment program, the reserve fund has more than doubled to $91.7 billion, with about 61% of that increase coming from investment gains. The chief actuary of Canada has estimated the fund will grow to approximately $147 billion by 2010.

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Saxon strengthening mutual fund business

(November 10, 1005) Saxon Financial’s recent move to hire three wholesalers to beef up the distribution and marketing capabilities of its mutual funds business appears to be paying off — the firm today announced record quarterly profits of nearly $10 million, a 38% increase from the same period last year.

“The wholesalers began to ramp up activities during the quarter,” Saxon said in a statement.

“Saxon’s record revenue and earnings this quarter show that we are sticking to our plan, and delivering stability, consistent growth and long-term performance for our clients and our shareholders,” said Saxon president Allan Smith.

Earlier this week, Saxon appointed Kevin Feeney, formerly of Trimark Financial and Labatt Breweries, as its new chief financial officer. “One of Saxon’s key strategies in going public this year was to enhance our ability to attract and retain the best and brightest people,” said Smith. “As a respected leader in Canada’s financial services Industry, Kevin Feeney will help Saxon continue to deliver long-term performance for both our clients and our shareholders.”

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Ottawa reduces EI premiums

(November 10, 2005) Ottawa is reducing employment insurance premiums for both employees and employers in an effort to reduce the program’s massive surplus.

Starting January 1, the EI premium rate for employees will be cut to $1.87 per $100 insurable earnings from $1.95 and the rate for employers goes down to $2.62 per $100 from $2.73. That’s about a 4% reduction. The maximum insurable earnings will remain at $39,000.

“Setting the rate at $1.87 will save Canadian workers and employers more than $800 million in premiums as compared to last year’s rate,” said Finance Minister Ralph Goodale.

According the EI’s chief actuary, the new rate should generate enough premium revenue in 2006 to cover payments made during the year.

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IDA expels former Vancouver rep

(November 9, 2005) The IDA has expelled John Pyle, a former registered representative with Canaccord Capital and Brink, Hudson & Lefever.

In a settlement agreement, Pyle admitted that he effected hundreds of discretionary trades between 1997 and 2001 without the knowledge or authorization of clients.

While with Canaccord, he also converted five client cash accounts into margin accounts without authorization.

Pryde admitted he had mental health problems in his four years with the two firms, but did not resign, even though he was aware of the threat he constituted to clients. He has also been ordered to cooperate in any further investigations the IDA may conduct in these matters and pay $20,000 in costs.

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CIBC launches new series of notes

(November 9, 2005) CIBC today launched the first series of CIBC Asset Management FULPAY DARTS deposit notes, which aim to provide principal protection and investment returns linked to the performance of a portfolio of assets allocated dynamically between an equity account and a bond account.

The equity account will initially be allocated 70% to units of two mutual funds, the CIBC Monthly Income Fund and the Talvest Millennium High Income Fund, and 30% to a basket of equities selected by Stephen Gerring of TAL Global Asset Management.

The equity account may also be leveraged through a revolving loan, CIBC says. Investors will receive monthly coupons equal to 100% of the monthly distributions on the funds and the equities and, at maturity, the principal amount plus an additional variable amount equal to any increase in the value of the portfolio.

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B2B Trust and Stone announce distribution deal

(November 9, 2005) B2B Trust has signed an agreement with Stone & Company, the manufacturer of the Stone family of mutual funds, for the distribution of investment loans.

Under the terms of the deal, B2B Trust will make investment lending products available to financial advisors for clients purchasing Stone funds.

B2B Trust will be responsible for the underlying credit services, and Stone will make the program available to investors through licensed investment professionals.

“Stone & Co. have chosen to include our three most popular loan options in their program, which affords the financial advisor significant choice when it comes to selecting the borrowing solution that best suits their individual client’s financial plan,” says B2B Trust vice president Al Spadaro.

“We are looking forward to a successful partnership with B2B Trust as we expand the products and services we offer to our clients at Stone,” added Stone senior vice president Wan Kim.

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Ethical defends CPP’s SRI policy

(November 9, 2005) Ethical Funds has come out in support of the CPP’s recently released social investment principles in response to criticisms by the Canadian Taxpayers Federation, which called the changes “bad policy.”

“The CPP should be lauded for embracing sustainable investing and taking reasonable steps to ensure that the companies they invest in are responding to key environmental, social and governance challenges,” said Bob Walker, vice president of sustainability at Ethical Funds.

In a speech last week, John Williamson, the federal director of the taxpayers federation, accused the CPP of using “strong arm of the state” to enforce its mandate. “This is not the role our pension funds should take,” he said, adding that including shareholders in the investment decision-making process opens the door to potential political interference.

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Credit unions score high in service survey

(November 9, 2005) Canada’s credit unions rank higher than banks and other financial institutions in terms of customer service, a new survey suggests.

The 2005 Synovate Customer Service Index found credit unions ranked highest in areas such as overall quality of customer service, staff service, as well as information and communications.

“Credit union members appreciate the benefits of being owners, not just customers,” said Joanne DeLaurentiis, president and chief executive officer of Credit Union Central of Canada. “This survey confirms what we in the industry have long known — people prefer to deal with a financial co-operative.”

Synovate surveyed more than 8,000 Canadians by mail this past summer. About one-thousand of those surveyed were credit union members.

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Consumer agency updates banking guide

(November 9, 2005) The Financial Consumer Agency of Canada has released the latest version of its banking guide, which allows users to compare the costs of 90 account packages from the major banks and other financial institutions.

Since its launch in 2003, more than 24,000 consumers have used the interactive, on-line version of the guide, the agency says.

“The Cost of Banking tool is a really unique and useful way to compare banking packages,” says FCAC commissioner Bill Knight. “It gives consumers the chance to evaluate products offered by a dozen different institutions from one location”.

Knight suggests that consumers can use the tool as a way to periodically revaluate whether their banking package is meeting their needs. “This is a competitive marketplace, and things change quickly. Even consumers who are happy with their fees may want to compare their package against others to see if they can save more money.”

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Pension shortfall rising, accountants say

(November 8, 2005) Canada’s defined benefit pension plans are falling further behind their obligations, posing a serious threat to Canadians’ retirement plans, according to Certified General Accountants Association of Canada (CGA-Canada).

In its annual “State of Defined Pension Plans in Canada” report, CGA-Canada says the DB pension funding shortfall grew to $190 billion by the end of 2004, from $160 billion at the end of 2003.

“The pension situation in Canada is ripe for reform and reform is necessary in order to sustain the lifestyle and economic expectations of Canadians,” says Anthony Ariganello, president and CEO, CGA-Canada.

The report encourages employers to consider the benefits of defined contribution programs as a safer long-term solution for their employees.

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Scotiabank acquires NBG Canada

(November 8, 2005) Scotiabank is taking over the Canadian operations of the National Bank of Greece. Financial terms were not released, but the deal includes all the assets and liabilities of NBG Canada, which has 10 branches in Montreal, Laval, Toronto, Scarborough, Mississauga, and Hamilton.

“The acquisition of NBG Bank is evidence of Scotiabank’s commitment to customers and to continuing to grow our Canadian operations,” said Wendy Hannam, Executive Vice-President, Domestic Branch Banking, Scotiabank. “I am pleased that we can play a part in ensuring the Greek community, and all the customers of NBG Bank, continue to be well served.”

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AIM Trimark promotes portfolio manager

(November 8, 2005) AIM Trimark has announced that Bruce Harrop will take on lead portfolio management responsibilities for the equity portion of the Trimark Global Balanced Fund, effective immediately.

Harrop has been a member of the fund’s management team since November 2004 and has also been a portfolio manager on the Trimark U.S. Companies Fund and Class, and the Trimark Discovery Fund since 2000 and 2001, respectively.

“This move is being made in recognition of the increased level of influence Bruce has taken in the management of these funds,” says Patrick Farmer, chief investment officer and executive vice president at AIM Trimark.

Richard Jenkins will remain as a co-manager of the equity portion on Trimark Global Balanced Fund and Rex Chong will continue to oversee the funds’ fixed-income portion.

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Scotia Securities expands use of fair value pricing

(November 7, 2005) Scotia Securities has hired the Investment Technology Group (ITG) to expand its use of fair value pricing and actively value international securities held in the lineup of Scotia Securities mutual funds.

The fair value pricing process determines the price of securities in a fund’s portfolio in situations where market prices are not available, not reliable or not reflective of the security’s market value. The model has been adopted by a number of fund in an attempt to deal with the potential negative effects of market timing.

ITG’s Fair Value Model values foreign securities after markets close but before net asset values are calculated. The ITG model creates fair value adjustment factors for over 45,000 stocks in 49 markets outside of the U.S. by 4:30 p.m. on each trading day.

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AGF augments loan program

(November 7, 2005) AGF Trust is enhancing its loan program to help clients maximize their RSP and RESP contributions.

The program includes loans for current-year or maximum allowable RSP contributions, re-advance loans to increase or refinance an existing AGF Trust RSP loan and transfer loans that consolidate RSP loans from other financial institutions.

Both RSP and RESP loans programs offer rates starting at prime minus 1%. RESP loan payments can be deferred up to six months after funding.

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Investment attitudes differ by region

(November 7, 2005) Women in Ontario and western Canada are more interested in managing household finances and investments than their counterparts in the east, according to the TD Waterhouse 2005 Female Investor Poll.

British Columbia turned in the highest number of respondents indicating they were very interested or somewhat interested in the subject. Of those surveyed, 94% said they were interested, followed by 93% and 91% of those in Ontario and the Prairies.

Despite being less interested in managing investments, respondents in Quebec were more confident about their financial success. In Quebec, 85% felt successful, compared to 66% in Ontario, 65% in the Prairies, 62% in British Columbia, and 59% in Atlantic Canada. Women in Ontario and British Columbia were most likely to have a financial plan, at 49% and 48% respectively, compared to 39% of those living in Atlantic Canada.

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