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(October 17, 2007) According to a new poll, Canadians’ interest in investing is waning.

The 35th quarterly Manulife Investor Sentiment Index dropped 11 points to +20, after staying near its highest levels since 2001 for the past three quarters.

Manulife says concerns over U.S. sub-prime mortgages and softer equity markets contributed to the decline in confidence.

Paul Rooney, Manulife Canada’s CEO, says that despite the more negative feelings toward investing in general, Canadians are generally positive about long-term investing, and real estate markets are still active.

Still, all six investment categories saw a decline in investor sentiment. Investment property had the biggest drop, down 16 points, while balanced funds fell 15 points, and people investing in their own home dropped one point. Cash and fixed income investments also lost ground, falling one point to +10 and nine points to +19 respectively.

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Employee retention a top priority for hedge funds

(October 17, 2007) A new report from Ernst & Young says the top priorities for hedge funds is attracting and retaining talented employees and managing growth.

The report, which polled more than 100 top global hedge fund managers who collectively manage about $900 billion in assets, reveals that 42% of those surveyed think retaining the right people is one of the biggest challenges that funds face over the coming year. Others (39%) said managing growth is at the top of their to-do list. Only 9% said that investing in or developing new products was a high priority.

Art Tully, co-leader of the global hedge funds practice at Ernst & Young, says, “Our survey demonstrates that managers are rethinking their infrastructure and operations to cope, not only to ensure scalability but, more importantly, to minimize any drag on performance. This is an evolutionary development for funds. To this extent, we agree with industry commentators who say that funds are moving from institutionalization to ‘industrialization,’ morphing into more typical asset manager–type structures.”

Overall, managers are confident in their operations, with 37% of those surveyed saying that they don’t need to alter their business practices in the next two years. Just 13% said they expect to raise permanent capital in the next couple of years.

Another challenge hedge funds face is with transparency issues around the valuation process. More than 60% said that this will be a “medium- to high-level regulatory challenge” for the next two years, while conflicts of interest (57%) and market abuse (55%) are the next key concerns.

The survey also found that 80% of managers expect incentive and management fees to drop over the next couple of years, despite an expected increase in operational costs. However, Ernst & Young says the top-performing managers will still charge fees they deem appropriate.

“Although pressures on fees may be downward, managers that consistently perform well — both on an absolute and relative basis — will also be able to continue to charge the fee structure they want,” says Julian Young of Ernst & Young’s U.K. hedge fund practice. “The poorer performers will be affected the most.”

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Desjardins Financial Security changes fund names

(October 17, 2007) Desjardins Financial Security is rebranding its funds, while adding a new fund manager and a new fund to its portfolio.

The company is changing the term “segregated funds” to “guaranteed investment funds,” a name it says is “more in line with the nature of the product and market trends.”

Desjardins says the new moniker reflects its commitment to greater transparency and clarity.

Starting October 29, the funds will be identified as follows: DFS GIF — name of fund category — name of asset manager. The designation Millennia III Funds will no longer be used.

“Using ‘guaranteed investment funds,’ instead of ‘segregated funds,’ is a concrete way for us to simplify the investment terminology for our clients,” explains Claude Paré, senior director, product development and marketing, individual savings, at Desjardins. “This initiative is part of the company’s strategic direction that aims to provide clients with guidance and support in all their interactions with our company.”

The financial institution also revealed that it has hired Addenda Capital, a Montreal-based company that specializes in the management of bond portfolios for institutional clients, and UBS Global Asset Management to lead its Canadian Bond and American Equity offerings, respectively.

As well, Desjardins said Wednesday that it is launching a new global equity fund, managed by Alliance Bernstein. The fund will become part of the company’s security portfolio.

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Mark Grammer joins Focus Far East Class fund

(October 17, 2007) Mackenzie Financial has added one if its star managers to its Focus Far East Class fund.

On November 16, Mark Grammer, the company’s vice-president of investments, will join the fund’s portfolio management team.

Currently, Grammer is the co-manager of Mackenzie’s Universal Global Infrastructure fund and Focus Japan Class.

In this additional role, Grammer — alongside managers from Henderson Global Investors, Mackenzie Cundill Investment Management and RCM Asia Pacific — will be responsible for creating a portfolio of Asian equity securities.

“We expect Mark’s extensive Asian investment experience to be a valuable addition to Focus Far East,” says David Feather, president of Mackenzie Financial Services. “As well, Mark’s growth investment style will provide a better balance between value managers and growth managers in the portfolio.”

(10/17/07)