Briefly:

(July 23, 2004) Jovian Capital has completed a deal to acquire 50% of the outstanding shares of hedge fund specialist Pescara, first announced in April.

Pescara manages a domestic and an offshore fund of funds.

“Pescara is very well situated to take advantage of the growing demand for fund of fund products in the hedge fund sector, particularly among high net worth investors,” says Jovian Capital president Philip Armstrong.

Financial terms were not released, but Jovian said the deal involved a cash consideration and the issuance of Jovian common shares.

Jovian also holds a 50% interest in RJS Global Investments, which holds the remaining 50% of Pescara’s shares.

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Students blast education savings grant

(July 23, 2004) The Canadian Federation of Students says the federal government’s Canada Education Savings Grant (CESG) is contributing to a massive gap between high and low income earners trying to save for post-secondary education.

A study released today by Statistics Canada reveals that more than two-thirds of children from higher income groups had money set aside for university or college, compared to less than 30% in lower income brackets.

StatsCan also found that families who were aware of the Canada Education Savings Grant program saved significantly more, regardless of income.

But Canadian Federation of Students chair George Soule says the CESG program awards millions of public dollars to families with the least financial need.

“Instead of implementing a national system of grants based on financial need, the federal government seems content with a system that rewards the wealthiest families,” he says.

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RBC Insurance completes UnumProvident product integration

Briefly: “RBC Insurance completes UnumProvident product integration” and more of today’s news snippets

(July 22, 2004) RBC Insurance has completed the integration of its individual living benefits product portfolio, combining previously offered RBC products with former UnumProvident offerings. RBC Insurance purchased the Canadian division of UnumProvident last November.

“Our goal was to create a best-in-class product offering that was innovative, competitive and cutting edge,” says RBC Life Insurance president Neil Skelding. “Our integrated individual living benefits products offer a comprehensive range of disability, critical illness and long-term care insurance products geared towards meeting the needs of a broad range of clients.”

Applications, marketing materials, illustration software and sales support for the new integrated product offering are available online and through RBC’s regional offices.

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Mackenzie changes investment objectives of emerging markets fund

(July 22, 2004) Mackenzie Financial is holding a special investor meeting in September to approve a change in the investment objectives of the Mackenzie Universal World Emerging Growth Capital Class Fund.

The fund is currently restricted to investing primarily in large cap firms in emerging markets. Mackenzie wants to broaden the mandate and remove the large cap limitation.

“By broadening the investment objective, the fund will be better able to leverage JPMorgan Fleming’s emerging markets research and expertise and benefit from the best investment opportunities regardless of their market capitalization,” Mackenzie said in a statement.

JPMorgan Fleming Asset Management takes over as the fund’s sub-advisor at the end of the month. If the change is approved by investors, the fund’s name will be changed to Mackenzie Universal Emerging Markets Capital Class.

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Performa announces executive appointments

(July 21, 2004) Performa Financial Group, Standard Life’s mutual fund dealer subsidiary, today announced three new executive appointments. Two of the latest hires come from rival dealers as Performa attempts to build its advisor network.

Ray Snoei and Nancy Schafer were both named vice-president and senior consultant of advisor relations.

Snoei, a CFP formerly with IQON Financial, will be working out of Performa’s Toronto office, supporting advisors based in Ontario.

Schafer joins Performa from TWC Financial, where she was the firm’s manager of business development. Schafer will be based in Calgary.

Cindy Jenner-Cowan takes on the new role of vice-president of business quality. Jenner-Cowan, previously a regional vice-president for the Pacific region, will be based in Vancouver, providing support to Performa’s branch offices.

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Pooled pension funds flat in second quarter

(July 21, 2004) Canada’s pooled pension funds posted a modest median return of 0.3% in the second quarter of the year, according to a survey released today by Morneau Sobeco. Year-to-date, the median return is 4.1%, in line with actuarial projections, according to Morneau Sobeco principal Jean Bergeron.

“The financial situation of pension plans has not changed much since the beginning of the year,” Bergeron said, noting that most pension fund managers have been able to add value by slightly outperforming a benchmark portfolio used by most pension funds of 55% equities and 45% fixed income. The benchmark’s return in Q2 was -0.1%.

The pension consulting firm surveyed more than 350 pooled Canadian pension funds, managed by about 60 investment firms.

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Soros top earner on Wall Street

(July 21, 2004) Hedge fund manager George Soros collected a salary of $750 million US in 2003, topping Institutional Investor‘s annual list of the country’s highest-paid fund managers.

Soros’s firm manages nearly $13 billion worth of investments.

Second on the magazine’s list was David Tepper of Appaloosa Management, with an annual salary of $510 million. Of the 25 hedge fund managers surveyed, the average salary was $207 million US.

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Interest rates on hold

(July 20, 2004) The Bank of Canada shocked no one with its announcement this morning that it would maintain its trend-setting overnight rate at 2%. Most economists had been predicting this would be the case for months, with a rate hike more likely in autumn.

The bank’s decision was clinched in many economists’ minds by the June Consumer Price Index reading, which showed core inflation was lower than expected.

“The Canadian economy is judged to be operating slightly closer to full production capacity than had been anticipated in April and is now expected to be at its production potential by mid-2005,” read a statement from the bank. “Core inflation is still projected to move back up to the 2% inflation target by the end of 2005. However, the short-term projection for total CPI inflation has been raised to reflect higher-than-expected world oil prices.”

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Martin names cabinet

(July 20, 2004) Prime Minister Paul Martin has announced his first cabinet appointments since retaining power in the June election, keeping Finance Minister Ralph Goodale in place.

Goodale took over the position from John Manley, who retired from politics after dropping out of the Liberal leadership race in 2003. Goodale has said a priority for his ministry will be to set out rules governing potential bank mergers, but it is unclear whether such a move will be hobbled by the Liberals’ minority status.

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RBC Insurance launches support centres

(July 20, 2004) RBC Insurance has launched a system of regional resource centres, located in Vancouver, Montreal and Toronto. The resource centres include 75 insurance professionals who will provide support to the sales and service across the group, life and living benefits product lines.

“Our industry-leading support model, which is led by a team of experts, was designed to ensure our distribution network has the specialized support they need at every stage of the insurance sales and service process, across all lines of business,” Neil Skelding, president and CEO of the RBC Life Insurance Company.

Skelding also announced the appointment of Neil Paton as vice-president of distribution for life and health businesses. Paton is responsible for business development and the management of our brokerage distribution channels.

Regional vice-presidents Phil Nemeth (Western Region), John McMeans (Central Region), and Madeleine B. Lafontaine (Eastern Region) will report directly to Paton.

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FPSC releases summer exam results

(July 20, 2004) Six hundred and sixteen financial planners have passed the summer sitting of the CFP exam. The Financial Planners Standards Council today released the results of its June 5 exam, written by 1,114 students.

The pass rate was 55%, slightly higher than last fall’s exam when 53% passed. Of those writing for the first time, 60% were successful.

The number of people writing was down from last year when about 1,200 individuals sat each of the summer and fall exams.

The six-hour financial planning exam is held twice a year in both official languages. The next exam is scheduled for November 20, 2004.

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Sun Life names Astley successor

(July 19, 2004) Sun Life Financial has named Kevin P. Dougherty as the replacement for retiring president Robert M. Astley. Dougherty is currently executive vice-president of Sun Life’s Canadian Group Benefits and Group Retirement Services operations. The move will be effective September 6.

“Kevin played a key role on Bob Astley’s leadership team in the complex, large-scale integration of Sun Life Financial’s Canadian operations and Clarica to create SLF Canada,” said Donald A. Stewart, Sun Life CEO. “I am confident Kevin will build on the strong business platform that’s been forged and take it even further as we continue to enhance everything we do to serve our customers better and deliver sustainable value to our shareholders.”

Astley became president of Sun Life in 2002, following the merger with Clarica, where he had worked for 35 years. Dougherty joined Sun Life in 1994.

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IDA recognized as SRO in Quebec

(July 19, 2004) Quebec’s new financial services regulator has approved the IDA’s request for official status as a self-regulatory organization in the province. The application now goes to the Quebec government for final approval.

Jean St-Gelais, head of l’Autorité des marchés financiers, announced the decision in a press release issued today. Approval of the IDA as an SRO was a requirement under legislation passed in February amalgamating Quebec’s financial services regulators into a single organization.

“We had to submit an application that satisfied their requirements of independent decision-making in the province,” says IDA senior vice-president Paul Bourque.

The move essentially formalizes the IDA’s powers and responsibilities in Quebec, Bourque explains. It provides for a separate budget for Quebec operations and a guarantee that hearings will be held in Quebec and in French, with discipline panel members from the province.

“That always was the process, we have a fairly decentralized approach, we just had to formalize some of those practices.” Bourque adds. “I don’t think a great deal will change, but it’s important to get the recognition.”

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Foreigners drawn to Canadian debt

(July 19, 2004) Canadian securities continued to attract international investors in May, with foreigners increasing their holdings by $1.3 billion, according to Statistics Canada. But it marked the first time in 14 months that foreign investors sold off existing equity holdings, opting for Canadian debt instead.

Foreign investors unloaded $1.8 billion in stock, while picking up $1.5 billion in bonds, favouring US-dollar denominated debt. An additional $1.6 billion in Canadian money market paper was purchased. Year to date, foreign stock ownership is up $23.3 billion and debt holding has risen by $5.6 billion

While Canadian investors preferred foreign bonds, equity holdings got a significant boost as well. Bond purchases totalled $2.1 billion, with $1.4 billion more heading into stock. The total investment of $3.5 billion is the highest single month gain since July 2003.

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Mackenzie launches new Sentinel Series

(July 19, 2004) Mackenzie has launched Series C of Mackenzie Sentinel Income Fund, a conservative balanced fund which pays investors a fixed, monthly distribution.

“With interest rates at a historic low, Canadians on fixed incomes are having a difficult time finding investments with yields that are high enough to meet their needs. Once taxes and inflation are factored in, this challenge is even greater,” said David Feather, president of Mackenzie Financial Services. “Coupled with professional financial advice, this new series strives to fill the gap for these investors, providing attractive, tax-efficient monthly income, housed in one of Mackenzie’s oldest and most consistent funds.”

Mackenzie Sentinel Income Fund, Series C will seek to pay a fixed amount of $0.10 per unit monthly, or 10% based on the net asset value per unit of $12.00 at the time of launch.

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Allianz spins off Canadian RESP division

(July 19, 2004) The management team at Allianz Education Funds — a Toronto-based RESP firm established in 1965 — is breaking ranks with its parent company, Allianz Life, and setting up a new independent shop.

The new firm will be known as Heritage Education Funds — named after the company’s Heritage Plan product — and will focus exclusively on the RESP market. Financial terms were not released.

“This acquisition has been in the works for some time, and it’s a by-product of our success,” says Heritage president Kevin Connolly. “It’s a strong Canadian management team showing confidence in a strong Canadian business.”

Connolly says the Heritage management team welcomes the Ontario Securities Commission’s recent decision to more closely scrutinize Canada’s RESP industry.

“Like the mutual fund industry some years ago, our industry is changing and growing quickly, and with that growth comes responsibility,” Connolly says. “We are committed both to the safety of our members’ investments, and to operating to the highest standards.”

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(07/23/04)