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(January 10, 2007) The Meritas Jantzi Social Index Fund has become the first mutual fund to invest in MicroVest Capital Management, a private U.S. firm that provides debt and equity capital and management oversight to microfinance institutions in emerging markets.

The investment comes in the form of a $300,000 US note subscription, and both parties hope the deal will catch the attention of other socially responsible mutual funds.

Gerhard Pries, vice-chair of MicroVest, calls the Meritas investment a “win-win situation for Canadian mutual fund investors and small entrepreneurs around the world,” adding that his firm believes that business solutions can become the preferred method of poverty elimination.

Meritas CEO Gary Hawton says his company has committed to investing up to 2% of its mutual fund assets in community development. “One benefit of investing in community development organizations is they tend to produce immediate and positive social impacts,” he says. Meritas was introduced to MicroVest by the Mennonite Economic Development Associates, a founding member of MicroVest, and has been monitoring its development for several years.

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Expect war on carbon emissions, report says

(January 10, 2007) A CIBC World Markets report concludes that concerns over global warming will force every jurisdiction in North America to impose carbon dioxide regulations by the end of the decade.

The study predicts that the rest of North America will follow California’s lead in not only placing a cap on carbon dioxide emissions but also enacting an emission trading system that will allow larger polluters to buy emission credits from firms that do not exceed the cap.

CIBC believes it will be profitable for firms to go green. “North America has ignored implementing the Kyoto Accord; public concern about global warming is growing,” says Jeff Rubin, chief economist at CIBC World Markets. “I expect this will force governments to declare war on carbon emissions on their own terms. As that campaign unfolds, the economy’s largest emitters of carbon dioxide will become increasingly dependent on the economy’s greenest firms for emissions credits.”

Rubin said the study concludes that Canadian investors should be cautious. The economy will take a big hit once these regulations go into effect due to its dependence on the energy sector. The energy sector currently accounts for 20% of Canada’s carbon emissions.

“What investors have to be wary of is not the future direction of oil prices but what the eventual net backs to oil producers will be in a carbon-regulated environment,” said Rubin. “The experience of the over decade-long functioning carbon dioxide emission trading systems in the U.S. reveals that over time the market price for emissions credits rises sharply as emission caps are gradually lowered. Depending upon how stringent the cap, the real investment risk is that much of the economic rents from rising oil prices may be diverted from shareholders of oil producers to owners of much-sought-after emissions credits.”

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Pure Trading delays launch date

(January 10, 2007) Canadian Trading and Quotation System announced Tuesday that it has delayed the date it will officially roll out Pure Trading’s continuous auction market.

The electronic trading market’s first three stock offerings will begin trading on March 9, with its remaining securities expected to launch over the following two weeks. Pure Trading was scheduled to start up later this month.

The move comes in response to numerous requests for additional test trading and order management systems, the company said in a release.

Ian Russell, president and CEO, Investment Industry Association of Canada, says he’s confident that despite the delay, the new electronic trader will be well received by brokers. “Given the level and complexity of changes required to our member firms’ internal processes and technology, the delay is wise: it will allow firms to test and enhance their new processes before launch.”

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Desjardins expands fund’s portfolio

(January 10, 2007) Desjardins Financial Security will expand its Millennia III Segregated Fund to include Franklin Templeton Quotential Portfolios.

Desjardins said it will become the only insurance company in Canada to offer these Quotential Portfolios in a segregated fund.

“The new Millennia III Franklin Templeton Quotential Portfolios are designed to provide a turnkey approach that simplifies the advisor’s role of rebalancing portfolios to meet clients’ investment objectives,” said Monique Tremblay, senior vice-president of savings and segregated funds at Desjardins.

Franklin Templeton also expects a win for Desjardins and its clients. “We are confident that Quotential will be a distinctive advantage to Desjardins Financial Security as they build a platform of proven investment solutions to provide their clients,” said Don Reed, president and CEO of Franklin Templeton Investments.

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(01/10/07)