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(August 11, 2006) Jantzi Research has released the latest performance data for its Jantzi Social Index, which tracks the performance of companies that meet its criteria as socially responsible investments. For the month of July, the index returned 1.64%, underperforming its benchmarks. The S&P/TSX Composite Index and the S&P/TSX 60 Index increased by 2.03% and 2.23% respectively.

Jantzi researchers attributed the underperformance to the index’s underweighting in the materials sector, while its underweighting in the energy sector actually made the greatest positive contribution to returns, relative to the TSX benchmarks.

The materials sector surged in July, when Inco was the subject of a bidding war. The Jantzi index does not count Inco among its holdings.

Since its inception January 1, 2000, the Jantzi Social Index’s annualized return of 7.11% has edged out both the S&P/TSX Composite and the S&P/TSX 60, which earned 7.04% and 6.35% respectively.

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U.S. consumer increasingly glum

(August 11, 2006) The primary driver that has kept the U.S. economy chugging along for the past five years could be losing steam, according to a survey by RBC. The RBC consumer attitudes and spending by household (CASH) index shows high prices for energy and housing are finally taking their toll on consumer sentiment.

“RBC believes that the U.S. consumer will continue to retrench during the second half of 2006,” said T.J. Marta, economic and fixed-income strategist for RBC Capital Markets.

Overall economic expectations appear to be of greatest concern to survey respondents. The one bright spot the survey found was in attitudes toward job security.

“The price of crude oil, for example, has risen close to $20 [a barrel] to a record $77.03 in recent sessions, and the national average for a gallon of regular unleaded gas had risen 80 cents to a record $3.04,” Marta said. “Additionally, the rate for a 30-year mortgage had risen 0.80 per cent to 6.79 per cent during this period, and while that has fallen in recent weeks to 6.42 per cent, homeowner affordability has dropped to its lowest level since 1989 and existing home sales continue to fall from their June 2005 peak.”

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CPP growth slows in quarter

(August 11, 2006) The Canadian Pension Plan fund grew by $600 million to $98.6 billion in its most recent quarter, despite the bleak returns on the market through May and June.

The rough patch on the market during the quarter ending in June cost the fund $2.5 billion, representing a dismal -2.5% return, but contributions to the fund were able to off-set these losses. During the three-month period the CPP fund, which includes investment earnings and CPP contributions not needed to pay current pensions, added $3.1 billion.

This is in sharp contrast to the 15.5% increase the fund experienced in the first three-months of the year. Still, the period between April and June hasn’t been the fund’s strongest quarter. During the same period a year ago the fund returned 3.6% and for the same period in 2004 the fund had a return of -0.3%.

“Our investment returns reflect the decline in Canadian and global equity markets that occurred during the quarter,” said David Denison, president and CEO of CPP investment board in a release. “Given that the composition of our portfolio is designed to generate long-term returns required to help sustain the CPP over multiple generations, this kind of short-term volatility in markets and returns is expected.”

As of June 30, 58.5% or $57.7 billion of the fund was invested in publicly traded stocks, 25.7% or $25.3 billion was in government bonds, 9.6% or $9.6 billion in real return assets, 5% or $4.9 billion in private equity and the balance in cash and cash equivalents. Those percentages are off slightly from asset-mix target as announced in May as the CPP investment board continues with its rebalancing plan. Most notably, the cash position of the fund has been upped to $1.2 billion, from $600 million at the end of March.

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Overlord Financial adds duties to chairman

(August 11, 2006) Overlord Financial, a Canadian specialty fund manager, has named Eric Tremblay as its executive chairman. Tremblay, who is already serves as the firm’s chairman, will become responsible for overall strategic planning and the day-to-day direction and operations of the Calgary office on a full-time basis.

In this position Tremblay will focus on the creation of financial products specializing in the Canadian energy sector and the income trust sector. Tremblay is well versed in the ins and outs of the income trust sector, having helped form Canada’s first income trust.

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(08/11/06)