Briefly:

(November 25, 2005) Clarington’s refusal to consider a takeover proposal by CI Financial flies in the face of Clarington’s own definition of what constitutes a “competing transaction,” according to the spurned suitor. Clarington has declined to consider the bid, saying it was a non-binding proposal and has endorsed a similar takeover bid from Industrial Alliance despite its lower price per share offer.

“We are confident that our proposal is a competing transaction which requires Industrial Alliance to either match our price of $14.75 or step aside, and that Clarington and Industrial Alliance are merely trying to buy more time to fend off CI’s bid,” said Stephen A. MacPhail, CI’s president and COO. “We are perplexed that Clarington’s board would continue to take steps to deprive its minority shareholders of our superior offer.”

Clarington has also characterized the CI proposal as “highly conditional.” To sweeten its offer, CI has now waived several conditions of its proposal, which required lock-up agreements and retention, non-solicitation and non-competition agreements with certain directors and officers of Clarington.

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Ontario must boost productivity: think tank

(November 25, 2005) An academic think-tank led by the dean of the MBA school at the University of Toronto is calling on Ontario’s government, businesses and citizens to invest more in boosting productivity, or risk losing the social programs to which they have grown accustomed.

Citing a growing “prosperity gap” between the province and similar jurisdictions, the Task Force on Competitiveness, Productivity and Economic Progress recommends businesses increase their capital spending to increase productivity.

The group says the government needs to reallocate spending from “consumption” programs, including health care, and invest more in education.

“The flawed logic that we have in place is that we can enjoy to the maximum the fruits of our prosperity today and that prosperity will just continue without ongoing investment,” said Roger Martin, dean of the Rotman School of Management. “Better logic concludes that investing today and forgoing some consumption of current prosperity will create even higher prosperity down the road.”

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ACPM, CARP, applaud Goodale

(November 25, 2005) Both the Association of Canadian Pension Management and CARP, Canada’s Association for the Fifty-Plus, are happy with Finance Minister Ralph Goodale’s decision to increase the dividend tax credit, instead of imposing new taxes on income trusts.

“The ACPM is pleased that the finance minister has chosen not to tax or otherwise discriminate against Canadian pension fund investments in business income trusts,” says ACPM president Scott Perkin. “Tax-deferred saving toward retirement is sacrosanct. Canadians should continue to be encouraged, not penalized, to save for retirement.”

“Kudos to Federal Finance Minister Ralph Goodale for putting the income Trust uncertainty and panic across the country to rest,” said CARP in a statement. “CARP has been vigorously advocating for this positive action since September. This may be a pre-election goodie, but CARP accepts it willingly and wholeheartedly on behalf of its members.”

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Saxon reduces fees

(November 25, 2005) Saxon Fund Management is cutting management fees on two its funds: the Saxon Money Market Fund and the Saxon Bond Fund.

Effective December 1, 2005, the annual management fee will be reduced to 0.5% from 0.6% on the money market product and to 0.89% from 1.15% on the bond offering.

The new management expense ratio, including GST, for the Saxon Money Market Fund and the Saxon Bond Fund will now be 0.54% and 0.95%, respectively.

Saxon claims the reductions put the funds’ fees 40% lower than the industry median. “We’re lowering our fees to provide Saxon clients with conservative fixed income investments with industry-leading returns — a value proposition that few can match,” said Saxon president Allan Smith.

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IDA suspends, fines former brokers

(November 24, 2005) The IDA has suspended two former members, one for life for conducting unauthorized trades, and the other for one year for acting in an unprofessional manner.

The IDA’s most serious charge was levied against Darrell Osadchuk who was permanently prohibited from working in any registered capacity with an IDA member firm, fined $40,000 and ordered to pay $10,000 in costs.

The former employee with the Calgary office of Research Capital admitted to unauthorized trading in the accounts of two of his clients between February 2001 and April 2002. He also told the IDA hearing that he fed those same clients false and misleading documents as to the holdings in their accounts.

The other disciplinary action announced by the IDA involved former Yorkton Securities (now Blackmont Capital) employee Lawrence Boscoe.

Boscoe admitted to an IDA hearing earlier in the month that he failed to use due diligence “to ensure that he learned the essential facts relative to a client” back in August 2001.

Compounding matters, he recommended high-risk securities to a client, which resulted in the level of high-risk equities in that client’s account to exceed stated objectives.

Boscoe has been suspended for one year, and fined $25,000. In addition to the suspension and fine, Boscoe must successfully re-write the Conduct and Practices Handbook course and pay $5,000 in costs before he will be allowed to return to the industry.

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M&A activity hits five-year peak

(November 24, 2005) The value of Canadian M&A deals reached nearly $50 billion in the third quarter of 2005, the highest since the technology boom of 2000, according to Crosbie & Co.

By comparison, M&A activity was worth about $29.4 billion in the third quarter of last year, and $29.8 billion in the second quarter of this year.

Crosbie says a “resilient North American economy, record high energy prices, strong activity in the income trust sector, and continued cross-border activity, contributed to the favourable M&A environment in the quarter.”

“The M&A market is firing on all cylinders,” added Crosbie managing director Ed Giacomelli. “It should remain robust well into 2006.”

The number of deals in Q3 rose to 304 from 207 during the same period last year.

Oil and gas was the main contributor, representing 25% of deal volume in the quarter and three of the 10 biggest transactions. “Demand for oil reserves is driving activity in the sector and continues to draw the attention of domestic and international acquirers alike, including China,” said Giacomelli.

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Arrow launches new hedge fund

(November 24, 2005) Arrow Hedge Partners is adding to its fund family, today announced that the Arrow Focus Fund is available for new purchases.

The Focus Fund is intended to generate capital that exceeds the growth rate of major equity indices, investing in underlying hedge funds that employ a variety of strategies, Arrow says.

It’s part of the Arrow Fund of Funds line up, which also includes the Arrow Global Equity Long/Short Fund, the Arrow Enhanced Income Fund and the Arrow Multi-Strategy Fund.

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GGOF announces fund manager change

(November 24, 2005) Jones Heward Investment Counsel will assume management of the value component of the GGOF Canadian Balanced Fund, says Guardian Group of Funds, replacing the current advisor, GGOF Management and Value Investments.

With the addition of the value component of the portfolio, Jones Heward will now act as portfolio advisor for the entire portion of the fund’s portfolio in Canadian equity securities, GGOF says.

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Active funds lagging indexes, says S&P

(November 23, 2005) Actively managed Canadian and U.S. equity mutual funds trailed their respective benchmarks over the first nine months of 2005, says Standard & Poor’s.

According to the Standard & Poor’s Indices Versus Active Funds scorecard (SPIVA) for Canada, the S&P/TSX Composite Index outperformed 86.6% of actively managed Canadian equity funds through September, while the S&P 500 Index (measured in Canadian dollars) outperformed 62.4% of U.S. equity funds.

However, actively managed Canadian small cap funds fared better, S&P notes, with 67.5% beating the S&P/TSX SmallCap Index.

“Because SPIVA compares the performance of actively managed Canadian mutual funds versus Standard & Poor’s indices in their respective categories, it allows us to measure “active risk,” something investors in Canadian mutual funds definitely need to be aware of,” says S&P vice president Steve Rive.”

Longer-term results continue to be consistent with past results, S&P adds. Over the last three years, 6.4% of actively managed Canadian equity funds have outperformed the S&P/TSX Composite Index, 59% of actively managed Canadian small cap funds have outperformed the S&P/TSX SmallCap Index, and 23.4% of U.S. equity funds have outperformed the S&P 500 Index.

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Female entrepreneurs on the rise

(November 23, 2005) More Canadian women are starting their own businesses than ever before, according to a survey conducted by Ipsos-Reid for RBC. But the motivational factors for going it alone are different than men, the poll suggests.

While 36% of men planning to open a business said they wanted to become wealthy only 23% of women listed the same reason. Nearly two-thirds of women said a more flexible working schedule was a greater entrepreneurial motive, compared to about half of men.

“Women in Canada are turning to self-employment and pursuing their career dreams at unprecedented levels,” said Kris Depencier, RBC Royal Bank’s national manager, small business. “Since 1981 the number of women entrepreneurs has increased by over 200 per cent. For a large portion of these women, building a business is not only a labour of love, but also a way to balance work and family obligations.”

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Most pension funds lack funding policy

(November 23, 2005) Only 25% of Canada’s defined benefit pension plans have a formal, written funding policy, according to a survey conducted by pension consultant Morneau Sobeco.

Twenty-four per cent of 95 organizations questioned said they were currently developing a formal policy while 34% felt that while such a policy might be useful, it was not under consideration. Only 17% responded that a formal funding policy was unlikely to be useful.

“The idea of a formal funding policy today is similar to the idea of a formal investment policy 15 to 20 years ago,” says Serge Charbonneau, a partner in Morneau Sobeco’s Montreal office. “At that time, many sponsors questioned the usefulness of a written statement of investment policy but they eventually came around to accept it.”

The Canadian Institute of Actuaries as well as several government bodies and other public organizations have recommended that the plan sponsor should be the one to establish funding objectives for a pension plan, not the actuary.

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Saxon names new head of fixed income

(November 23, 2005) Saxon Financial has announced a shuffle of its fixed income team, naming Steve Locke lead portfolio manager for the Saxon Bond Fund and other key fixed income mandates, effective December 2.

Locke replaces vice president and senior fixed income portfolio manager Peter Park, who is leaving Saxon to pursue other interests. Locke is currently manager or co-manager of $5 billion in fixed income assets for Saxon and has been with the firm since 2003.

“We thank Peter for his service and look forward to working with Steve Locke as he continues his outstanding investment management career at our firm,” said Saxon president Allan Smith. “We will continue to expand Saxon’s fixed income team to meet growing demand from our clients in this key area of our business.”

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Heating costs may hurt RSP contributions

(November 22, 2005) The impact of higher energy prices on the retail sector is well-known, but Canadians are now saying winter heating bills may affect their RSP contributions, according to a survey conducted by Decima Research for Investors Group.

In fact, 34% of respondents predicted they would contribute less to their retirement plans this year, with lower income earners being most likely to be affected. Among those earning less than $40,000 a year, 47% said they expect to contribute less.

“The retirement strategies of Canadians are in the crosshairs of rising energy costs,” says Debbie Ammeter, vice-president of advanced financial planning support at Investors Group. “Vision will be required if people want to ensure they don’t compromise their long-term goals for the short-term challenges they are facing.”

The same survey also found Canadians have not paid much attention to the stock markets lately. Only 39% were aware of the fact the TSX index was up at all this year, despite this being the second consecutive year of double digit percentage gains. Enthusiasm for real estate has yet to wane, however, as 65% of respondents said they believe their real estate holdings will appreciate faster over the next decade than their other investments.

“While the growth in value of real estate assets is welcome, homeowners need to bear in mind that their primary residence is just that — their residence,” Ammeter says. “It’s not highly liquid and not an effective substitute for diversified, long-term retirement planning.”

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Faircourt switching to daily NAV

(November 22, 2005) Faircourt Asset Management has announced the adoption of daily net asset value postings for all of its existing closed end funds, effective December 1, 2005.

Daily NAV calculation is intended to both ensure more appropriate market pricing relative to the underlying portfolios and improve the daily liquidity of our closed end funds.

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E*Trade cuts commissions

(November 22, 2005) In an era when financial advice has become quite fashionable, discount brokerage E*Trade Canada has cut its trading fees on equities and options, in a bid to win back the do-it-yourself crowd.

Base commissions on Canadian equity trades have been cut from $26.99 to $19.99 for up to 1,000 shares, above which a 2% per share commission is charged. Active traders with 30 or more trades per quarter will pay $9.99 for the first 1,000 shares and 1% per share after that. U.S equity trades carry the same base commission, but without the additional, per share charge for orders over 1,000 shares.

“With these price reductions, E*TRADE Canada is in a position to offer one of the most compelling combinations of price, product and service,” said Michael Curcio, executive vice president, E*TRADE Securities LLC. All pricing changes will be in effect as of January 10, 2006.

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CIBC to merge asset management units

(November 22, 2005) CIBC has announced it plans to merge TAL Global Asset Management and CIBC Asset Management, effective January 1st, 2006.

“CIBC Asset Management will be one of the leading asset managers in Canada with a combined $60 billion of assets under management,” said Victor Dodig, executive vice president of CIBC Wealth Management. “By bringing all our asset management units together under the CIBC Asset Management brand, we will be better able to leverage the strength of CIBC across both strategic operating areas: mutual funds and managed solutions, and institutional investment management.”

CIBC acquired a majority ownership position in TAL Global in 1994, and took the firm private in October 2001.

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IA mails out Clarington bid

(November 21, 2005) Industrial Alliance has mailed out its offer circular in its bid to buy out Clarington, saying the binding offer was the only one on the table, referring to a rival bid from CI Financial.

“Despite making public statements that an offer has already been made, both of CI’s recent press releases clearly state that a formal offer will only be made by way of a take-over bid circular, and as of today, we are the only company that has mailed a take-over bid circular to Clarington’s shareholders”, said Normand Pépin, executive vice-president of Industrial Alliance. “We find it interesting that CI has not yet made a binding offer to Clarington shareholders.”

Industrial Alliance says it plans to keep Clarington’s team intact, while CI’s proposal would see Clarington funds merged into comparable CI funds. While CI has vowed to cut MERs, Industrial Alliance hints that cost discipline could drive fees lower in the future.

As part of the circular, Industrial Alliance issued new consolidated financial statements for the three-month period and the nine-month period ended September 30, 2005, taking into account losses from investments in Norshield. The company is posting an additional provision of $64.9 million, on top of $13 million announced in the original earnings report. The firm has now written off its entire Norshield investment of $77.9 million ($52.1 million after tax).

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Younger women less likely to have advisor

(November 21, 2005) Young women in their prime “borrowing years” are less likely to have a financial plan than older women, according to survey conducted for TD Waterhouse. Only 44% of women aged 25-35 said they enlisted the help of a financial professional, compared to 62% of women between 35 and 45.

The poll found young women were almost twice as likely to seek advice from family or friends, rather than a professional advisor, than older women.

“Everyone wants to feel at ease with the person they are going to for financial advice, and it is evident that young women feel more comfortable talking to friends and family,” said Patricia Lovett-Reid, senior vice president, TD Waterhouse Canada. “It tends to be the first step for everyone. But it is still no substitute for sitting down with a professional and working out a plan.”

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Millennium BullionFund goes global

(November 21, 2005) The Millennium BullionFund has announced it will offer a “class G unit,” aimed at global investors, including pension funds, endowment funds, foundations, insurance companies, hedge funds, wrap products and high-net worth individuals.

“We developed the Class G Units as a result of increased interest from outside of North America,” said Nick Barisheff, president of Bullion Marketing Services, the distributor of the fund. “Investors and their advisors are seeking a position in bullion for hedging and as an important part of a properly diversified portfolio.”

The fund is Canada’s only open-end mutual fund trust that invests in gold, silver and platinum bullion, in equal weightings by value.

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Equinox offices adopt new software

(November 21, 2005) Software maker CoVirt, has announced it has successfully migrated 20 of Equinox Financial Services member offices to its VirtGate client management system.

“You hope for the best of course, but the conversion to VirtGate has gone very well,” says Tim Traill, director, technology solutions at Equinox Financial. “The learning curve in particular is very short so our marketing centres were up and running quickly. They continue to discover exciting new features every day in VirtGate.”

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MacDonald no longer advising Hartford

(November 21, 2005) Hartford Investments Canada has announced the departure of Norman MacDonald from his position as vice-president of Beutel, Goodman & Company, effective November 18.

Beutel, Goodman & Co will continue to serve as Hartford’s portfolio sub-adviser in respect of The Hartford Canadian Value Fund and The Hartford Canadian Equity Income Fund.

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GMP investors approve trust conversion

(November 21, 2005) GMP Capital announced on Friday that shareholders have overwhelmingly endorsed a plan to convert the company into an income trust. The firm still awaits judicial and regulatory approval.

Management expects the conversion will be completed on or about December 1, 2005. Units of the trust will trade on the TSX with the ticker symbol “GMP.UN”.

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