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(September 18, 2006) If the latest Statistics Canada data is any indication, Canadians are heeding calls to increase the foreign content portion of their portfolios.

After a brief pause in June, Canadians invested heavily in foreign securities in July, acquiring $6.3 billion worth, StatsCan reported on Monday. Half went to foreign bonds, while the remainder was split between foreign shares and short-term paper.

Almost all purchases of foreign bonds were from overseas market, as purchases of U.S. bonds plunged to $151 million, from $2.7 billion in June. Pension funds were the primary driver in purchases of foreign shares. Most of those shares were in companies in the U.S.

Meanwhile, foreign investors snapped up Canadian bonds. Americans investors alone acquired $8 billion worth of Canadian bonds, the second highest tally on record, while European investors sold off $6 billion in Canadian bonds.

Despite concerns about the cooling off of the Canadian market, non-residents bought $1.6 billion in Canadian equities in July, targeting the manufacturing, mining and investment intermediaries. So far this year, foreign purchase of Canadian shares has topped $18.5 billion.

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Sun Life comments on MFS sell-off rumours

(September 18, 2006) Sun Life Financial issued a brief statement on Monday in the wake of reports suggesting that the insurance giant is looking to sell its U.S. subsidiary, MFS Investment Management.

Sun Life said that while it values the Boston-based firm as an asset and remains committed to growing the business organically, it is also assessing its options.

“The company has retained investment bankers to advise on strategic alternatives,” the statement reads. “However, there is no assurance that a transaction will result.”

“Management at MFS is working hard to grow MFS, including expanding distribution and research globally, and improving performance and profit margins,” Sun Life added, noting that MFS is gaining flows on the institutional side both domestically and internationally and has delivered “significant margin improvement” over the past year.

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U.S. economic slowdown will hurt Canada: TD

(September 18, 2006) The Canadian economy is in for a bumpy ride, as a long-anticipated slowdown in the U.S. bites into growth north of the border as well, according to the latest quarterly forecast from TD Economics.

Neither country is expected to slip into recession however, with U.S. growth seen dipping to 2% and Canada slowing to between 2% and 2.5%. The minor difference in growth rates will mask a wider gap, as U.S. growth potential could be as high as 3.3%, while Canada’s potential will be 2.8%, only slightly higher than its expected growth rate.

“While the absolute economic growth numbers will be similar, the accumulation of economic slack will be far less in Canada and this demonstrates the relative out-performance of the Canadian economy,” says Don Drummond, chief economist of TD Bank Financial Group.

Export-reliant sectors of the Canadian economy will struggle to cope with softer demand from the U.S., but the domestic economy is expected to fuel overall growth. Consumer spending should remain strong, as unemployment remains low, and Drummond also predicts increased business spending.

The slower growth rates will impact monetary policy on both sides of the border, with the U.S. Federal Reserve expected to cut interest rates in early 2007; cuts are expected to total 100 basis points. The Bank of Canada is also expected to cut rates, but with less slack in the economy, Drummond says these should only total 50 basis points.

The smaller interest rate cuts in Canada should maintain the relatively high value of the Canadian dollar, which is expected to hover between 87 and 90 cents US through 2007.

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RBC Insurance gets into seg funds

(September 18, 2006) RBC Insurance has introduced RBC Insurance Guaranteed Investment Funds, a foray into the segregated funds market, with sales kicking off immediately.

There are now seg fund versions for 12 of RBC’s mutual funds, with four portfolios also available.

RBC Insurance GIFs are available through all non-proprietary channels for the company’s life insurance products, including advisors and financial planning firms, MGAs and national accounts. RBC Insurance’s own proprietary sales force will start selling the funds “over the next several weeks,” according to a press release.

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CANNEX Canada sells Australian holdings

(September 18, 2006) CANNEX Financial Exchanges has sold its Australian operation to Chapwill Pty Ltd, a holding company controlled by the Australian company’s chair, Andrew Willink.

Financial terms were not revealed, but the company says the transaction will produce significant additional investment in CANNEX Financial Exchanges’ U.S. business to boost its annuity surveying service with new retirement income data and information services.

CANNEX provides a number of data feeds to Advisor.ca, including savings, loan and broker rates. Check our home page for details.

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