Briefly:

(November 14, 2003) Canadian mutual funds posted higher returns in October, with 88% of all funds in the black for the month, according to fund researcher Morningstar. Fund returns were slightly negative in September, following five straight months of gains.

The average return for Morningstar’s top 10 fund indexes was 6.5%. Year-to-date, 87% of the 4,800 funds tracked by the research firm have made gains.

Precious metals, far and away 2003’s top performer, led the way with a 15% gain last month. However, Gareth Tingling, Morningstar’s manager of fund research, says those impressive results come with an important proviso.

“There are very few funds with track records, and this dearth of funds is a result of the early exit of poor performers,” he says. “The absence of poor performers benefits the category. Simply put, crummy funds do not get included in the group, because they fold up and therefore do not bring down the average.”

Science and technology funds also did well in October, followed by Canadian small cap equity.

Morningstar’s Canadian equity fund index rose 4.6% last month, matching the performance of the Toronto Stock Exchange. The U.S. equity fund index gained 3.6%, slightly behind the S&P 500 index, due to the strong Canadian dollar.

Bond funds among the worst-performing for the month, including the foreign bond fund index, which fell 2.2%.

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Fund researcher names “A” team

(November 14, 2003) Investors are often guilty of chasing hot mutual funds, but it’s better to find a fund that offers consistently strong performance through good times and bad, according to FundMonitor.com, which recently released its Canadian mutual fund “A” list.

FundMonitor.com calculated and ranked fund performance in both up and down markets. “We define down markets as any decline of more than 10% from peak to trough,” says researcher John Chan in the report. “Everything else is considered to be an up market.”

Funds are compared within their peer group and average quartile ranking through each up market and down market period. “Whether their fund category is flying high or down in the dumps, these picks are consistent top quartile performers,” says Chan.

Nineteen mutual funds made the grade in FundMonitor.com’s survey, including four from AIM-Trimark, three from Bissett, and a pair each from AGF and Fidelity.

Here’s an alphabetical list of FundMonitor.com’s “A” team:

• ABC Fundamental Value
• AGF Canadian Growth Equity
• AGF International Stock
• Bissett Canadian Equity
• Bissett Microcap
• Bissett Multinational Growth
• CI Canadian Investment
• E&P Growth Opportunities
• Fidelity Growth America
• Fidelity True North
• Mawer New Canada
• McLean Budden American Equity
• Northwest Specialty Equity
• Sprott Canadian Equity
• Templeton International Stock
• Trimark Canadian Resources
• Trimark Canadian Small Companies
• Trimark Fund
• Trimark Income Growth

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CI closes Assante deal

(November 14, 2003) CI Funds announced today that it has completed its acquisition of Winnipeg-based financial planning firm Assante. The stock and cash deal, first announced in August, is valued at $829 million. Assante shareholders approved the takeover on November 7 and it was rubber-stamped by an Ontario court the following week.

CI acquired only Assante’s Canadian operations. The U.S. operations were spun off into a separate company known as Loring Ward International.

CI also announced today that it has appointed Synergy founder Joe Canavan as president of Assante Canada. CI also acquired Synergy this summer.

Former Assante president Nick Mancini will assume the role of chair at the firm, which will be run as a separate company, CI said today.

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TD offering high-ratio credit line

(November 13, 2003) TD Canada Trust is offering a home equity line of credit that will allow customers to access up to 90% of their home’s value.

“We see an increasing number of customers moving to our lines of credit as a flexible mortgage alternative to finance their home purchase or to refinance their existing mortgage, renovate, or pay out higher interest debt,” says Kathy Gregory, vice-president of real estate secured lending.

Lines of credit over 75% of the customer’s home value are considered high ratio, and must be insured, with the customer paying the premium. TD Canada Trust says this product is a first in the Canadian market.

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CI Funds outsources Skylon, Synergy to RBC

(November 13, 2003) CI Mutual Funds has selected RBC Global Services to be the outsourcing provider for newly purchased Skylon Capital and Synergy Mutual Funds. In total, RBC Global Services will provide custody and fund accounting services to over $37.3 billion of assets under administration for CI.

“Our recent acquisitions offered us a unique opportunity to review the offerings of the leading outsourcing providers,” says Stephen A. McPhail, executive vice-president, chief financial officer and chief operating officer at CI. “RBC Global Services has a proven track record of successfully implementing outsourcing solutions that support our strategic objectives and benefit both our clients and shareholders.”

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OSC expanding review of mutual fund industry

(November 12, 2003) The Ontario Securities Commission (OSC) is expanding its investigation of the province’s mutual fund industry to include “other links in the mutual fund chain,” says OSC chair David Brown.

Last week, in the wake of a growing scandal in the U.S., the commission sent letters to all fund managers in Ontario asking them about policies and procedures to deal with market abuses, such as late trading and market timing.

“We are now focusing on each link involved in the infrastructure of the industry as well as in the distribution of mutual funds,” Brown said in a speech today.

Brown said that so far the investigation has uncovered no abuses. And he added no one has come forward with any tips or even suggested there might be problems.

Brown expects that some mutual funds will report incidents of market timing, but he noted it’s often part of an investment strategy and is “not all bad.”

“[New York Attorney General Eliot] Spitzer believes he’s uncovered market timing that goes beyond acceptable boundaries,” Brown told reporters. “We expect that when we hear back from mutual funds that there is market timing, but we don’t know if it exceeds those boundaries.”

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Life insurance applications down

(November 12, 2003) Annual life insurance applications in North America are off 4.5% this year, although the Canadian decline is much smaller, at 0.9%, reports MIB Group, an insurance information service based in Westwood, Mass.

However, October applications across North America were up over September applications by 9.7%. The Canadian increase was smaller, at 8.6%.

Applications among those over 60, however, are on a record-setting pace for the fifth month in a row. Applications for this group rose 6%, while applications for those under 45, who constitute 62% of applicants, fell for the month.

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BMO cuts ties with Putnam

(November 11, 2003) BMO Investments is severing ties with Putnam, the sub-advisor on the bank’s international equity fund. Putnam has been accused of fund trading abuses in the U.S.

“While Putnam has assured us that the BMO International Equity Fund was not impacted by its past investment management issues, we believe a change in the sub-advisor is in the best interests of unitholders at this time,” said BMO Investments president Ed Legzdins.

BMO is actively seeking for a new advisor and has appointed an interim team of portfolio managers for the fund.

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Oliver to chair Financial Services Council

(November 10, 2003) The Financial Services Council of Canada has appointed Joe Oliver, president and CEO of the IDA, as its council chair at its fall council meeting. His predecessor was Mark Daniels, the council’s first chair, who has completed his one-year term.

“We look forward to working with governments and regulators to make our regulatory system more fair and efficient in order to better serve financial consumers and providers,” said Oliver. “We will also be addressing common economic and fiscal policy matters, as well as cooperative support for the newly created Financial Services OmbudsNetwork”.

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Mackenzie renames SRI fund, announces donation

(November 10, 2003) Mackenzie Financial has announced it is renaming Mackenzie Universal Global Ethics Capital Class fund to Mackenzie Universal Sustainable Opportunities Capital Class fund, saying the new name better represents the fund’s approach.

Mackenzie will make an annual corporate donation equivalent to 0.05% of the fund’s assets to Mackenzie Financial Charitable Foundation.

“We recognize that the donation for this first year will be relatively small based on the current size of the fund,” said David Feather, president of Mackenzie Financial Services, “but we are optimistic about the prospects for the fund and, as the asset base of the fund grows, the size of the donation will grow along with it.”

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(11/10/03)