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(April 24, 2007) The Bank of Canada today announced that it is maintaining its target of 4.25% for the overnight rate. The operating band for the overnight rate is unchanged and the bank rate remains at 4.5%.

While the rate remains unchanged for now, the BoC says rising inflation could have an impact on its next rate adjustment. Overall, growth of the Canadian economy has been in line with the Bank’s expectations as set out in the January Monetary Policy Report Update.

A number of factors have contributed to the increase in inflation. Pressures on economic capacity over the past year have been stronger than previously judged. Also, food and gasoline prices have recently risen more than expected, the BoC says.

Robust domestic demand continues to support Canada’s economic growth. Stronger-than-expected growth outside North America has led to rising demand for, and prices of, many commodities. This growth has been tempered, though, by the slowing U.S. economy.

The BoC projects that the Canadian economy will grow by 2.2% in 2007 and 2.7% in both 2008 and 2009, returning to its production capacity in the second half of 2007 and remaining there through 2008 and 2009. Core inflation is projected to decline to 2% by the end of 2007. Total CPI inflation is projected to rise above the 2% inflation target in the second half of this year before returning to the target by mid-2008.

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Manulife bolsters fund lineup

(April 24, 2007) Manulife Mutual Funds, a division of Elliott & Page Limited, has added five new fund mandates to its lineup.

“We continuously review our products to ensure they provide the best possible access to opportunities as they arise in the marketplace, and offer global diversity with best-in-class investment opportunities for Canadians,” said Doug Conick, vice-president of investment funds for Manulife Investments. “With the addition of these new mandates, we believe we have come closer to our goal.”

The new funds include the Elliott & Page Global Monthly Income Fund, Elliott & Page Global Real Estate Fund, Elliott & Page U.S. Value Fund, MIX Global Opportunities Class and the Elliott & Page Canadian Bond Plus Fund.

The Global Monthly Income Fund will be managed by Alan Wicks and Danny Tomka of MFC Global Investment Management Canada. The fund pays dividends in global equity, bonds and the securities of real estate companies.

The Elliot & Page Global Real Estate Fund will invest in real estate investment trusts of between 40 and 65 global companies. The fund is managed by Tim Keefe and Joseph Marguy of MFC Global Investment Management in the U.S.

Also managed by Tim Keefe is the MIX Global Opportunities Class. This fund invests in companies that are mispriced by the market and trading at a discount to what the managers believe to be their true value. There are no sector or geographic constraints on where investments will be held.

The Elliott & Page U.S. Value Fund will add a U.S. large cap value equity mandate to Manulife Mutual Funds’ current lineup of U.S. equity funds. The fund will be managed by Harpreet Singh.

The Elliott & Page Canadian Bond Plus Fund will be managed by AllianceBernstein Canada. The fund will invest in global bonds within a core Canadian bond holding.

Manulife Mutual Funds says that in addition to the new funds, it will also increase trailer fees for new sales of its back-end load mutual funds beginning June 1, 2007.

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IDA finds firm complicit in RRSP stripping

(April 24, 2007) A hearing panel of the Investment Dealers Association has found Octagon Capital Corporation, an IDA member, guilty of participating in illegal private placement distribution.

In its decision, the hearing panel found that, between July 2002 and June 2003, Octagon privately placed two Bright Star Venture debentures in 97 client accounts opened by Barry (Sai-Kwong) Leung. The IDA says that Leung disregarded due diligence by not ensuring whether the debentures had been approved for distribution, that a prospectus had been issued or even if the clients were qualified to invest in debentures.

The IDA says that the opening of the 97 accounts was for the purpose of liquidating the clients’ holdings in locked-in retirement savings plans (LIRAs) and reinvesting the proceeds into accounts under the administration of Octagon, thus qualifying it as an RRSP stripping scheme.

As each LIRA account was opened, transfers arrived in the form of cash, which was then used by Octagon to subscribe to the BSV debentures. Although the clients had agreed to purchase the BSV debentures prior to opening the accounts, the IDA feels this agreement did not release Octagon, the plan carrier for the specific LIRA accounts, from its compliance responsibilities.

In a decision from November 4, 2005, Mr. Leung was prohibited from registration approval with any IDA member firm for a period of five years and fined $100,000. The IDA has not announced yet what penalties Octagon will face.

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(04/24/07)