Briefly:

(March 3, 2006) The C.D. Howe Institute is calling on the Bank of Canada to raise its trend setting overnight interest rate to 3.75%, citing rising inflation as a threat to economic growth. The BoC board will meet March 7 to decide on the direction of interest rates.

The think-tank’s seven-member Monetary Policy Council was divided on this call, with two members advocating a 50 basis point rate increase, to 4%, while one member thought no increase was needed at present.

The group was further fragmented in its recommendation for the April rate setting meeting, with two members calling for a rate of 4.25%, three advocating 4% and two pushing for 3.75%.

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CRA announces Q2 interest rates

(March 3, 2006) The Canada Revenue Agency has announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations.

The interest rate charged on overdue taxes, CPP contributions and EI premiums will be 8%; the rate paid on overpayments will be 6%; and the rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 4%.

The CRA adjusts interest rates quarterly. These latest rates will be in effect from April 1, 2006, to June 30, 2006.

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CIBC team adjusts portfolio weighting

(March 3, 2006) Rising interest rates and February’s stock market correction have led portfolio strategists at CIBC World Markets to increase their overweighting toward equities in their model portfolio. The team, led by chief strategist Jeffery Rubin, have increased their equity allocation by 1%, to 57% of the total portfolio — a 7% overweighting compared to the benchmark.

“Despite the over 250-point pullback in the index in February, we remain bullish on the market, given still exceptionally good value in both energy and materials stocks,” reads the research note, penned by Rubin and senior economist Peter Buchanan. “Those two groups have four times the throw weight in the TSX than in the S&P 500, providing sufficient leverage for a 13,200 TSX index level by year-end.”

The portfolio reflects a bullish sentiment, underweighting fixed income by 5% to 33% of the total portfolio, and overweighting income trusts by a corresponding 5%, to 10% of the portfolio. The 7% overweighting to equities comes at the expense of the cash position, which is set at zero.

Within the equity portfolio, the group is decreasing its allocation in telecoms by 2% and boosting its allocation to industrials by the same amount. The most significant deviations from the TSX Composite benchmark are an 8% overweighting in energy, and a 3% underweighting in both technology and consumer discretionary stocks. The portfolio remains 2.5% underweight in consumer staples as well.

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CSA calls for comment on trade matching

(March 3, 2006) The Canadian Securities Administrators is inviting comment on a new national instrument (NI 24-101) and its companion policy (NI 24-101CP), governing institutional trade matching and settlement. The comment period will end on May 2, 2006.

The instrument and the companion policy constitute “materially revised” versions of proposals made in 2004, which would have seen trades processed on the day they were place. But the proposal was rejected by most commenters and the incremental step of T+1 was suggested instead.

“The majority of comments on the 2004 proposals support a CSA rule requiring institutional trade matching on trade date,” said Jean St-Gelais, Chair of the CSA, and president and CEO of Québec’s Autorité des marchés financiers. “However, almost all of the commenters found it unfeasible to require institutional trade matching by the earlier proposed deadlines. We have revised our proposals to facilitate institutional trade matching by focusing on policies and procedures and by allowing a transition towards institutional trade matching on the day of trade by July 1, 2008.”

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GGOF offers two new funds

(March 3, 2006) Guardian Group of Funds has announced the launch of a pair of new funds: the Small Cap Growth and Income Fund and the Global Diversified Fund.

Global Diversified is a balanced global fund aimed at providing income generation, portfolio growth and inflation protection, with an equal weighting for each of these themes.

“Inflation has not been a major concern for Canadian investors in recent years, but it can be a great destroyer of wealth,” says said Gavin Graham, Chief Investment Officer, Guardian Group of Funds. “While we don’t foresee an upcoming surge in inflation, rising demand for raw materials in the developing nations, particularly India and China, suggests that investors would be naive to ignore this potential investment risk.”

Management of the various asset classes will be split between Lazard Asset Management (global bonds, global equities); Barrantagh Investment Management (resource equities); Jones Heward Investment Counsel (Canadian equities); and Matthews International Capital Management (Asian equities). Guardian Capital will oversee the high yield bonds and income trust holdings.

The Small Cap Growth and Income Fund will invest in small cap income trusts and be will be managed by Wally Kusters, Bruce Jackson and Peter Comber of Barrantagh Investment Management.

“As an overlooked asset class, small cap income trusts can provide valuable diversification for an existing income portfolio and minimize single issue risk for investors with individual small cap income trust holdings,” Graham says. “We developed GGOF Small Cap Growth and Income Fund based on our well-recognized expertise in structuring and offering both traditional and non-traditional income products, as well as our ability to create products that control risk.”

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SciVest launches five new funds

(March 2, 2006) SciVest Alternative Strategies is adding five new funds to the company’s lineup, including the SciVest-branded Oil Sands Index PLUS Fund, Income Portfolio PLUS Fund, Commodity Index PLUS Fund, Asia Pacific Long-Short Equity Fund and Aggressive Market Neutral Equity Fund.

“Although Market Neutral will remain a core strategy, we believe that Beta Controlled funds are a useful investment tool in the current market environment, allowing investors to run either with the bulls or bears in a risk controlled manner,” says Dr. John Schmitz, president and CEO of SciVest Capital Management. “Our PLUS funds on the other hand, use a sophisticated investment technique, known as ‘portable alpha’ to provide investors with the opportunity to beat the relevant underlying long-only benchmark with no additional market risk, effectively combining the power and benefits of both indexing and pure active investment management.”

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AEGON seeks unitholder approval to merge funds

(March 2, 2006) AEGON Fund Management has called a special meeting of imaxx TOP RSP Growth Portfolio and imaxx TOP RSP Balanced Portfolio unitholders, to consider mergers for each fund.

On March 17, unitholders will be asked to consider proposals to merge the clone fund’s assets with the assets of the underlying TOP Growth and TOP Balanced portfolios.

“With the changes introduced last year to eliminate foreign content limits inside registered investment plans, these funds no longer serve any practical purpose for investors,” says Geraldo Ferreira, vice president of investment products at AEGON Canada. “Merging them into the non-RSP versions of the respective funds should eliminate duplication and costs and improve efficiencies.”

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Former IDA rep fined for discretionary trading

(March 2, 2006) The IDA has fined a former registered representative $30,000 for trading in a client’s account without written approval. Janet Beatrice Kim was also suspended for six months.

The discretionary trading took place between December 30, 2001 and June 26, 2002 when Kim worked for CFG Futures Canada in Oakville, Ontario, which was later acquired by Refco.

Kim also personally covered and paid margin calls without the client’s knowledge, and while working for Benson-Quinn GMS from April 30, 2003 to October 29, 2004, she promised to personally compensate the same client for losses incurred at CFG.

The settlement agreement includes $10,000 in investigation costs. Kim is currently not working in the securities industry. If she chooses to return, she would have to pay the penalties, successfully complete the Conduct and Practices Handbook examination and be subject to strict supervision for a period of 12 months. The IDA does not have the legal power to collect fines from reps who have left the industry.

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Rogers Associate Financial Partners opens B.C. offices

(March 2, 2006) Calgary-based Rogers Associate Financial Partners is opening new offices in Richmond and eastern Vancouver, British Columbia, the company’s president, John Rogers, announced on Thursday.

The financial management firm, which went public at the end of 2005, specializes in debt counselling, mortgage brokering, insurance brokering and financial planning. The company currently operates seventeen offices in Western Canada and has aggressive plans to develop and acquire new products lines and enter new markets across the country.

“In order to meet our expansion goals, we will continue to seek out opportunities in new and existing markets,” says Rogers. “For us, new offices equal better service for our clients and increased revenues for the company, and that’s good for our shareholders.”

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Salary is rarely the reason executives jump ship

(March 2, 2006) A new survey of global executives, conducted by Korn/Ferry International, found that only 5% say inadequate or inconsistent compensation was the primary reason why they left their last job.

When deciding on a new job, four in ten say the new company’s management team is the most important factor they consider. Other popular responses were company culture, brand and reputation and strategy.

Lack of challenge or career growth opportunities topped the list of reasons why executives leave jobs, followed by ineffective leadership and attractive job market alternatives. The qualities executives say would improve organizations’ ability to retain talent, include providing more opportunity for advancement or career development and better work/life quality, but most frequently they say empowering employees to make decisions would make the biggest difference. Only 6% said more attractive compensation packages would help retain employees.

“Executives don’t leave jobs for better money, they leave jobs for better opportunities,” says Jack MacPhail, managing director at Korn/Ferry International. “Formalizing talent management processes and placing more emphasis on identifying and developing top performers are essential steps in retaining talent.”

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Ernst & Young suggests tax season filing tips

(March 2, 2006) Ernst & Young has prepared a sheet of practical tax-filing suggestions, aimed at helping clients during the run up to the April 30 deadline for filing 2005 income tax returns.

Among the list of suggestions, the firm suggests one spouse in each family claims all family charitable donations. Families may also accumulate donations and carry them forward to another year. Lower income spouses should claim all medical expenses and clients should explore the possibility of claiming the caregiver tax credit if they are caring for an elderly parent, grandparent or infirm dependent.

Business owners have a number of business related expenses that can be claimed to reduce taxes, including automobile expenses, parking, business association fees, home office expenses, entertainment, expenses for up to two conventions each year, cell phone bills, depreciation on computer equipment and salaries paid to assistants, including family members.

Moving expenses, including the cost of travel, meals and lodgings can be claimed if clients moved to a new job or went away to school during the year. Business investment looses for money lost investing in a small business corporation, may also be claimed. E&Y also recommends using capital losses to offset capital gains made in previous years, and filing tax returns for children in order to establish and start building RRSP contribution room.

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Scotia Capital launches hedge fund index

(March 1, 2006) Scotia Capital announced the launch of the Scotia Capital Canadian Hedge Fund Performance Index on Wednesday at the company’s Canadian Hedge Funds forum, being held in Zurich, Switzerland.

“The Canadian hedge fund industry has now reached a size that warrants an index,” says Mike Durland, managing director and co-head of capital markets at Scotia Capital. “Scotia Capital is proud to be at the forefront of this exciting new industry by launching the very first Canadian focused hedge fund index.”

The monthly snapshot, calculated on both an equal and asset-weighted basis, tracks funds managed by Canadian based advisors with a minimum of $15 million in assets under management and an audited 12 month track record. The company says the Canadian hedge fund industry returned strong numbers compared to their foreign counterparts in recent months, thanks to higher commodity prices in 2005.

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Investment demand drives gold prices, but retail markets stagnant

(March 1, 2006) Strong investment demand for gold continued to drive prices to 25-year highs in the last quarter, but despite this bullish backdrop, traditional consumer demand is sluggish. The Scotiabank Precious Metals Quarterly report says the rapid price increase did coincide with a traditionally active period for jewellery demand throughout the world, but with relatively few exceptions, it is retail investors, predominantly those investing in Exchange Traded Funds (ETF) offerings, that are driving demand.

ETF reserves have risen 15%, just over 50 tonnes, during the same period while jewellers and manufacturers continue to report lacklustre trading conditions with buyers sidelined by high prices. Although traders are mixed on the effects this environment will have on prices, bullish sentiment for both gold and silver continues to underpin market activity.

“Following a period of rapid price appreciation, it is not unusual to see physical buyers withdraw and wait for signs of stabilization or a correction before returning to the market,” says Bernard Hunter, director of ScotiaMocatta. He says price volatility in recent weeks has provided plenty of opportunity for retail bargain hunting, which did attract some buyers from India and China, but Middle Eastern demand remained strangely muted during the pullback. “Physical buyers in that region are looking for a much sharper drop in price before they can be induced to return en masse,” he says.

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UBS opens Toronto hedge fund office

(March 1, 2006) UBS has opened a new hedge fund services office in downtown Toronto. The office will provide a complete range of hedge fund administration services for the company’s North and South American hedge fund client base of international asset managers using “state or the art” technology, including web-based reporting.

“Toronto is a leading financial services centre with a concentration of corporate headquarters as well as associated professional services,” says office head Pearse Griffith. “With a pool of highly qualified financial and technical employees, the city offers many businesses the opportunity to grow effectively.”

Along with continuing its expansion plans in Canada, UBS says it could open an office in Asia later this year. The company currently has hedge fund services offices in the Cayman Islands, Dublin, New York and London.

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OpenSky launches new series of notes

(March 1, 2006) OpenSky Capital has introduced Series 15 of its Principal Protected Index Optimizer Notes, which are guaranteed by Citibank.

The notes offer investors access to a portfolio of eight world class indexes, up to 11.09% annual compounded rate of return at maturity (assuming each of the eight locked-in performances are locked-in at the maximum simple rate of return of 16.5%) and 100% principal protection at maturity, OpenSky says.

The notes also allow investors to lock-in the return of the best performing index (from settlement date and subject to a maximum of 16.5%) each year, among the indexes remaining eligible in the portfolio. The top performing index is then discarded from the portfolio for the purpose of calculating future locked-in performances.

The new product is available to the end of March, with an up-front selling commission of 4%.

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Loring Ward replaces Taillieu

(March 1, 2006) Loring Ward International today announced that it has named Gerald Melia, chief financial officer of Loring Ward Group, the subsidiary that holds the company’s U.S. operations.

The former CFO of the Americas division of Credit Suisse Asset Management takes over for Winnipeg’s Denis Taillieu on or before March 31, in line with the company’s plan to transition its executive management team from Canada to the United Stats. Taillieu will likely continue as a consultant with the company.

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Creststreet to launch energy income fund

(March 1, 2006) Creststreet has filed a preliminary prospectus for an initial public offering of the Creststreet enHanced Income Energy Fund, a trust which will invest entirely in the energy sector.

The trust will be managed by Creststreet Investment Management, who said Wednesday that the oil and gas sector will “continue to benefit from a combination of global excess energy demand and diminishing energy supply, including constrained conventional natural gas supply in North America and the surge in global crude oil demand attributable to emerging markets such as China and India.”

About 85% of the trust will be allocated to energy-related income trusts and 15% to common shares of Canadian and American issuers in the energy sector.

The trust is targeting an initial annual yield of 6% on the original subscription price of the units through monthly distributions of $0.05 per unit for the period ending May 2007, or $0.60 per year.

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Middlefield to offer new Alberta focused fund

(February 28, 2006) Middlefield Capital is hoping to cash in on the rich Albertan economy, filing a preliminary prospectus for the new Alberta Focused Income & Growth fund.

The fund will be comprised primarily of income trusts and common stock issuers in the energy sector. The investment manager cites Alberta’s oil sands assets, the sustained strength in oil and gas prices, and the province’s debt free status as the main reasons for offering the fund.

The new offering is expected to provide a stable monthly distribution with the potential for capital appreciation. The initial indicative yield is 6% per annum, based on the original issue price of $10 per unit.

Middlefield will manage the fund, which will include determining the asset mix and security selection. The manager will also rely on Henry Groppe of Groppe, Long & Litell, a Houston, Texas-based oil and gas consulting firm, as a special advisor who will provide analysis of global economic and political forces affecting energy prices.

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Front Street Capital terminates alternative asset fund

(February 28, 2006) Front Street Capital announced Tuesday that it will stop offering shares of the Front Street Alternative Asset Fund effective immediately, citing a lack of sales.

In a release, Front Street said that the board of directors of the fund have determined that sales during the initial offering period, under a prospectus dated December 16, 2005, “have not been sufficient to implement the proposed investment strategy.”

All of the money contributed to the fund to date will be returned to investors. The fund’s service providers will be sending out cheques by courier to each brokerage firm through which shares have been purchased, Front Street added.

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Diversify and prosper, study says

(February 28, 2006) Canadians pride themselves on their cultural diversity. We embrace it. It turns out some businesses embrace it too, and they stand to profit because of that.

According to a study by Solutions Research Group, TD is the bank of choice for all six of Canada’s major ethnic population groups: Chinese, South Asian, West Asian/Arab, Black, Hispanic and Italian.

The bank has made a concerted effort to attract these people. No wonder. The immigrant market is viewed as being one of the most lucrative sources of domestic growth available to the banks.

One of the reasons TD lead in this area, according to Kaan Yigit of Solutions Research, is that the bank has been recruiting visible minorities as percentage its total workforce, which becomes a conduit for drawing customers. She adds, the bank has also rallied behind ethnic celebrations ranging from Black History Month to the South Asian Heritage Festival.

TD has done particularly well at attracting new immigrants, particularly those of South Asian decent. TD Canada Trust serves about 43% of this segment of the population, particularly in Vancouver and Toronto, which is higher than the next three financial institutions combined.

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Consumers pushed growth in 2005, says StatsCan

(February 28, 2006) Canada’s gross domestic product advanced 2.9% last year, mainly due to increased consumer spending, according to Statistics Canada.

“The year 2005 was the year of the consumer, as the 4% jump in personal expenditure on goods and services was the main contributor to overall growth in real GDP,” StatsCan said in a report released Tuesday. “It was the largest annual increase since 2000, when skyrocketing labour income drove up personal expenditures.”

High energy prices also helped boost incomes, the agency added, with much of these earnings reflected in corporate bottom lines, as well as in personal income. “In 2005, wages, salaries and supplementary labour income increased 5.4%, the strongest annual increase since 2000. The increase was particularly strong in Alberta and British Columbia.”

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OSC imposes penalties against consultant

(February 28, 2006) The Ontario Securities Commission has imposed a $7,850 penalty against a consultant who traded securities while in possession of material undisclosed information. Michael Newbury admitted that he purchased 50,000 shares of OntZinc on October 1, 2004, eventually making a profit of $3,925 on the penny stock trade.

At the time he purchased the securities, Newbury had knowledge of the fact that OntZinc was in exclusive negotiations for the assets of Hudson Bay Mining and Smelting, but he believed that the information about the acquisition had been generally disclosed, the OSC says. In fact, the acquisition was not disclosed until October 8, 2004.

Newbury also agreed to pay $5,000 in investigation costs and not to trade in the securities of any firm of any company he provides geological consulting services to for the next 12 months, unless he receives written approval from the in-house counsel of the firm.

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U.S. retirement attitudes evolving, report says

(February 27, 2006) Attitudes about retirement savings are undergoing a gradual shift south of the border as life expectancy increases and investors deal with the reality of needing multiple sources of income in their golden years, according to UBS Wealth Management.

A UBS/Gallup survey finds that although about half of Americans expect to have enough money when they retire, 28% worry they will not have sufficient funds to last for the rest of their lives. Twenty per cent believe they will have more than enough.

Interestingly, pursuing a more aggressive investment strategy or saving more were not the most popular options among Americans anticipating a retirement funding shortfall. Nearly two-thirds said they would make up the deficit by spending less than they hoped in retirement and 63% said they would work longer before retiring.

The survey also reveals that Americans are relying less on company pensions. Ten years ago, 40% of investors said they felt that company pensions would be major source of retirement income. That number has fallen back to 29% today, UBS says, partly due to the tendency of businesses to offer 401k retirement packages rather than pensions.

Other major sources of retirement income for Americans include social security (21%), part-time work (18%) and an inheritance (9%).

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Former IDA rep suspended and fined

(February 27, 2006) The IDA has fined former rep Zygmunt Janiewicz $50,000 and suspended him from the securities industry for six months.

In a decision released on Monday, the IDA said that Janiewicz, formerly of Global Securities in Kelowna, B.C., failed to use due diligence to ensure that the recommendations he made and the transactions he placed were suitable for the client.

He was also accused of making discretionary trades without the client’s written authorization. The transgressions took place between January and May 2000. Global reimbursed the client and Janiewicz left the industry in October 2000.

Should he wish to return, he would have to pay the fine, repay more than $8,000 US in commissions and rewrite the Conduct and Practices Handbook exam.

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BCSC issues $5,000 penalty in abusive trading case

(February 27, 2006) The BCSC has settled a case of abusive trading in the securities of B.C. headquartered Golden Fortune Investments. Under the settlement, Rene Co is barred from serving as a director or officer of any issuer and he cannot engage in any investor relations activities for at least two years.

Co must also pay the BCSC a $5,000 penalty and complete conduct and practices training. Co has admitted he failed to notice and prevent a nominee trading account from conducting matched trades in the securities of Golden Fortune, between Nov. 1, 2001 and Oct. 31, 2002. Co was a registered representative at Jones, Gable and Company at the time.

Co is the second person to face disciplinary action in this matter. On February, BCSC staff settled with another B.C. man, Michael Alan Wilson, for conduct related to Golden Fortune trading.

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Jovian unit offers BDC notes

(February 27, 2006) Jovian Capital has announced its Accumulus Management division will participate in the distribution of BDC Canadian Financials Yield Notes, Series 1, guaranteed by the Business Development Bank of Canada.

“This note has been designed to allow investors to capitalize on Canada’s financial sector — one of the cornerstones of our economy and our equity markets — while ensuring their principal invested is not at risk,” says Raj Lala, President of Jovian subsidiary Gibraltar Consulting Group.

BDC Canadian Financials Yield Notes are a principal protected investment linked to a portfolio of 10 leading Canadian financial stocks including banks, insurance companies and mutual fund management firms. The notes will pay quarterly coupons equal to 75% of the ordinary cash distributions declared on the underlying equities in the portfolio, with the balance of the ordinary cash distributions and any other distributions on the underlying equities reinvested in the portfolio. The new notes will be available for sale until April 7, 2006.

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UBS names Vaughan to head wealth management

(February 27, 2006) UBS has appointed Terry Vaughan as head of investment solutions for its Canadian wealth management division. Vaughan was most recently a Partner at Toron Capital Markets.

“Terry brings with him strong leadership skills, a client centric focus and a dynamic investment style,” said Grant Rasmussen, President and Chief Executive Officer, UBS Bank (Canada). “He will be enhancing our product shelf with innovative solutions while leveraging the global strength of UBS. Our clients will benefit from the addition of Terry to our team.”

Vaughan is a CFA and has 12 years experience in equity research, equity selection, portfolio management, project finance and engineering.

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Ethical seeks new dividend fund manager

(February 27, 2006) The Ethical Funds Company has announced the departure of Greystone Managed Investments as manager of the Ethical Canadian Dividend Fund, calling the departure “mutually agreed.”

No replacement has been named, as Ethical is launching a search for a new manager. Greystone will continue to actively manage the fund until a new manager is chosen.

“We are fully confident that we will select a first class manager who will be a valuable addition to our already strong team of top investment management firms,” said Ethical president Don Rolfe.

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