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(May 17, 2006) Concerns about slower global growth, higher core inflation and rising worldwide interest rates are on the rise among fund managers surveyed by the Merrill Lynch Global Securities Research and Economics Group.

The May survey of 204 fund managers found that 14% say they expect the global economy to deteriorate over the next 12 months, up from 5% who took this view in April; 64% expect global core inflation to be higher one year from now and 32% think global monetary policy is too stimulative. A net 71% of respondents say they expect short term interest rates to be higher one year from now.

Merrill Lynch says the most visible indicator of investor unease though, has been the steady decline in risk appetite since the start of the year. The number of fund managers using lower than normal risk tolerance in their investment strategies rose to 11% in May, up from just 4% in February. At the same time 20% (up from 12% in February), say they’ve shortened their time horizons and 18% (up from 11%), say they are overweight in cash relative to their benchmark.

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One Signature Financial announces debenture default

(May 17, 2006) One Signature Financial says it is in default in its payments obligations of $350,000 worth of convertible debentures.

The debentures were issued in 2004 and were due on May 9, 2006. The company says it is trying to reach an agreement with the debenture holders to extend that payment date.

“If the corporation is not successful in obtaining this agreement, the corporation will be required to pay to the debenture holders the aggregate of $407,525, representing principle and accrued interest to the date of this release,” One Signature said in a statement.

One Signature also announced today that due to market conditions it has opted to suspend its efforts to complete a private placement of its common shares to raise funds, announced on February 15.

The company’s management says it is exploring other options for raising funds, including selling off more of its shares in Simplex Solutions. Earlier this month, the firm sold 10 million Simplex shares, and now owns about 25% of the company. One Signature trades on the CNQ.

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Canadians invest heavily in foreign securities

(May 17, 2006) Canadian investors purchased a record $9.2 billion of foreign securities in March. Investment was roughly split between foreign bonds and foreign equities with record purchases occurring in both asset classes. Foreign investors meanwhile, bought $3.3 billion worth of Canadian securities during the month.

Statistics Canada says “following two exceptional months in which foreign investors acquired a total of $9.4 billion of Canadian equities, foreigners reduced their holdings of Canadian shares by $1.4 billion in March. While they continued to buy outstanding shares, this was more than offset by dispositions from other transactions. In essence, foreign takeovers of a number of high profile Canadian companies resulted in foreign portfolio shareholders exchanging their Canadian shares for cash or shares of foreign companies.”

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Brokers settle with BCSC

(May 17, 2006) The British Columbia Securities Commission announced it has reached settlement agreements with three Union Securities reps who breached “know your client” and gatekeeper obligations.

Martin Browne, Dominic Busto and Elliot Kagna admitted that they failed to learn essential facts about some clients holding U.S. dollar accounts at the firm. The brokers failed to learn their client’s identity, creditworthiness and reputation, contrary to requirements under securities rules. None of the clients or individuals who gave trading instructions on the accounts were residents of Canada.

As part of the agreement, Busto and Kagna’s registrations are subject to close supervision for two years and they must successfully complete conduct and practices coursework within six months. Browne left the firm in March 2002. He cannot apply for registration for at least three years and must also complete conduct and practices coursework before he can reapply. All three have agreed to pay the commission $50,000 each.

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Inhance adopts UN principles

(May 17, 2006) Vancouver-based mutual fund company Inhance Investment Management, a member of the Vancity Group, has announced that it has joined 68 other institutional investment managers, firms and advisors in adopting the UN Principles of Responsible Investment.

“The adoption of the UN Principles by mainstream investment managers and firms will benefit all shareowners by encouraging companies to disclose how they are treating relevant non-traditional risks,” says Dermot Foley, Inhance vice president of strategic analysis. “With this information we can all make appropriate investment decisions.”

The voluntary principles, launched in April, are underpinned by a set of 35 possible actions that institutional investors can take to integrate environmental, social and corporate governance (ESG) considerations into their investment activities. The document was developed by a group of more than 20 pension fund managers and 70 experts from around the world, during meetings held in Paris, New York, Toronto, London, and Boston over an eight-month period.

Inhance, formerly known as Real Assets, claims to be the first Canadian fund company to sign on to the UN principles.

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