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(October, 8, 2008) The persistent turmoil in the financial markets has prompted RBC to downgrade its growth outlook for Canada.

RBC expects Canada to eke out a positive growth of 0.9% this year, a fairly substantial downgrade from its previous estimate of 1.4%.

“The continued weakness in the U.S. economy is expected to dampen growth in Canada,” said Craig Wright, senior vice-president and chief economist, RBC. “However, this pressure on our growth will be tempered by strong commodity prices, which are contributing to robust export revenues and providing support to Canadian domestic spending via a boost to incomes.”

Canada’s housing market is expected to slow after almost a decade of growth, the report notes. However, any weakening is expected to be moderate compared to the U.S. experience, as Canadian mortgage markets did not see the excesses that afflicted the U.S. housing sector.

RBC is also anticipating a slowdown in jobs growth to take a toll. After generating 320,000 new positions on average each year from 2002 to 2007, the pace of job gains has slowed to just 87,000 for the first eight months of 2008.

The outlook for all provinces has generally darkened as a result of the recent dramatic turn in the year-long financial market crisis.

RBC expects Saskatchewan will lead the way this year and next, in terms of economic growth, with Manitoba closely behind. The Atlantic region is expected to display resilience and should sustain a moderate pace of expansion for the most part.

An eroding housing situation and rapidly slowing growth in consumer spending have prompted downward revisions to the forecasts for British Columbia and Alberta. Quebec and Ontario are likely to experience little to no growth this year and next.

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Advisors more likely to sell than investors

(October 8, 2008) Advisors are more likely to switch out client money into something else in this market than the average investor, according to a poll conducted by U.S.-based InvestmentNews.

Slightly more than half (53.2%) of the 765 advisers who responded to an InvestmentNews poll about investment recommendations said they were advising their clients to reallocate investments, while 46.8% (358) were suggesting investors stand pat.

A separate poll of investors found they were more patient; 72.2% (514) of 707 respondents had not moved money from one type of investment to another in the past month.

“Despite reports of investors’ skittishness regarding the stock market and the economy, we were surprised to find that investors were more apt to stand pat than financial advisors when it came to reallocating investments,” says Jim Pavia, editor of InvestmentNews.

Among advisors who suggested reallocations, the poll found 57.5% recommended to at least 10% of their clients that they withdraw money from stocks or equity mutual funds; 23.9% recommended withdrawing from bonds or bond mutual funds; and 21.2% recommended withdrawing from bank savings accounts.

Among those readers who shifted investments, 59.6% had moved out of stocks and stock mutual funds, 36.5% had liquidated investments into cash and 32.3% had deposited money into bank savings accounts.

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CSA cautions investors

(October 8, 2008) As part of its kickoff for Investor Education Month, the Canadian Securities Administrators (CSA) is urging investors to take the time to research any investment opportunity before actually investing.

The CSA says the uncertainty in today’s financial markets is on the minds of many investors, who are worried about their savings. With international media outlets covering current market events, investors may be anxious about their investments and financial future.

The regulator urges investors to control their emotions and make well-informed investment decisions in order to ensure they have long-term financial goals. The CSA suggests nervous investors talk to a qualified financial advisor, because sudden moves based on media stories or unsound advice can have devastating consequences on savings.

Fraud artists are also likely to capitalize on investor uncertainty, the CSA notes. These people use current events to design no-risk, high-return investment pitches to unsuspecting investors. The CSA says if an investment sounds too good to be true, you need to stop and evaluate the offer.

“In good or bad times, investors should resist the temptation to make quick decisions about their investments,” says Jean St-Gelais, CSA chair and president and CEO of the Autorité des march&eacutes financiers (Québec). “Taking the time to get more information is always a good idea.”

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Covington to consolidate Venture Fund Series

(October 8, 2008) Covington Group of Funds has announced that it has approved a proposal to consolidate the pool of assets of Covington Venture Fund Class A Shares, Series VII with the pool of assets of Covington Venture Fund Series VIII and Series IX.

The proposed consolidation of the Series VII Assets with the Series VIII and Series IX Assets, aimed at reducing regulatory costs for compiling and reporting financial results, will effectively double the combined assets of the three series of the fund.

The proposal still remains subject to conditions, including regulatory approvals and the approval of the fund’s shareholders at the fund’s annual and special meeting scheduled for November 14, 2008.

(10/08/08)