Briefly:

(September 10, 2004) Most Canadian homeowners are not worried about the effect rising interest rates will have on their mortgages, with 94% saying they could handle an increase of 1 or 2%, according to a poll by CIBC and Decima Research.

“It was surprising to see how much wiggle room most homeowners say they have in their budgets,” said Paul Mims, vice president, CIBC mortgages and lending. “According to forecasts by CIBC World Markets economists, it’s unlikely that we will see rates rise by more than one percent by the end of 2005, so most homeowners should feel confident about the affordability of their mortgage payments.”

Respondents said that five-year mortgage rates would have to get as high as 9.8% before they would consider their mortgage unaffordable. About a quarter of respondents said they expected it would take two years before interest rates rose to a point where they would feel a pinch in their budget.

Earlier this week, the Bank of Canada raised its overnight lending rate 25 basis points to 2.25%. In response, the big banks slightly bumped up their open and closed mortgage rates.

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CPP review gets another set of eyes

(September 9, 2004) An external peer review committee has been established for the next actuarial review of the Canada Pension Plan. The report is conducted every three years, with the last one concluding that the CPP will collect enough money through premiums and investment income to meet its obligations until at least 2075.

“Canadians and their parliamentarians can be assured that this enhanced independent process ensures the highest degree of standards and international best practices will be applied to the actuarial work that our office produces,” says Canada’s chief actuary Jean-Claude Ménard.

The panel members were drawn from the Canadian Institute of Actuaries, including James Paterson, who has previously reviewed the CPP Actuarial Report and will serve as chairman, Robert Brown who is a past president of both the CIA and the Society of Actuaries, and Mark Campbell, current chairman of the CIA Practice Standards Council.

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RBC offers new corporate bond fund

(September 9, 2004) RBC Asset Management has announced the launch of the RBC Global Corporate Bond Fund, which, as the name implies, will offer exposure to worldwide corporate debt.

“Investors continue to look for products that will help them generate yields in this low interest rate environment, while at the same time managing risk,” said Dan Chornous, chief investment officer, RBC Asset Management. “One thing we do know from past experience is that in a rising rate environment, corporates, high yield and emerging market debt indices have performed better than government debt. This new fund provides further diversification for fixed income holdings.”

The RBC Global Corporate Bond Fund invests primarily in investment grade debt — rated BBB or higher — and can also invest up to 30% in high yield or emerging market debt. It has a management fee of 1.5% for A Series and 0.75% for F Series.

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Goodale pledges balanced budget

(September 9, 2004) Finance Minister Ralph Goodale has pledged to maintain a balanced budget, despite an avowed commitment to spending more on healthcare. He is promising $15 billion in targeted new funding for healthcare for fiscal 2005-06, but has offered no hint as to where the cash will come from.

“The government of Canada, as promised, will meet the financial benchmarks set out by Mr. Romanow in his 2002 report,” Goodale said. “Addressing healthcare above other priorities does not mean addressing healthcare instead of all other priorities. Canadians want to see real progress on many other important fronts.”

In a speech in Ottawa Thursday, Goodale noted that economic growth has exceeded expectations so far this year, which will mean “greater revenues and more fiscal room for our government.”

After his speech, Goodale told reporters that a long-awaited report on bank mergers, expected this summer, has been delayed. The minister says he is completing consultations with bank officials and will complete the report “as rapidly as I can.”

Goodale is expected to deliver an economic update this fall.

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U.S. traders to mark September 11

(September 9, 2004) The Nasdaq is asking market participants to observe a minute of silence on Friday to mark the anniversary of the September 11, 2001 terror attacks in New York City.

In a statement today, the Nasdaq said investors should “refrain from trading activity between 11:00 a.m. and 11:01 a.m. to remember those who lost their lives.”

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Wellington West launches institutional trading unit

(September 8, 2004) Wellington West Capital Inc. is teaming up with Harris Partners Ltd. to create an institutional trading division, called Wellington West Capital Markets Inc.

“We’ve been looking to add a first rate institutional group to our growing organization for some time now. Fortunately for us, we’ve been able to unite with a group that shares our corporate values of independence, entrepreneurship and employee ownership,” said Charlie Spiring, CEO of Wellington West Capital. “[Harris Partners President] Greg Thompson and his people are joining forces with us because they see the same thing we see — a significant opportunity to build a successful Canadian, employee-owned investment services firm.”

The transaction is expected to close in October 2004, subject to receipt of all appropriate regulatory approvals. The deal will see Harris Partners rebranded as Wellington West Capital Markets Inc.

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Unity Life offers new LTC policy

(September 8, 2004) Unity Life of Canada has introduced a new long term care product, in partnership with Ten Star Long Term Care Insurance Brokers. The LTC product is available through all participating Ten Star advisors, authorized managing general agencies and brokers across Canada.

“This plan offers a number of elements that will attract a younger age group,” says Brian Veinot, Ten Star LTCI’s COO. “It goes a long way to change the misconception that LTCI is only for seniors.”

LTCI policy includes combined home and facility care benefit, a choice of premium payment plans, an optional inflation rider and a spousal transfer benefit which allows 50% of the unused allowance to be transferable to surviving spouse. Policyholders also have access to Best Doctors services.

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Scotia offers new HNW product

(September 7, 2004) ScotiaMcLeod has launched Summit Optimized Portfolios for high net worth clients, which adopt the multi-manager, multi-style approach. The firm says the new portfolios are the first of their kind in Canada.

“Multiple style portfolios, such as the Summit Optimized Portfolios, provide flexibility to choose the asset mix and money managers that best suit the individual investor in a single account,” said Willo Watson, director, fee based product development and portfolio management, ScotiaMcLeod. “The Optimized Portfolios maintain the performance and diversity of the Summit Program, while consolidating accounts to make them more manageable and tax friendly.”

The portfolios are designed to add value through multi-level diversification in a single account, while providing strategic portfolio rebalancing and enhanced tax and risk management features. The Summit Optimized Portfolios were created and are monitored by Northern Trust Global Advisors and have a minimum investment of $500,000.

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AIM Trimark announces road show schedule

(September 7, 2004) AIM Trimark is inviting advisors to its annual traveling road-show “PD Network Live,” which the fund firm says is “designed to help advisors maximize their success by providing them with useful perspectives they can act on today.”

“Working closely with advisors has always been one of our top priorities,” says Philip Taylor, AIM Trimark president and CEO. “PD Network Live, in its seventh consecutive year, is another example of our continued commitment to partnering with advisors to equip them with what they need to succeed in today’s competitive marketplace.”

Topics include strengthening client relationships through wealth management strategies, understanding competitive business models in a changing environment, strategies to minimize clients’ tax liabilities and more. The half-day sessions begin next week with 22 shows across the country. Schedule details are available on the AIM Trimark Web site.

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CI completes fund mergers

(September 7, 2004) CI Mutual Funds has announced the completion of 15 mutual fund mergers and the reorganization of its global corporate class fund structures. Most of the mergers eliminate Synergy funds with similar mandates after CI took over Synergy last year.

“These changes are part of our commitment to providing distinct, efficient funds while continuing to offer the industry’s broadest selection of investment funds,” said Peter W. Anderson, president and CEO of CI. “With the completion of this step, we will continue to consider opportunities to streamline our lineup.”

The company also amalgamated two of its global corporate class structures, merging Synergy Global Fund into CI Sector Fund.

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AIC launches new funds

(September 7, 2004) AIC has launched seven new funds, including a dividend income offering as well as six new portfolio funds.

“The new AIC Dividend Income Fund was designed to meet the needs of investors looking for lower volatility and an income stream, while the new AIC Portfolio Group Funds are a fund-of-fund structure offering diversification by asset class, geography and fund managers,” said Jonathan Wellum, AIC’s Chief Investment Officer. “Like all AIC Funds, these new funds will be managed in a tax efficient manner.”

The AIC Dividend Income Fund, managed by James Cole, will invest in traditional equities as well as royalty and income trusts and fixed income securities. The six AIC Portfolio Funds will invest in a selection of four or five existing AIC Funds. For example, the AIC Core Growth Portfolio Fund will invest in the AIC Advantage Fund, Value Fund, World Equity Fund, Canadian Focused Fund and Bond Fund.

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