Briefly:

(February 17, 2006) Fears of poor governance among income funds is greatly overblown, according to an study by SECOR Consulting, commissioned by the Real Property Association of Canada (REALpac) and the Canadian Association of Income Funds (CAIF). In fact, the study finds governance to be comparable to corporations.

“At a time when corporate governance across all sectors is in the spot light, it is not surprising to see income funds draw increased attention,” said Ken Smith, Managing Partner, SECOR Consulting.

The study examined 102 income funds and 100 publicly listed corporations, comparing their compliance to the Canadian Securities Administrators’ National Policy 58-201: Effective Corporate Governance.

The study found 67% of income funds were explicitly compliant with over 90% of the guidelines, while 71% of publicly traded companies matched this level of governance.

“This study focuses on the composition, structure and policies of income fund boards, which are key aspects of governance,” said Stephen Pincus, Chair, Governance Committee, CAIF and Chair, Income Funds Group, Goodmans LLP. “Establishing this benchmark is just one step in our approach to examining a range of governance issues.”

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Real Assets changes name to Inhance

(February 17, 2006) Real Assets Investment Management has changed its name to Inhance Investment Management, effective immediately and has adopted the motto “Return on Responsibility.”

“Inhance speaks to the integration of our investment process with our enhanced analysis of environmental, social and governance performance,” said Kerry Ho, CEO of the Vancouver-based SRI firm. “We also use constructive shareholder initiatives to enhance corporate responsibility and profitability among the companies we hold.”

Most of the firm’s five funds will retain their original names, with only the brand changing, although the company’s Social Leaders Fund will be renamed as Global Leaders Fund. None of the funds’ mandates will change.

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IGM reports 2005 profit, boosts dividend

(February 17, 2006) IGM Financial, the parent of Investors Group and Mackenzie Financial, has released its full-year earnings for 2005, totaling $682.4 million, up $66.8 million from 2004, an increase of 10.9%. For the final quarter of the year, the company posted a profit of $177.2 million.

IGM also announced it would raise its dividend on common shares, adding 2.5 cents per share per quarter to 37 cents.

“During 2005 we significantly expanded our field management to support our growing Consultant network,” said Murray J. Taylor, president and CEO of Investors Group. “A 257% increase in mutual fund net sales over 2004 combined with strong investment performance has resulted in record levels of assets under management.”

The Investors Group division of the company saw full-year mutual fund net sales of $778 million. Net mutual fund sales for Mackenzie totaled $1.2 billion.

“Industry net sales of long-term funds in the quarter represented the best fourth quarter results since 1998 indicating that the industry is still benefiting from positive investor confidence,” said Charles R. Sims, president and CEO of Mackenzie Financial. “Mackenzie’s gross sales for the year were the highest in the company’s history.”

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Pensions becoming more activist

(February 16, 2006) More pension fund managers are laying out ground rules for proxy voting, rather than allowing their investment managers to vote as they choose, according to a survey by SHARE. The percentage of investment managers exercising complete discretion fell to 64% in 2005, down 10 percentage points from 2004.

“The number of trustees that ignore their duty to direct proxy voting policy is clearly declining,” said Peter Chapman, executive director of SHARE, a Vancouver-based non-profit organization that promotes responsible pension investment practices. “Because participation in the survey is voluntary, the results may reflect the behaviour of investment managers that generally place greater emphasis on proxy voting.”

Starting in 2006, under a new Canadian Securities Administrators rule, all mutual funds and labour-sponsored venture capital funds will be required to disclose their voting record to clients.

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BC needs lower taxes, spending: Fraser Institute

(February 16, 2006) The Fraser Institute is calling on the government of British Columbia to focus on controlling spending and creating a competitive tax environment in its upcoming budget, due out next week.

“If the government wants to achieve its goal of making BC a ‘global powerhouse of innovation, inspiration and wealth creation’, it must further reduce personal and business taxes in order to improve the incentives to work, invest, and undertake entrepreneurial activities,” says Niels Veldhuis, associate director of fiscal studies at the institute.

Veldhuis urged caution in estimating revenues, warning that a sudden drop in natural gas prices could have a dramatic impact on government in-flows.

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E&Y tax guide now available

(February 16, 2006) Ernst & Young has announced its tax guide is now available for professionals preparing 2005 tax filings. The Line-by-Line Guide to Preparing the 2005 Personal Tax Return is available in both book and searchable Internet versions.

“Tax professionals completing their clients’ personal tax returns are regularly inundated with dozens of separate pieces of information from the CRA,” says Gena Katz, CA, tax executive director at Ernst & Young. “The logical line-by-line set-up of the guide is convenient and straightforward. We consider it an invaluable tool for personal-tax practitioners.”

As the title suggests, the guide provides line-by-line commentary and annotations from Ernst & Young tax advisors, as well as official CRA guidance.

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MFDA names two new PAC members

(February 16, 2006) The MFDA has announced two new members to its Policy Advisory Committee (PAC), which provides advice comments and reports to MFDA staff on various regulatory and policy initiatives.

The new members of the committee are Jeanne Beverly, TD Investment Services and Ian Moorhouse, Independent Accountants’ Investment Group. There are nine other members on the PAC.

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New ETF scheduled for launch next month

(February 16, 2006) There will soon be a new player in the exchange traded funds business on the TSX, as Claymore enters the market. The management fee for the new ETF will be 0.65% per annum.

The ClaymorETF FTSE RAFI Canadian Index Fund uses a “fundamental index strategy” which differs from the traditional cap-weighted indexing strategy by taking into account measures such as total cash dividends, free cash flow, total sales and book equity value.

The official launch will be marked by a reception at the TSX on March 6, 2006.

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CAIF names new leader

(February 16, 2006) The Canadian Association of Income Funds (CAIF) has appointed a new chair, naming Paul Hollands, CEO, A&W Revenue Royalties Income Fund to the post.

Hollands replaces founding chairman Stephen Probyn, president and CEO of Clean Power Income Fund.

“I’m very pleased to assume the role of Chairman of CAIF,” said Hollands. “Over the past four years since its inception, CAIF, under Stephen’s very capable leadership, has been very successful in representing the interests of one of the fastest growing and most important sectors of Canada’s capital markets.”

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Corporate cash could influence economy

(February 15, 2006) Canadian companies are flush with cash and how they use it could have wide ranging influence over the economy as a whole, according to a report from RBC. Corporations have been reluctant to loosen their purse-strings since the crash of the tech bubble and have bulging coffers as a result.

“Never before have companies experienced such cash surpluses,” said Derek Holt, assistant chief economist at RBC. “Depending upon how companies deal with these surpluses, we could see inflation, higher wage gains and higher interest rates. Or they could drive stronger investment, improve productivity and potentially set off record-breaking merger and acquisition activity.”

Hoarding cash can make a company a major player in the M&A market, while spending on productivity enhancing technology could help keep inflation at bay. Another option is to raise wages, which have not grown as quickly as corporate earnings, but would increase inflationary pressure.

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Altamira adopts PlanPlus Web Advisor

(February 15, 2006) Altamira Investment Services has announced the adoption of PlanPlus’s Web Advisor financial planning tool.

“A good financial planning tool is the key to assessing Altamira client needs and formulating solutions for them in order to achieve their goals,” said Anne Wildfong, vice-president of private wealth at Altamira. “The Investment Policy Statement (IPS) in particular plays a significant role as such. It has become the ‘roadmap’ for Altamira customers and their financial futures.”

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Standard Life offers life cycle product to CAP members

(February 15, 2006) Standard Life Canada has launched a new series of Target Year Funds, a life-cycle product managed by McLean Budden, aimed at Capital Accumulation Plan (CAP) members.

“Many plan sponsors are challenged by the issue of effective employee education,” said Anthony Cardone, senior vice president, group savings & retirement, Standard Life. “This new series of funds provides a turnkey solution for both sponsors and their plan members, simplifying both the selection and management of their funds.”

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Canada, Japan sign pension accord

(February 15, 2006) Canada has signed an social security agreement with Japan, allowing Canadian employees working in Japan to count their contributions to the Japanese pension program toward their Canada Pension Plan qualification.

“Agreements such as this one will help provide seniors with additional income in retirement,” said Diane Finley, Minister of Human Resources and Social Development. “This agreement with Japan is also an important step toward strengthening the relationship and cooperation between our two countries.”

The reciprocal agreement also covers Old Age Security benefits.

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Healthcare a concern for investors: poll

(February 15, 2006) The future of Canada’s healthcare system is a source of concern for many when planning their retirement, according to a survey from TD Waterhouse, and that level of concern is rising.

In a client poll, the brokerage found 61% of respondents expressed concern about rising healthcare costs, compared to 54% last year. The potential for privatization of services was cause for concern among 56%, compared to 50% last year.

“The continuing debate in Canada over health care funding, privatization and two-tiered medicine is clearly having an impact on investor expectations and concerns,” says Patricia Lovett-Reid, senior vice president, TD Waterhouse Canada. “This is a rational response to Canada’s aging population and growing concerns over how we will meet health care costs.”

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Scotiabank to acquire mortgage lender

(February 14, 2006) Scotiabank has announced plans to purchase mortgage lender Maple Trust, a division of Maple Financial Group. The purchase price is $233 million in Maple Trust shares.

Maple Trust currently has $7.5 billion in mortgages under administration and 42,000 outstanding mortgages.

The acquisition, which also includes $1 billion in deposits, moves Scotiabank up to number three from number four in Canada’s overall mortgage market, doubling originations through the mortgage broker channel — where the bank acquires mortgages through brokers.

“Scotiabank’s acquisition of this business demonstrates our commitment to finding opportunities to drive revenue growth,” said Scotiabank president Rick Waugh. “This is an excellent opportunity to build on our strong position as a leading provider of mortgage financing for Canadians.”

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Pro-Hedge announces brand extension

(February 14, 2006) Pro-Hedge Funds, Pro-Performance Funds and Pro-Financial Private Client Group will now fall under the new Pro-Financial Asset Management banner, the firm has announced.

“This is an exciting and long-awaited expansion for us” said Pro-Financial president Stuart McKinnon. “We have spent the past several years developing the Pro-Hedge brand, our corporate infrastructure and our reputation for commitment to superior products and unparalleled service, and have built relationships with some of the world’s best money managers, banking groups and respected investment experts.”

Last week, the firm introduced a new structured produce: Pro-Performance Blue Chip Yield Deposit Notes, featuring a 100% principal guarantee at maturity by BNP Paribas. The new notes, available for sale until March 31, 2006, invest in a portfolio of 30 stocks, picked from the Dow Jones Global Titans 50 Index.

“We are not reinventing the wheel here,” said senior vice president Ravi Ramaswamy. “The market is clearly inundated with these types of products, because there is a place for them in most portfolios. I’d without hesitation put the Pro-Performance Blue Chip Yield Notes up against any in the market.”

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Record-breaking year for CoVirt

(February 14, 2006) CoVirt signed up seven insurance brokerage firms last year to VirtGate, the company’s online document management system.

ABEX Brokerage Services, Able Insurance Group, Boulos Financial Group, Creative Planning Corporate Insurance Services, PEAK Insurance Services, R.G. Packman & Associates, and TORCE Financial Group all joined the VirtGate platform in 2005.

“This MGA-first approach has made VirtGate the most widely used and fully featured agency management system in Canada for over half the independent life insurance distribution channel,” CoVirt said in a release.

“The point of technology is to provide superior results and this is why so many MGAs are so passionate about VirtGate,” says CoVirt president Tim Fitzpatrick. “When agency management systems are compared, VirtGate is chosen most often by MGAs for its combination of system features, support, scalability, flexibility and price.”

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TD changes portfolio advisor

(February 14, 2006) TD Asset Management has appointed Highstreet Asset Management as portfolio advisor on the TD Private Canadian Strategic Opportunities Fund.

Highstreet, a Canadian based institutional asset manager since 1998, will replace KBSH Capital Management, on or about February 16, 2006.

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IDA rules against Resolution Capital

(February 13, 2006) An IDA hearing panel has slapped a fine of more than $51,000 against Resolution Capital and ordered a permanent ban against its president and CEO, Gaston English. Senior vice-president, director, chief compliance officer and CFO Eric English has been suspended for three years.

At a disciplinary hearing held June 15-16 and August 31, 2005, the panel found the firm neglected to pay its IDA membership fees from 2003 through 2005; refused to pay auditor fees; and neglected to pay its late filing fee for its 2004 Joint Regulatory Financial Questionnaire and Report.

The firm also failed to maintain adequate capital and failed to follow proper accounting principles. Both Gaston and Eric English failed to discharge their duties “in a prudent and reasonable manner,” the IDA added.

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Hedge funds return nearly 4% in January

(February 13, 2006) The average hedge fund manager earned their clients 3.7% in January, taking advantage of market inefficiencies in the small-cap sector, according to the Barclay Hedge Fund Index.

“Small-cap value and growth stocks were the star performers in U.S. equity markets in January,” says Sol Waksman, founder and president of The Barclay Group. “Many long/short equity hedge funds focus on the small-cap sector, where they find the most inefficiency and the greatest opportunity for profit.”

The best returns were found in China, India and Russia, though, where some funds managed returns in the mid-teens for the month. Barclay’s Emerging Markets Index gained 6.81%, leading the pack of 18 indices. Only the Equity Short Bias posted a loss, dropping 3.85%.

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National Bank issues new notes

(February 13, 2006) National Bank has launched the third series of its SMART Note, which offers a 100% principal guarantee and no upside limits. The notes are available in $100 increments, with a minimum investment of $2,000.

The notes are available in three formats, with portfolios reflecting either a moderate, conservative or growth strategy. The notes qualify for registered accounts and mature April 1, 2013.

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