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(February 6, 2007) A study by CIBC Capital Markets says Canadians will contribute nearly $33 billion to their RRSPs this year but will still fall well short of filling the $491 billion gap in unused RRSP room.

The study, entitled Retirement: Ready or Not?, found that despite strong growth in overall RRSP contributions in 2005, fewer than 40% of Canadians between the ages of 25 and 64 actually contributed during the year.

“On average, each of the 20.7 million Canadians with unused RRSP contributions can contribute $23,700 to their RRSPs for the 2006 tax year, up from $15,000 in 1999,” says Benjamin Tal, senior economist, CIBC World Markets. “Almost 90% of Canadian tax filers currently have RRSP room.”

CIBC said the dollar value of contributions has hardly changed in the past few years; this means that when accounting for inflation, the median amount of RRSP contributions made by Canadians is actually falling. CIBC points out that as a share of income, RRSP contributions fell below 6% in 2005, more than a full percentage point lower than the level seen in 1999.

The study also finds that the increase in total RRSP contributions masks a growing income disparity, given that most of the growth is attributable to Canadians who earn more than $80,000 per year. In 2005, 20% of Canadians between the ages of 35 and 64 with a yearly income of less than $30,000 contributed to their RRSPs.

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Standard & Poor’s to acquire Goldman Sachs’ GSCI

(February 6, 2007) Standard & Poor’s will acquire the Goldman Sachs Commodity Index and two equity index families from the Goldman Sachs Group.

The GSCI, created in 1991, currently includes 24 commodities and is designed to provide investors with a reliable and publicly available benchmark for investment performance in the commodity markets.

The GSCI has an estimated $60 billion in institutional investor funds tracking it, the majority of that coming through over-the-counter derivatives transactions. After a brief transition period, the index will be renamed the S&P GSCI Commodity Index.

The specific terms of the agreement were not disclosed, but S&P said it will also acquire the Goldman Sachs sector indexes and its Technology Index.

The sector indexes cover healthcare, financial institutions, utilities, consumer companies and cyclical industries, while the Technology Index is a broad composite measure of U.S.-traded technology stocks and six technology sub-indexes.

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Man Investments launches new PPN

(February 6, 2007) Man Investments Canada, a provider of hedge fund investments, announced the launch of the Man MGS Access (Canada) Notes, the company’s first independent note product designed specifically for the Canadian market since opening its Canadian office in July 2006.

The Canadian dollar-denominated notes will provide exposure to the performance of the MGS Access Portfolio, which is actively managed by Man Global Strategies, otherwise known as MGS.

Man Investments says the notes, to be issued by Citibank Canada, are structured to ensure that holders receive payment of an amount equal to 100% of the subscription price at maturity.

Additionally, the investment advisor will seek to provide exposure to the MGS Access portfolio of up to 150% of the prevailing net asset value of the notes.

The portfolio will allocate its assets to a selection of quality hedge fund managers that score highly on MGS’ internal rating system and are focused on outperforming the market.

According to Man Investments Canada’s chief executive, Toreigh Stuart, investors who normally shy away from hedge funds may be attracted to the notes because of their high level of transparency, which will be supported by regular contact through a dedicated relationship management team.

“One concern many investors have had regarding hedge fund products is a lack of transparency. We are extremely proud to be providing a solution to this problem by bringing a product to market that discloses all underlying managers in the portfolio,” Stuart said. “The quality of the managers in the Access portfolio and the high level of transparency that we have into their daily operations via managed accounts give us the confidence to offer such a concentrated and dynamic portfolio.”

The notes will be open for investment from February 2007 until around April 30, 2007.

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CEOs confident about growth prospects

(February 6, 2007) PricewaterhouseCoopers’ Global CEO Survey finds that the majority of Canadian CEOs are optimistic about their future revenue growth, which they expect to be fuelled by improved market penetration, geographic expansion, and mergers and acquisitions.

Of the 1,100 CEOs in 50 countries that PwC surveyed, 59% of Canadian respondents and 52% of global respondents are very confident that revenue will increase in the next 12 months.

This enthusiasm is not without reservations though. Eighty-eight per cent of Canadian CEOs cite the lack of skilled labour, followed by downturns in major economies (68%) and overregulation (61%) as key threats that may hinder their business growth prospects.

When dealing with employee recruitment and retention, the survey found that 70% of Canadian CEOs felt that active engagement in social issues is a key success factor, versus 65% of their global counterparts.

However, given this interest in social issues and the volume of recent political and media attention, a surprising 76% of Canadian CEOs said that they were either not at all concerned or not very concerned with the threat of global warming and climate change and its impact on the growth of their companies. Fifty-nine per cent globally shared that sentiment.

“There seems to be a disconnect between Canadian CEOs and public sentiment when it comes to climate change,” says Christine Schuh, Canadian climate change leader at PwC. “The issue is becoming more and more important across the country and around the globe, but CEOs don’t seem to share this concern — at least in the short term. This will likely change as the public pressures governments to take action to mitigate global warming. Companies should realize that global warming will change more than the climate; it will change the way they do business.”

The biggest growth opportunity cited by all CEOs is better penetration of existing markets for existing products (23%), with access to new markets via geographic expansion (21%) and M&A (21%) coming in a close second.

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Teachers, CPP help launch Turkish equity fund

(February 6, 2007) Teachers’ Private Capital, the private investment arm of the Ontario Teachers’ Pension Plan, and the Canadian Pension Plan Investment Board have announced that they have jointly led the establishment of Actera Partners, a private equity fund exclusively focused on investment opportunities in the Republic of Turkey. The institutions have committed 75 million euros each.

The two pension plans said they want to capitalize on the opportunities created by Turkey’s emerging economic potential and its continued drive to modernize its financial and regulatory structures.

“Turkey is an attractive private equity market with a large and growing population, a high number of quality mid-market businesses and a developing economy, which is expected to benefit from becoming increasingly harmonized with Europe,” said Jim Leech, senior vice-president of Teachers’ Private Capital.

Actera Partners’ investment strategy will focus primarily on buyout and growth equity investments across a range of industries in Turkey. In addition, Actera Partners will seek to partner with Turkish companies in order to assist in their expansion efforts outside of Turkey. The fund expects to have raised 250 million euros by mid-2007.

Actera Partners is led by Isak Antika and Murat Cavusoglu, who both have experience in principal investing and investment banking in Turkey and the surrounding region.

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(02/06/07)