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(October, 4, 2007) The worst of the recent credit troubles have passed, which should allow the TSX to rally toward 15,000 by year-end, according to a new CIBC World Markets outlook report.

“While some problems remain in the asset-backed commercial paper market, we are becoming more confident that the worst in credit markets may now be in the rearview mirror,” says Jeff Rubin, chief strategist and chief economist at CIBC World Markets.

With oil hitting record highs, a base metals rally and good prospects for further U.S. interest rate cuts, Rubin expects the TSX to hit 15,000 by year-end and continue on to 16,200 by the end of 2008.

Rubin’s optimism in equity markets means he’s 12 percentage points overweight in equities and has also shifted 2% of the overall portfolio from cash back into a still-underweight bond position.

“Despite an initial reluctance, the U.S. Federal Reserve Board signalled clearly with September’s aggressive 50 basis point cut. It now takes the threat of housing contagion seriously, and is ready to adjust policy accordingly,” Rubin says.

Further rate cuts may be needed to stave off a full-blown recession south of the border, leading Rubin to add a half-point of weighting to the gold component of the materials sector — moving it a full percentage point overweight.

Rubin notes Canadian markets are sufficiently insulated from any turbulence in the U.S. because with 50% resource capitalization, the fortunes of the TSX are more intertwined with those of the global rather than the North American economy.

Rubin does warn that proposed royalty hikes in Alberta have already led to a discount of Canadian oil stocks by domestic investors. The oil sands still represent over 50% of the world’s oil reserves open to private investment, so he does not expect the royalty increases to deter foreign acquisition of oil sands properties over the next 12 to 24 months.

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AIC terminates flop fund

(October, 4, 2007) Only four months after its launch, AIC Limited is discontinuing the AIC Canadian Income Choice Fund. Effective October 3, 2007, new shares are no longer available to investors. The fund is scheduled to be terminated on or about December 7, 2007.

“We introduced the AIC Canadian Income Choice Fund in June 2007 with the goal of offering a product that combined an income stream choice with a tax choice that could be tailored to investors’ unique needs,” says Jonathan Wellum, AIC’s CEO. “Since launch, however, AIC received additional and valuable feedback from advisors across Canada and, as a result, we’ve decided to discontinue this particular fund with the plan to re-launch a fuller suite of products in the near future.

Existing shareholders of the fund will have the option of switching to another AIC fund or redeeming their shares. Shareholders who do not switch their shares to another AIC fund will be reimbursed any deferred sales charges or low load sales charges and for any front-end sales charges they previously paid.

Shareholders who purchased under the DSC or low load options and switch to another AIC fund will continue under the same redemption schedule for those new units/shares.

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Canadian investors thinking green: Investors Group survey

(October 4, 2007) More Canadians are thinking about longer-term green investments, an Investors Group poll finds.

IG says more than three-quarters (76%) of Canadians agree that investing in alternative sources of energy is the morally right thing to do. A significant portion (64%) think investing in alternative energy is a good investment choice with potential for good returns.

IG says this growing preference is translating into environmentally friendly fund sales. Forty-four percent of those who currently hold alternative energy investments plan to increase their holdings. Among Canadians who don’t have investment portfolios or do not currently hold any alternative energy investments, 17% are considering purchasing some.

“Clean, alternative energy sources are becoming increasingly desirable and attractive,” says Dan McClure, co-manager of IG’s Summa Fund, the company’s largest socially responsible investment fund. “This is because worldwide energy demand is expected to increase by more than 50% in the next 25 years, and there is growing awareness of environmental issues.”

McClure notes the interest in SRI funds has to go a long way before it becomes mainstream.

“The sector is still relatively new to many investors and represents uncharted territory,” he says. “Like any other investment opportunity, investors should be looking for diverse, fundamentally sound players with the potential for growth and profits.”

The survey was conducted by Harris Decima, with a sample size of 2,055 Canadian adults. The online survey was completed between September 4 and September 13, 2007.

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RBC fixes, lowers MERs on some products

(October 4, 2007) RBC Asset Management announced that it will fix the management expense ratios for the RBC Select Portfolios, the RBC Select Choices Portfolios, the RBC Cash Flow Portfolios and the RBC Target Education Funds.

Beginning January 1, 2008, RBC will ensure that changes in the mix of underlying funds held by the portfolio will no longer have an impact on the MER. The MER for each series of units of the portfolios should therefore be more predictable.

The company is also reducing the management fees on the RBC $U.S. Money Market Fund, the RBC Canadian Short-Term Income Fund, the RBC Bond Fund and the RBC Global High Yield Fund, effective November 1, 2007.

The RBC $U.S. Money Market Fund MER will go from 1.00% to 0.85%. The RBC Bond Fund and RBC Canadian Short-Term Income Fund will go from 1.25% to 1.15%. The RBC Global High Yield Fund will change its MER from 1.75% to 1.50%.

RBC notes further reductions are planned for April 1, 2008, to bring the management fees for the RBC Canadian Short-Term Income Fund and the RBC Bond Fund to 1%.

(10/04/07)