Briefly:

(November 5, 2004) The CPP Investment Board announced a quarterly return of 1.2%, coming largely on the back of its fixed-income portfolio, which gained 2.2%. By the end of September, the fund had earned $906 million, rising to $75.2 billion.

“Our focus remains on the long term,” said John MacNaughton, president and CEO of the CPP Investment Board. “We are continuing to broadly diversify the portfolio in order to help ensure sustainability of the CPP for generations to come.”

The CPPIB also announced a $50 million commitment to EdgeStone Venture Fund II, a Canadian venture capital fund focused on early-stage software companies in enterprise solutions, transaction processing and networking.

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Feds fine financial firms

(November 5, 2004) The Financial Consumer Agency of Canada (FCAC) has found two federally regulated financial institutions in violation of federal legislation that protects financial consumers.

FirstLine Mortgages, a division of CIBC Mortgages Inc., was fined $50,000, for violating paragraph 8(1)(q) of the Cost of Borrowing (Trust and Loan Companies) Regulations.

Laurentian Bank of Canada was fined $30,000 for violating subsection 19(1) of the Cost of Borrowing (Banks) Regulations.

For case summaries of the violations named above, visit the Compliance Section of FCAC’s website (www.fcac.gc.ca).

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Astley joins BMO board

(November 4, 2004) Insurance industry veteran Robert Astley has been appointed to the Bank of Montreal’s board of directors.

Astley retired as president of the Canadian operations of Sun Life Financial in September. Prior to that, Astley was chief executive officer at Clarica and oversaw that firm’s merger with Sun Life.

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National Life launches new term life product

(November 4, 2004) National Life has announced a new term life plan, called “Pick-A-Term,” which the company claims is the most flexible of its kind in Canada.

“Pick-A-Term gives you the flexibility to customize the length of coverage to the number of years you require from as short as 10 years to as long as age 85,” says National Life’s Promod Sharma.

“This is in contrast to conventional term life insurance where if you require coverage for 14 years you must buy Term 10 and pay high renewal premiums or buy Term 20 and pay higher initial premiums,” he adds.

Coverage starts at $100,000 and the death benefit is tax-free, National Life says.

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Investor education fund up and running in Quebec

(November 4, 2004) Quebec’s financial services regulator says its new investor education fund is now operational. The $14.6 million fund will provide financial support for projects related to investor education, investor protection, the promotion of good governance and improving knowledge about the financial sector, the Autorité des marché (AMF) says.

The AMF has also released guidelines for selection criteria and conditions for submitting potential projects to the new fund.

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Investment income slides

(November 3, 2004) The number of Canadians reporting investment income in 2003 fell to about 7.4 million, off slightly from the previous year, according to a report from StatsCan released today. A total of $30.1 billion was earned from investments, based on tax filings from 2003.

This is the third consecutive year claimants of investment income have declined, but the rate of has slowed from 6% in the past two years to 1.3%. Only Alberta and British Columbia saw increases. Median investment income remained unchanged at $500 for the third year in a row.

The number of dividend investors remained stable between 2002 and 2003 although the dividend and interest income they received increased 2%. The number of savers — those who reported interest income only — declined 2.2% to 4.4 million in 2003.

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Income trusts lag TSX Comp in October

(November 3, 2004) CIBC World Markets today released its new monthly Income Trust indices report for October 2004, while the total index rose 2.29%.

That marks a slight underperformance by the trust group, compared to the S&P/TSX Composite Index, but income trusts still dominate common equity on a year-to-date basis.

The utilities index led the pack, gaining 3%. Capitalization split the indices, with small cap trusts underperforming the mid to large cap trusts.

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Mackenzie launches income fund

(November 3, 2004) Mackenzie Financial has launched the MSP Maxxum Trust, a structured investment fund aimed at providing tax-efficient monthly income.

Lead manager Bill Procter, senior vice-president of Mackenzie Financial, will invest in a broadly diversified portfolio of North American securities comprised mainly of Canadian equities and income trusts. A yield of 7% of the initial $10.00 price is targeted and the fund is eligible as Canadian property for registered accounts.

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Desjardins expands group retirement line

(November 3, 2004) Desjardins Financial Security is adding five new portfolio managers to its group retirement savings lineup.

“These major improvements top up our current offer quite well by offering new investment options to our group retirement savings plan members,” says Peter Ferland, Desjardins’ vice-president, sales savings and segregated funds. “Plan members will have a wider range of assets and managers to choose from because we selected managers with management styles that complement the current managers’ approach.”

The new managers include UBS Global Asset Management, Addenda Capital, GE Asset Management, New Star International Managers and Desjardins Global Asset Management.

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RRSP contributions rose in 2003

(November 2, 2004) Canadian taxpayers increased their RRSP contributions for the first time in three years, despite a slight decline in the overall number of filers, according to StatsCan data on the 2003 tax year.

Contributions rose 1.8% from 2002, to $27.6 billion, while the number of contributors was down 0.7% to 5,948,000 tax-filers. Women accounted for 38% of total RRSP contributions, down from 39% in 2002. Their median contribution remained virtually unchanged at $2,100.

Canadians have a long-running tradition of failing to max out their RRSP limits and 2003’s $27.6 billion total still only represented about 9% of the total room available.

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TD launches new portfolio fund

(November 2, 2004) TD Asset Management has launched its new TD U.S. Equity Advantage Portfolio. The U.S.-based fund of funds’ portfolio will be determined by the same team that designed the TD Income Advantage Portfolio and the $7 billion TD Managed Assets Program.

“What the TD U.S. Equity Advantage Portfolio offers is an ability for investors to get broad coverage of the diverse U.S. Equity Market in a single investment,” says Steve Geist, President, TD Mutual Funds. “We’re confident that the combination of TD Asset Management’s portfolio construction expertise and the recognized strength of the T. Rowe Price investment management team will make this an attractive product for clients.”

TD also launched Advisor Series versions of the TD Managed Income RSP Portfolio, the TD FundSmart Managed Income RSP Portfolio, and an F Series version of the TD Short Term Bond Fund.

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Wealth managers get high marks for account statements

(November 1, 2004) Investment firms specializing in serving high net worth clients are doing a good job providing effective and informative account statements, says research firm DALBAR.

DALBAR examined statements sent to holders of wrap accounts and other discretionary management products and found them to be “very strong in their presentation of performance information, investment commentaries, and fee disclosure.”

“We found that these statements are generally very effective at covering some areas that get less attention on other financial product statements,” says DALBAR’s Mark McDonald. “It’s apparent that companies realize that clients owning these products have more refined information needs, and they’re taking the appropriate steps to meet them.”

Franklin Templeton received the highest rating. Other companies that scored well were AGF, Mackenzie and First Asset Advisory Services.

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Homes seen as best-performing investment

(November 1, 2004) Most Canadians believe their homes will outperform all other investments over the next decade, a study released today indicates.

The poll, conducted by Decima Research for Investors Group, found that 59% of working Canadians believe their real estate assets will grow more in value than their investment portfolios over the next 100 years.

But that belief could be based on the recent hot real estate market combined with tepid stock market returns, cautions Debbie Ammeter, Investor Group’s vice-president of advanced financial planning. In fact, she notes that the average annual increase in real estate assets over the last 20 years is 5.1%, compared to the TSX’s increase of 9.35% per annum over the same period.

“Rising house values are making homeowners feel wealthier and that can make it more difficult to follow a disciplined savings and investment plan,” says Ammeter. “However, Canadians should be aware that real estate markets are volatile. Even though investing in your home is a great idea, you still need a balanced and well-planned approach to saving for your long-term goals, such as retirement.”

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Global economy expected to slow

(November 1, 2004) The global economic growth rate will slow to a more modest pace of expansion in the coming year, at around 3.9%, down from 4.4% in 2004, according to Export Development Canada (EDC).

“The global economy has passed its high-water mark, and we are beginning to see signs of moderation in world economic growth,” says EDC senior vice-president and chief economist Stephen Poloz. “As a result, the economy should grow at a pace that is more sustainable — a pace that is neither too hot nor too cold, but just about right.”

Canada is predicted to post a steady growth rate of 3.2%, roughly equivalent to 2004. By year end, export sales are expected to have surged 9% after three consecutive years of decline. A slowing global economy is expected to stifle some of the strong export economy, however. In the U.S., growth is seen slowing to 3.3% from 4.2% this year.

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