Briefly:

Previous Brieflies this week: | MON | <ahref=”” title=””>TUE | <ahref=”” title=””>WED | <ahref=”” title=””>THU |

(August 29, 2006) With all the talk of an impending flight to quality in the stock market, companies would be well-advised to shore up their own risk-management plans, according to a report from Ernst & Young.

A survey of business leaders found almost half (46%) rated their risk-management programs as 8 or above, on a scale of 1 to 10. The nationwide average score was 7.3 out of 10. Meanwhile, a survey of institutional investors gave Canadian corporations an average rating of just 5.6 out of 10.

Whether the money managers are correct or not may be irrelevant, as it is their perception that will dictate where they invest their hefty portfolios.

“Senior management and boards must realize that investors are becoming less tolerant of companies that don’t address risk,” said Robin Hutchinson, who is a partner at Ernst & Young and a leader of the risk-advisory services practice. “Investors are also willing to pay a premium for those with strong plans in place. From our survey of institutional investors, we’ve learned that nearly half of them have walked away from an investment because of a lack of good risk management and 30% have pushed for changes in senior management to ensure the job was done right.”

There is also some confusion over responsibility for risk management. Canadian companies seldom identified their board as the “owner” of risk, with just 9% assigning it to the directors, compared to 21% of global respondents and 40% of global board members.

“Canadian organizations must move from assessing to really digging in and managing risk in order to close the gaps between objectives and performance,” says Hutchinson. “They need a structured risk program that is aligned with business strategies and that helps boards and executives track and oversee risks, and helps line-managers prioritize and accurately report on the status of risks.”

• • •

Man Investments names COO

(August 29, 2006) Man Investments Canada has announced the appointment of Andrew Doman as COO. He will report directly to CEO Toreigh Stuart.

A 12-year veteran of senior operating positions, Doman was most recently COO of Toronto-based Abria Alternative Investments.

Man Investments Canada is a subsidiary of London-based Man Investments, which has offices in 16 countries and manages over US$54.0 billion.

• • •

Studying the benefits of workforce planning

(August 29, 2006) Defined-benefit plans are no more effective than defined-contribution plans when it comes to workforce planning, according to the latest survey by pensions and benefits consulting firm Morneau Sobeco.

Excluding the impact of formal downsizing programs, the survey found that, in Canada, 52% of employers primarily provide DB plans to their non-union employees, while 32% mainly use DC plans. But in terms of workforce planning, neither approach had an advantage over the other.

Of the companies that used financial incentives to get employees to retire sooner, 63% of respondents said they provide early retirement incentives (not including formal downsizing programs). Of the 37% of those that do, 15% say they use incentives one-tenth or more of the time.

The study found that DB plan sponsors offered retirement incentives more often than DC sponsors. “One would have thought that financial incentives would be needed more frequently in DC plans to get employees to retire earlier,” said Fred Vettese, chief actuary of Morneau Sobeco.

The survey obtained responses from 218 employers across Canada, including 113 DB plan sponsors.

• • •

Manulife beefs up global offerings

(August 29, 2006) Manulife Mutual Funds has added three global mandates to its Elliott & Page fund lineup in order to take advantage of the greater emphasis on global diversification message.

The new funds on Manulife’s product shelf include the Elliot & Page Global Dividend Fund, the Manulife Simplicity Global Balanced Portfolio and the MIX World Investment Class.

“With the outperformance of the Canadian market and the elimination of foreign content restrictions to retirement plans, now is the time to reduce risk and ensure your portfolio is properly diversified inside and outside Canadian borders,” said Doug Conick, Manulife’s vice-president of investment funds.

The MIX world-investment-class fund is the only one of the new mandates that will be managed externally. Mawer Investment Management has been brought on to serve as sub-advisor to the fund. Steve Orlich, vice-president and senior portfolio manager at MFC Global Investment Management, will add the new balanced portfolio to his duties, while the Value Equity Team of MFC Global will be responsible for the new dividend fund.

In the same release, Manulife announced several changes to some of its existing funds. The Elliott & Page Core Balanced Fund is being added to the company’s fund lineup, with Pat McHugh, MFC Global’s vice-president as senior portfolio manager. McHugh has also been given the reins for the MIX Canadian Large Cap Core Class fund. Bissett Investment Management is not longer acting as a sub-advisor to this fund.

Another MFC Global vice-president and senior portfolio manager, Shauna Sexsmith, is replacing Danny Tomka as the lead manager for the Elliott & Page generation wave fund.

All changes took effect August 28, 2006.

• • •

(08/29/06)