Briefly:

(October 15, 2004) The Canadian Association of Income Funds (CAIF) is calling on the federal government to scrap plans to restrict foreign ownership of income trusts.

“This is a major shift in investment policy towards the trust industry,” said Stephen Probyn, chairman of CAIF, and president and CEO of Clean Power Income Fund. “We are very disturbed by these legislative changes because they pose a severe challenge to income trusts which require access to foreign markets to attract the significant capital required to expand and undertake new projects.”

The group also opposes an item in last year’s budget which implemented a 15% withholding tax on all income trust distributions paid to non-residents.

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Sibold stepping down as ASC chair

(October 15, 2004) Stephen Sibold, head of the Alberta Securities Commission, will leave his position when his contract ends next year.

Sibold was appointed to a five-year term as ASC chair in May, 2000. He led the Uniform Securities Legislation project and was appointed chair of the Canadian Securities Administrators in April, 2003. That two-year term expires in April, 2005.

“I am extremely pleased with the success which we have achieved at the ASC over the past five years,” Sibold said in a statement. “I have been very proud of our accomplishments in the many areas of securities regulation, where we continue to provide practical and professional oversight of the capital market in Alberta.”

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C.D. Howe committee recommends interest rate hike

(October 15, 2004) The C.D. Howe Institute’s Monetary Policy Council has recommended that the Bank of Canada raise its overnight lending rate by 50 basis points to 2.75% next week.

The council, a panel of nine economists and academics, were not unanimous in their interest rate recommendations. Five favoured a 50-basis-point increase, while four leaned toward a more conservative 25-basis-point rise.

“There remains a consensus among panel members that, over the long term, the Bank of Canada should move the overnight rate well above current levels to maintain inflation at 2%,” C.D. Howe says.

The Bank of Canada’s next interest rate announcement is scheduled for Tuesday, October 19.

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Ottawa reports $9 billion surplus

(October 13, 2004) The federal government recorded a surplus of $9.1 billion in the last fiscal year, Finance Minister Ralph Goodale confirmed today. It’s the seventh consecutive annual surplus, a Canadian record.

“Consistent with generally accepted accounting principles, the $9.1 billion has been applied to reduce Canada’s federal debt,” the minister said in a statement.

In the last federal budget, Goodale estimated last year’s surplus would be just $1.9 billion, prompting critics to accuse Ottawa of low-balling surplus estimates to boost its reputation as a prudent fiscal manager. But Goodale defended the unexpected windfall.

“Thanks to a resilient economy, the level of incomes and government revenues were higher than estimated in the last federal budget, illustrating that the Canadian economy successfully weathered the problems of 2003, which included BSE, SARS and the significant appreciation of the Canadian dollar.”

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Ethical strengthens research team

(October 13, 2004) Ethical Funds is beefing up its research staff following the launch of a new index fund. Catalin Chiloflischi has joined Ethical’s sustainable investing research team, joining analysts Jennifer McCaffrey and Coby Squires, as well as senior analyst Jennifer Coulson.

The team is led by Ethical’s vice president of research, Robert Walker. “With extensive experience at financial institutions in Romania, Switzerland and Denmark, Catalin brings with him a refined set of quantitative skills,” Walker said.

Last week, Ethical introduced a new index fund based on the TSX. Ethical’s internal research team will be responsible for applying the company’s sustainability screens to the fund as well as implementing a corporate sustainability scorecard that ranks companies in different industries.

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Business commentators given honorary designation

(October 13, 2004) Two prominent business media pundits have been given honorary designations by the Canadian Securities Institute. Patricia Lovett-Reid of TD Waterhouse and Fred Ketchen of Scotia McLeod have been named Fellows of Canadian Securities Institute (FCSI).

“Patricia and Fred have been instrumental in educating the public about financial services,” said CSI president Roberta Wilton. “Through their work at their respective institutions and as financial opinion leaders, they have helped raise investor awareness of various aspects of the business.”

The selection was made by the council of FCSI, comprised of representatives of the more than 5,000 industry professionals who have earned the FCSI designation.

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Canadians concerned about rising interest rates, poll suggests

(October 13, 2004) Nearly 70% of Canadians are worried about how they will handle their debts if interest rates keep rising, according to a survey conducted for Manulife Bank.

Mortgage rates were cited as the main concern, followed by credit card debt. However, 29% of those questioned said they had no financial worries at all.

The Maritz Research survey also revealed that a majority of Canadians (nearly three-quarters) admitted they gained little or no ground in reducing debt or increasing savings in the past year.

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ING scraps portfolio funds

(October 12, 2004) ING Investment Management has announced it plans to terminate its six Ensemble Portfolios by December 15, 2004. The six all-equity “fund-of-funds” are no longer accepting new deposits, including incoming transfers and switches.

In the four years since their launch, Ensemble Portfolios attracted only $25 million in assets. The company is advising investors to contact their financial advisors to find alternative investments and is waiving the redemption charges on the funds.

“These are always difficult decisions, but you need to be pragmatic,” said Mr. Lockbaum. “I would like to recognize and thank our investors, their advisors, the dealer community and our business partners for their support of this product.”

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OSC names new commissioner

(October 12, 2004) The Ontario Securities Commission has appointed David L. Knight as commissioner and member of the audit and finance committee for a three-year term.

Knight was vice-chairman with KPMG for over a decade, taking on a senior role in professional standards with KPMG International and participating in drawing up the International Accounting Standards and International Standards on Auditing.

“The breadth of knowledge our commissioners have is quite impressive,” said OSC chair David Brown. “We are fortunate to have attracted a candidate with the stature of Mr. Knight to join us.”

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RBC integrates insurance, banking referrals

(October 12, 2004) RBC Insurance is expanding the product line available to clients of its career sales representatives. Reps can now offer integrated referrals to personal loans and mortgages as well as various personal banking packages.

“This enhancement will allow representatives to be able to strengthen their client relationships by offering a broader RBC product portfolio and providing an integrated, seamless experience,” said Ernie Murdoch, senior vice-president, career sales, RBC Life Insurance Company.

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