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An “uneven” rebound in 2010 means investors will have to dig deep to find growth opportunities in sectors and markets that have been overlooked in the past—and possibly ramp up their exposure to emerging markets—according to a new investment strategy report from CIBC.

“The world’s economy is again in drive, but operating on only half its cylinders,” says one of the report’s contributors, Avery Shenfeld, chief economist, with CIBC.

Shenfeld adds, “Countries and sectors with less of a lingering hangover from the financial shock, such as Brazil, are generally positioned for better returns on equities and better spread performance on corporate bonds.”

Shenfeld says countries not deeply affected by the subprime crisis are positioned for a decent rebound, along with emerging Asia, where banks avoided the deep losses experienced in Europe and the U.S.

Michael Rosborough, executive director, strategic risk, with CIBC says the road to recovery has been led by credit and interest rates, then emerging equities and finally G7 equities.

Rosborough argues G7 equities, and particularly those of the U.S. and U.K. that have been hit the hardest during the credit crunch, may take a long while to fully recover, but the troughs are so deep that the rebound potential is ultimately the greatest.

“Brazil has been hot and it is getting hotter,” the report states. “Brazil declared an end to the recession after only six months. All of its sovereign debt ratings are now firmly investment grade after the latest upgrade from Moody’s, and it enjoys capital flows into the economy. We believe the appreciation of the Real still has room to continue, and expressed this belief through a structured trade.”

The report does, however, caution on gold investing. The report says a weak dollar drove the recent rise of gold,and that the dollar’s valuation has overshot to the downside with a relief rally expected in the next two to three quarters. The report also believes investor anxieties will continue to subside, crimping appetite for financial insurance including gold. Finally, an “unwinding of the present exaggerated market fears” about near-term inflation should diminish the appeal of gold.

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U.S. life settlement market flattens

The controversial life settlements market was hit hard by the economic crisis and other factors in 2008, according to a new study by Conning Research and Consulting.

“The economic crisis was the major impediment to growth in the United States life settlements market in 2008, as the credit markets froze in the second half and life settlements buyers had difficulty financing new premiums,” says Scott Hawkins, analyst at Conning Research & Consulting. “In addition, the major life expectancy underwriters revised their methodologies, calling into question the accuracy and valuation of existing portfolios. While there were fewer active buyers in the market, our $11.7 billion estimate of 2008 settled policies did increase our estimate of cumulative in-force life settlements face values.”

The research study, Life Settlements: A Buyers’ Market for Now presents Conning’s estimates of current market size and growth rate, as well as a long-term forecast and analysis of market conditions.

“The life settlements market must shake off profitability concerns and general market concerns about life insurer solvency before it will return to growth,” says Stephan Christiansen, director of research at Conning. “The buyers’ market of late 2008 and 2009 should help buyers re-establish profitability in their portfolios. More policyholders want to sell, and more agents now understand life settlements—the near-term challenge is all about buyers’ and investors’ capacity.”

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Gestion FÉRIQUE launches new funds

Gestion FÉRIQUE, manager of the FÉRIQUE Funds, has introduced two new mutual funds, the FÉRIQUE Moderate Balanced Fund and FÉRIQUE Dividend Fund. As with all other FÉRIQUE products, the funds will be exclusive to engineers, their families and their companies.

The FÉRIQUE Dividend Fund will be invested primarily in common and preferred Canadian stocks that pay good dividends. It may also include income trust units or dividend-bearing foreign stocks. Foreign investment is limited to no more than 10% of the total assets.

The fund will seek to achieve a balance between high income, mainly in the form of dividends and, to a lesser extent, long-term capital growth.

The FÉRIQUE Moderate Balanced Fund is invested primarily in bonds, Canadian and foreign stocks, and money market securities. Seventy percent of the fund is in fixed income securities, and 30% is in stocks. The goal is to maximize investment return and, to a lesser extent, ensure long-term capital growth through asset diversification.

“The new funds were created in response to recent changes in our clients’ needs,” explained Fabienne Lacoste, executive director of Gestion FÉRIQUE. “A growing number of investors are looking for vehicles that suit a more conservative profile or provide regular income. For some, this need is associated with the approach of retirement. For others, it is related to changes in their investor profiles, often in reaction to market volatility.”

The management expense ratio for the two funds is only 0.85%.

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RBC wins private banking award

RBC Wealth Management has been announced as the 2009 award winner for “Outstanding Private Bank – North America” from Private Banker International(PBI) at its wealth management summit in Singapore.

“RBC is one of the select few banks that has been enjoying a flight to quality by clients reflected in a steadily growing international private banking franchise,” says William Cain, editor of Private Banker International. “RBC has ambitious plans for international wealth management growth.”

The Wealth Management Awards are based on nominations from the worldwide readership of PBI, with winning institutions chosen by PBI’s advisory board of independent industry experts.

“This award recognizes the strength, stability and leadership of RBC in our domestic market and our longstanding commitment in over 20 countries around the world to helping high net worth clients grow, preserve, protect and ultimately transfer wealth to succeeding generations,” says George Lewis, group head, with RBC Wealth Management.

In addition, RBC’s Matthew Yong, president of RBC Wealth Management, Asia, was recognized as one of the world’s outstanding young private bankers. The award is presented to individuals who represent the future of the industry and have demonstrated excellence in their field through either leadership, innovation in products and services, excellence in strategy or a combination of the three.

The Private Banker International Wealth Management Summit 2009 is organized by the global wealth journal Private Banker International. Based in London, U.K., it is the oldest international wealth management publication.

(10/09/09)