Briefly:

(May 13, 2005) Mutual fund companies may offer adequate customer service, but they often fail to use their client services representatives (CSRs) to their full advantage, according to a report by industry consultant Dalbar.

“For most mutual fund companies in 2005, attracting new business is as difficult as it has ever been,” said Randy Carriere, manager of business development at Dalbar. “But when advisors call, CSRs can certainly be more proactive in attempting to overcome that challenge.”

The report, entitled Financial Advisor Service Evaluation, found that CSRs rarely promoted new funds or sales tools to advisors, “even when it was clear that the advisor would likely be interested in hearing about them.”

The report gave tops marks to AIC for its service on common enquiries, while Franklin Templeton stood out for its CSR promotion of funds and sales tools. AGF and Manulife were also recognized for their service to the advisor community.

“While it’s not the role of the typical client services department to generate sales, most fund companies can do a better job of using this department in tandem with their sales force,” said Carriere. “Currently, it looks like many leads that arise from the client services department’s interaction with an advisor are often overlooked.”

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Maturing cycle favours oil services, transport

(May 13, 2005) Continued strength in the oil and gas sector should propel growth the industry’s service sector through 2005 and 2006, according to BMO Financial. The maturing business cycle should also lend a hand to the manufacturing sector, with the transportation and aerospace industries making significant gains.

“High oil and gas prices will continue to fire up exploration for and development of new reserves in Canada, keeping companies providing services to the oil and gas industry very busy,” said Earl Sweet, assistant chief economist, BMO Financial Group.

The bank expects the forestry, textiles and agricultural sectors to decline over the coming 18 months, due to decreased sawmill capacity and increased foreign competition.

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ADVISOR Group journalist honoured in Quebec

(May 12, 2005) Christian Benoit-Lapointe, reporter for Objectif Conseiller, has been named best new journalist in Quebec, by the Association Québécoise des Éditeur de Magazines. The award was announced as part of Journée Magazine (Magazine Day) 2005, which honours the best journalists and designers in Quebec’s magazine industry.

Benoit-Lapointe was named the “rookie of the year” by a panel of experienced journalists for his three articles on dividends, bond markets and financial disclosure.

Objectif Conseiller is part of ADVISOR Group, which also includes Advisor.ca, Advisor’s Edge Report, Advisor’s Edge, Advisor Live, Conseiller.ca and Conseillers en Direct.

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Hedge fund assets stagnate, fund of funds rise

(May 12, 2005) The Barclay Group has launched a new quarterly report entitled Hedge Fund Industry Assets Under Management. According to the premier issue of the report, fund of funds assets are up 28% to $632.3 billion in the first quarter of 2005.

“Although asset growth slowed during the first quarter, the fund of funds industry was able to increase market share,” says Sol Waksman, president of The Barclay Group. “It appears that hedge fund investors are now opting for multi-manager approaches rather than single manager funds.”

Asset growth in rest of the hedge fund industry rose just 2.3%, from $1,011.9 billion to $1,035.5 billion. Some sectors saw AUM decline in 2005, such as convertible arbitrage, which dropped from $66.1 billion to $52.5 billion under management.

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Mackenzie names two new managers

(May 12, 2005) Mackenzie Financial has named new managers for two of its funds. ABN AMRO Asset Management Canada is the new sub-advisor to Mackenzie Universal World Real Estate Capital Class fund, while Aberdeen Asset Management will become sub-advisor to Mackenzie Universal Sustainable Opportunities Capital Class fund.

The appointments are effective at the close of business on June 10, 2005.

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Great-West UK unit buys annuity assets

(May 12, 2005) Great-West Lifeco’s UK subsidiary, Canada Life Limited, has reached a deal to purchase the payout annuity business of Phoenix and London Assurance Limited, part of the Resolution Life Group in the UK.

The deal almost doubles Canada Life Limited’s current annuity operation, adding about 58,000 new policies, worth $5.1 billion in assets and liabilities, as of the end of 2004.

“Canada Life holds a strong position in the payout annuity market. This acquisition advances our strategy to capitalize on the company’s position in core European markets,” said Raymond L. McFeetors, president and CEO of Great-West Lifeco.

The company will begin to assume the risk effective July 1, 2005. Final closing is expected to be in the fourth quarter of this year, subject to regulatory and legal approvals.

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Vancouver investment dealer settles with BCSC

(May 11, 2005) Vancouver investment dealer Wolverton Securities and three of its top executives have reached a settlement with the British Columbia Securities Commission for acting “contrary to the public interest” in a financing deal set up back in 2000.

The firm must pay $60,000 to the BCSC for its conduct in a planned IPO of Cinema Internet Network shares. In the settlement, president Brent Wolverton admitted he failed to properly supervise his employees to ensure compliance with securities laws and regulatory requirements.

Manager of corporate finance, Tim Fernback and William Massey, president and director of Cinema, admitted they should have known that trading in Cinema shares could create an artificial price for the company’s stock. In addition to the Wolverton Securities penalty, Massey has agreed to pay $5,000 to the BCSC, Fernback will pay $20,000 and Brent Wolverton will pay $30,000.

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CI announces executive appointments

(May 11, 2005) Bill Holland, CEO of CI Fund Management, announced a series of senior executive appointments today.

The newly promoted are Stephen MacPhail, former executive vice-president, chief operating officer (COO) and chief financial officer (CFO); Douglas Jamieson, CFO and senor vice-president of CI Mutual Funds; Steven Donald, former Assante senior vice-president and CFO; David Pauli, executive vice-president of fund operations; and the architect of CI’s overall technology structure, Tony Issa.

In their new roles, MacPhail takes over as president of CI Fund Management. He will also remain as the company’s COO. Jamieson has been appointed senior vice-president and CFO of CI. He will also carry on his existing duties with the company’s mutual fund arm. Pauli, meanwhile, takes over as executive vice-president and COO of CI Mutual Funds, Donald has been promoted to president and COO of Assante, and Issa has been appointed executive vice-president and chief technology officer of CI Mutual Funds and Assante.

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GMP declares monthly dividend

(May 11, 2005) Since going public at the end of 2003, full service investment firm GMP Capital has paid nearly regular quarterly dividends to its shareholders. Today the company’s board of directors announced it has adopted a dividend policy to pay $0.05 per common share, beginning this month, for each month of fiscal 2006.

In a statement, the board said it intends to review the dividend policy periodically in the context of the firm’s overall profitability, free cash flow and other business conditions. Formerly known as Griffiths McBurney & Partners, the Canadian investment dealer focuses on providing investment banking and investment services for high-net-worth private clients.

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TD Waterhouse opens private client services centre in Montreal

(May 11, 2005) TD Bank Financial Group opened Quebec’s first TD Waterhouse Private Client Services Centre in downtown Montreal today.

The centre, part of the bank’s on-going growth and expansion efforts, employs a team of banking, estate and trust, insurance and investment professionals to work with private clients in Montreal and the surrounding area. Bill Fulton, senior vice-president, Private Client Group, TD Waterhouse Canada, says “Quebec is a very important centre of business for TD Bank Financial Group and TD Waterhouse.” The bank celebrates its 150th anniversary next week.

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Active funds still underperforming benchmarks, S&P says

(May 10, 2005) The majority of actively managed Canadian and U.S. mutual funds underperformed their benchmarks in the first quarter of 2005, says Standard & Poor’s.

The Standard & Poor’s Indices Versus Active Funds Scorecard (SPIVA) show that in Canada, only 23% of actively-managed funds did better than the TSX in Q1. In the U.S., active funds did slightly better, with 38% outperforming the S&P 500 (measured in Canadian dollars).

Actively managed Canadian small cap fared the best, with 63% beating the S&P/TSX SmallCap Index, S&P says.

“The SPIVA scorecard goes beyond simple performance numbers of each fund category to report detailed apples-to-apples comparisons corrected for survivorship bias,” says S&P’s Steve Rive. “Over longer periods of time, such as three or five years, the SPIVA scorecard shows the majority of Canadian active mutual funds in every category being outpaced by indices.”

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frontierAlt acquires Montreal fundco

(May 10, 2005) Toronto-based frontierAlt Investment Management Corporation is expanding into Quebec, today announcing a tentative deal to acquire Orbit Mutual Funds Management. Financial terms were not released.

The acquisition, still subject to regulatory approval, also includes KeiDATA Backoffice solutions, which provides back office services to Orbit.

“These acquisitions are part of our long-term business plan to become a fully integrated financial services company,” said Asif Khan, CEO of frontierAlt. “From a strategic standpoint they add greater depth and breadth to our product and service offerings and put us in a sound position to grow our business.”

frontierAlt says it plans to keep and develop both the Orbit and KeiDATA brands, and management at both firms will remain in place.

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Canadians confident about job security, survey suggests

(May 10, 2005) The majority of Canadians feel there’s little chance they’ll be joining the unemployment lines in the coming year, a survey suggests. Seventy-seven percent said they expect to keep their current jobs, according to a survey of full-time staff by Right Management Consultants, up from 71% when the same question was asked six months ago.

Still, many Canadians believe the job market remains tight — nearly 80% said they believe it would be somewhat or very difficult for an unemployed worker to find a comparable paying job.

“Employees are feeling cautiously more confident than they did six months ago about the job market,” said Bram Lowsky, senior vice president of Right in Eastern Canada. “But there is recognition that jobs are still not plentiful, nor are they easy to land. Until the job market completely recovers, we are only seeing incremental shifts in worker confidence levels.”

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IDA keeping tabs on “do not call” proposal

(May 9, 2005) The IDA says it is making major strides in getting its concerns and recommendations across to policymakers regarding the federal government’s proposed “do not call” registry.

“As it stands, the proposed bill has several major drawbacks for the Canadian securities industry — prohibiting advisors from calling some clients, banning unsolicited telephone calls to potential clients and charging fees and levies on dealers to access the do not call registry,” notes IDA senior vice president Ian Russell.

The IDA has already filed a submission seeking further clarity on the bill and has requested an appearance before a standing committee when public hearings begin, expected later this year.

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Fidelity changes income fund’s name

(May 9, 2005) Fidelity Investment is changing the name of the Fidelity Diversified Income & Growth Fund to the Fidelity Monthly Income Fund, effective May 16. The new name more clearly reflects the monthly income distribution expected to be paid by the fund, Fidelity said in a release.

The fund is also changing its benchmark effective at the end of the month to 30% MSCI Canada Value Capped, 20% S&P/TSX Capped Income Trust Index, 30% RBC CM Canadian Bond Market Index, 10% Merrill Lynch High Yield Master II Index and 10% Lehman Brothers Investment Grade CMBS Index. The fund’s managers and investment objective will not change.

The neutral mix of the fund is also undergoing some re-tooling to 30% Canadian dividend-paying securities, 30% Canadian fixed-income securities, 20% Canadian income trusts, 10% U.S. high yield securities and 10% U.S. commercial mortgage-backed securities.

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Desjardins reduces fees

(May 9, 2005) Desjardins Financial Security says it has reduced the MER on two of its segregated funds and the investment fee on three group retirement savings funds.

The MER reductions involve Desjardins’ Millennia III segregated funds. The MER for the Talvest Global Bond RSP Fund has been lowered by 0.3%, and the Trimark Canadian Fund MER by 0.18%. The decreases took effect April 18, 2005.

The investment fees for the three funds managed by AIM Trimark on behalf of Desjardins Financial Security, and available to group retirement savings plan participants, were reduced to 0.85%, effective April 1.

The three funds are the Trimark Income Growth Fund, the Trimark Canadian Fund, and the Trimark Fund.

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