Briefly:

(January 21, 2005) The CFA Institute has announced the results of the December sitting of the CFA Institute Level 1 exam. Of the 1,901 candidates who wrote the exam, 754 passed, for a pass rate of about 40%.

The next sitting of the Level 1 exam is in June, along with the exam for Levels 2 and 3. The December sitting of the Level 1 exam was added in 2003 due to increased demand.

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CE requirements increasing for Manitoba advisors

(January 21, 2005) Insurance advisors in Manitoba need to accumulate 30 credit hours between June 1, 2005 and May 31, 2006, and every year thereafter, to meet new continuing education requirements set out by the Insurance Council of Manitoba.

The council is the regulatory body responsible for licensing and disciplining insurance agents, brokers and adjusters in the province. The council implemented the changes to bring the province in line with other jurisdictions. Advisors with accident and sickness-only licenses are required to complete 15 credit hours.

Life agent licensees may only carry forward 10 hours each year while accident and sickness licensees can carry forward five hours each year. Under the rules, internet courses can account for only one-third of all credits required.

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AGF introduces new income-oriented portfolio

(January 20, 2005) AGF Funds has launched the Harmony Balanced and Income Portfolio, which the firm says will replicate the Harmony Balanced Portfolio, with the addition of monthly distributions, targeted at 6% annually.

“The Harmony Balanced and Income Portfolio expands the yield offering for income-oriented investors who are looking for consistent and ongoing cash flow,” said Randy Ambrosie, executive vice-president, sales and marketing at AGF.

In addition, Harmony’s front-end commission is now negotiable up to 6%, AGF says, with the exception of the money market pool, which is negotiable up to 2%. The expanded front-end purchase option is available for all pools and portfolios.

AGF also announced a couple of name changes to other Harmony portfolios. The Harmony Aggressive Growth Portfolio has been re-branded as the Harmony Growth Plus Portfolio and the Harmony RSP Aggressive Growth Portfolio will be called the Harmony RSP Growth Plus Portfolio.

Yesterday, AGF announced it will hold a special meeting of unitholders on March 7 in Toronto to approve changes to the investment objectives of the AGF MultiManager Class of the All World Tax Advantage Group and AGF RSP MultiManager Fund.

AGF proposes to bring the funds’ assets together under the direction of one portfolio manager — AGF Funds, with Dublin-based AGF International Advisors remaining as portfolio advisor and narrowing the scope of the funds’ current multi-investment style approach.

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Strong returns fail to boost health of pension funds

(January 20, 2005) Canadian pension funds returned 5.3% in the last quarter of 2004 and 10% over the entire year, according to Mercer Investment Consulting.

However, those solid numbers did not help the overall health of Canadian pension funds, as their liabilities rose due to declining long bond yields in 2004, notes Mercer’s Peter Muldowney.

Mercer’s Canadian Pension Health Index — an indicator of the impact of capital markets on the financial position of Canadian pension plans — stood at 89% as of December 31, 2004, unchanged from the previous year.

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RBC appoints new privacy officer

(January 20, 2005) RBC Financial Group has hired Jeff Green as its new chief privacy officer. RBC says Green will be responsible for overseeing the implementation of policies and practices for the management of privacy on an enterprise-wide basis.

“At RBC, we have a longstanding commitment to safeguarding the personal information and confidentiality of both our clients and our employees,” said Green. “It is a cornerstone of our business and continues to remain one of our highest priorities.”

Green, who has been with the bank for nearly 20 years, takes over from Cynthia Trapp, who served as RBC’s corporate privacy officer from March 2004 to the end of last year.

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BMO launches Accelerated Growth note

(January 20, 2005) BMO Financial has launched the Bank of Montreal Franklin Templeton Investments bestLINK Protected Deposit Notes, Accelerated Growth Class, Series 1, a principal-protected product with an eight year maturity.

“By linking the performance of the notes to the Templeton Global Smaller Companies Fund, investors can enjoy the benefits offered by the potential for up to 200% exposure to a global equity fund with full principal protection if held to maturity,” said Luke Seabrook, Managing Director, BMO Nesbitt Burns.

The minimum investment for these notes is $2,000 and they are available through most financial advisors until March 18, 2005.

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Central bank called on to cut rates to curb soaring loonie

(January 19, 2005) The high-flying Canadian dollar could be a threat to the country’s economy, unless the Bank of Canada cuts interest rates, CIBC World Markets warns in its latest economic forecast.

The report says that a further weakening of the U.S. dollar against the euro and other overseas currencies could potentially bring back the Canadian dollar close to its 1991 peak, “a level that would threaten the Canadian economy with a major recession.”

However, another three rate hikes in the U.S., coupled with a rate cut in Canada, should weaken the loonie, as Canadian interest rates fall below U.S. levels within the next couple of months, the report predicts.

“Lower Canadian interest rates should delink the loonie from a rising euro, and send it lower, ending the year at just under 77 cents,” says CIBC World Markets chief economist Jeffrey Rubin.

Rubin notes that Canadian exports to the U.S. account for nearly one-third of the country’s GDP, adding that “Canada’s trade exposure to a sinking U.S. dollar is about 10 times that of Euroland.”

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Foreigners feast on Canadian securities

(January 19, 2005) Foreign investors bought $7.2 billion worth of Canadian securities in November 2004, Statistics Canada reported today, making it the second best month of that year.

Bonds were popular among foreign investors, to the tune of $6.3 billion. “Purchases of corporate bonds accounted for almost two-thirds of the total as the sector witnessed a surge in new issues in the amount of $5 billion, the highest level of corporate new issues since June 2003,” the agency said. Foreign purchases of Canadian stocks totalled $1.2 billion in November.

Meanwhile, Canadians’ appetite for foreign securities was also healthy in November, at $4.2 billion, the highest total to date for 2004. Again, bonds led the charge, at $3.8 billion, the biggest investment in three years, evenly split between U.S. treasury and corporate bonds. Canadian investors bought $393 million in foreign equities in November, mostly overseas stocks.

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Manulife to offer group life and health insurance in China

(January 19, 2005) Manulife-Sinochem — the Chinese subsidiary of Manulife Financial — has received government approval to sell group life and health insurance in China.

Manulife says the decision by the country’s insurance regulator will allow the Canadian company to significantly enhance its product portfolio in China, bringing its business operations in line with other domestic insurers. “We plan to take advantage of the decision as soon as possible,” said Marc Sterling, executive vice-president of Manulife’s Asian operations.

“As the only Canadian life insurance company to be granted this license extension, we look forward to adding these new lines of business to our existing range of life insurance products and services,” he added.

Manulife-Sinochem plans to offer group life and health insurance beginning mid-year to customers in Shanghai, Beijing and Guangdong province, where it just last week received a province-wide licence to operate. Once a number of pension regulations are in place, Manulife-Sinochem will also expand its lineup of pension products in the Chinese marketplace, the company added.

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Canada’s corporate taxes self-destructive, says C.D. Howe

(January 19, 2005) Canadian business investment taxes are the third highest in the world and must be reduced in order to make the country a more attractive place to do business, the C.D. Howe Institute says in a new report.

“Because of the importance of business capital investment for productivity improvement, technological advancement and the country’s standard of living, it is urgent that federal and provincial governments put together a new action plan,” the report says.

Canada’s marginal effective tax rate for business was 31.3% in 2004, the institute claims, lagging behind only China (37.7%) and Germany (32.7%). By comparison, the U.S. rate was 23% and Britain’s was 18.7%. Hong Kong’s was the lowest, at 5.7%.

C.D. Howe says Canada should accelerate its capital tax reduction (currently scheduled to be eliminated by 2008) and remove provincial sales taxes on capital and other business inputs in an effort to reduce the corporate income tax rate to match the OECD average of 30%.

“The cost of the existing system will be a high one for all Canadians if the country eventually becomes an investment wallflower,” the report concludes.

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Canadians confident about retirement, survey suggests

(January 18, 2005) The majority of Canadians are confident they will reach their retirement goals, according to a survey released today by Manulife Financial. However, the same poll suggests that less than half of Canadians are working with a financial advisor.

Nearly two-thirds of Canadians surveyed by Maritz Research in December, 2004 said they are confident of reaching their retirement goals, up five percentage points from last year.

Meanwhile, 83% of those contributing to the survey expect to invest the same or more to their RRSP in the 2004 tax year, compared to the previous year. About 60% said they will contribute the same, while 22% plan to contribute more.

“Most Canadians are extremely focused on their long-term investment and we’ve seen this continue to gain strength in our recent national surveys,” says Manulife senior executive vice-president Bruce Gordon.

Around 23% said they plan to contribute at least $5,000 to their RRSPs, up from 17% last year. Only 45% of those surveyed said they work with a financial advisor.

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Leading indicators advanced in December

(January 18, 2005) Statistics Canada’s composite index of leading economic indicators rose 0.2% in December, reversing a six-month slowdown.

Six of the 10 components surveyed by StatsCan rose last month, with manufacturing and services reinforcing the steady growth of household demand and stocks strengthening.

A booming housing market paced household demand, which posted its strongest gain in two years.

Furniture and appliance sales grew 0.9%, its largest monthly gain in six months, Sales of other durable goods advanced 1.1%, driven by automobiles.

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Mavrix closes fund to new investors

(January 18, 2005) Mavrix Fund Management is closing its dividend and income fund to new purchasers, effective March 1.

Existing unitholders, as well as those with pre-authorized payment plans and automatically reinvestited distributions, can still invest in the fund.

“Mavrix believes that conditions within the sectors of the fund’s mandate are such that sharp increases in cash flow could dilute the fund’s returns,” says Mavrix president Mal Spooner.

Spooner suggests that the Mavrix Canadian Income Trust Fund, managed by the same team, could be a possible alternative to the dividend and income offering, which the company says could be re-opened to new investors in the future.

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RBC adds new O’Shaughnessy fund

(January 17, 2005) RBC Asset Management’s lineup of O’Shaughnessy funds grew today with the launch of the RBC O’Shaughnessy International Equity Fund. The fund will hold up to 100 stocks with roughly equal weightings invested in value and growth stocks. It will rebalance annually and employ O’Shaughnessy’s quantitative approach to stock market analysis.

Manager Jim O’Shaughnessy is senior managing director at Bear Stearns Asset Management in New York and author of three books, including What works on Wall Street, which outlines his research and strategies for investing. The international equity fund invests primarily in equity securities outside of North America using the investment portfolio management model developed in 1990 by O’Shaughnessy Capital Management.

The no-load fund is designed for investors seeking long-term growth, with some current income or diversification outside of North America.

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Canadians coming late to retirement investing

(January 17, 2005) Three in five Canadians feel that they’ve arrived late to the retirement investing game. A recent Scotiabank/Ipsos-Reid poll, designed to understate attitudes and behaviour towards RSPs and long term investment, found that 83% believe it is up to them to fund their own retirement, but 61% feel that they started much too late.

One alarming outcome of the poll found that more than half felt they would save more for retirement if they weren’t living paycheque to paycheque.

“Even people living paycheque to paycheque can probably find $5 a day to put away if they watch what they spend,” says Bruce Armstrong, managing director of Scotiabank’s investment savings programs. “That’s all you need to start. Starting late is better than not starting at all.”

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Consumers feeling the holiday debt hangover

(January 17, 2005) More than two thirds of Canadians say they’re carrying credit card debt from the holidays. According to a BMO Bank of Montreal survey, Canadians spent approximately $970 each during the holidays and many put the purchases on their credit cards.

Of those surveyed, only 37% had a specific budget for holiday spending. Of those, 14% say they went over their limits. Ontario consumers spent the most, around $1,170, while Quebecers spent the least overall, with an average bill of $599 each.

The statements will be coming in soon, but many respondents say they plan to carry their balances for at least six months. More than 71% of those surveyed said they carry a balance and 30% say they carry a balance of $1,000 or more. Of those who do carry a balance, 24% expect to take six months or more to pay off the debt.

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AGF appoints new manager

(January 17, 2005) The AGF American Growth Class has a new lead portfolio manager. The company appointed Tony Genua senior vice-president and head of AGF’s U.S. equity team, replacing former senior vice-president and portfolio manager, Steve Rogers.

Genua, formerly an investment manager and principal at KBSH Capital Management, will also join Cameron Scrivens in co-managing the AGF-branded Global Technology Class, MultiManager Class, RSP MultiManager Fund and the AGF Special U.S. Class funds. The changes will not affect fund mandates.

“Tony Genua has a long and impressive track record in managing U.S. equity mandates,” says Clive Coombs, executive vice-president at AGF. “He will bring stability, strong returns and a definitive new voice in U.S. investing to the firm.”

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