Briefly:

(January 6, 2006) CI Investments has announced the launch of Portfolio Select Series, a set of nine strategically constructed core portfolios which CI says are customizable to better fit the investor’s optimal allocation.

The program offers access to more than 40 CI mutual funds, under the corporate class structure, allowing for switching between funds without triggering a taxable event in non-registered accounts.

“Portfolio Select Series goes beyond other strategic asset allocation programs by giving investors and their financial advisors an enhanced ability to customize their chosen portfolio, resulting in an even better fit with their investment objectives,” says Peter Anderson, CI president and CEO.

The portfolios are built on four exclusive investment pools managed by some of Canada’s most recognized money managers, including Kim Shannon; CI’s Signature Advisors; Synergy Asset Management; Altrinsic Global Advisors; Epoch Investment Partners; Trilogy Advisors; and QVGD Investors.

“The strength of the portfolio managers is one of the key advantages that Portfolio Select Series has over other investment programs,” says Anderson.

The fee structure for Portfolio Select Series is identical to that of the CI Corporate Class mutual funds. The program requires a minimum investment per account of $50,000.

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Desjardin names new group insurance heads

(January 6, 2006) Desjardins Financial Security has announced the appointment of André Simard as national vice president of sales, group and business insurance and Dan Poole as vice-president of strategic planning implementation for the same division.

“Mr. Simard’s mandate is to expand the Desjardins Financial Security group and business insurance client base across Canada,” said Alain Thauvette, senior vice-president, Group and Business Insurance. “The sales offices in Halifax, Levis, Montreal, Ottawa, Toronto, Winnipeg, Calgary and Vancouver will all be under his responsibility as well as Sales, Public and Parapublic Groups.”

Poole’s position was recently created as Desjardins drives its expansion across the country.

“Our new structure allows us to grow at a pace greater than the market, while ensuring we provide our clients with quality customer service and reduced costs,” says Thauvette. “Mr. Poole’s new responsibilities will include implementing the new strategic plan. This is a major step forward for this business line.”

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Investors Group merges Quebec division

(January 6, 2006) Investors Group has announced a reorganization of its Quebec operations, folding Les Services Investors Limitée into Investors Group Financial Services, making that the nationwide brand name.

The change was effective January 1, 2006 and the company says it will allow its Quebec advisors to register to serve clients in other provinces. Investors Group will continue to serve its Quebec advisors and clients through its Quebec office.

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AMF introduces new penalties

(January 6, 2006) Quebec’s regulator, l’Autorité des marchés financiers (AMF), has unveiled new administrative penalties for issuers and insiders in default situations, such as failing to file required documents. The penalties came into force January 1.

“With these new penalties, the AMF will be able to enforce securities legislation even more effectively and thoroughly,” stated AMF president and CEO Jean St-Gelais.

Reporting issuers face penalties of $100 per missing document for each business day during a given year, to a maximum of $5,000. Insiders or senior executives who fail to disclose their control over securities face the same penalty.

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Manulife, Scotiabank expand in China

(January 6, 2006) Manulife Financial subsidiary Manulife-Sinochem Life Insurance has received approval from Chinese insurance regulators to open a branch in Sichuan Province, with the branch slated to open in the provincial capital, Chengdu, in the second quarter.

“As our first foray into Western China, the opening in Sichuan Province is a very big step for our Company,” said Marc Sterling, chairman, Manulife-Sinochem. “Manulife has a long history with this province in that much of our China market entry work and strategy began in Sichuan. We were also one of the first foreign financial institutions to establish a presence in Sichuan.”

The Chengdu Branch license marks the 12th city in which Manulife-Sinochem has received approval to operate, making it the company with the most cities under licence.

Also receiving approval for Chinese expansion, Scotiabank announced it will upgrade its representative office in Shanghai to offer lending and deposit-taking services, making it the only Canadian bank in that market.

“The upgrade of our representative office in Shanghai to full branch status provides an excellent opportunity to further build our international presence,” said Rick Waugh, Scotiabank’s president and CEO. “We are particularly optimistic about the potential for growth in China and are pleased to have the opportunity to bolster our presence in Shanghai.”

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Think tank gives Ottawa failing grade on taxes

(January 5, 2006) Average Canadians have seen little improvement on tax reform under the Liberal minority government, according to the Canadian Centre for Policy Alternatives.

In fact, the situation has worsened, the centre says in a report card on Paul Martin’s tenure as prime minister in a minority parliament, awarding Ottawa an “F” on taxes.

“Inequality and poverty in Canada have increased as a result of regressive tax measures under the Liberals,” the report says, adding that most tax cuts have “overwhelmingly benefited corporations and those with the highest incomes.”

In the last budget, Finance Minister Ralph Goodale increased the basic personal amount to $10,000 over five years, bumped up RRSP contribution limits, and scrapped the foreign content limit on registered investments.

Still, the centre says much more beneficial cuts were provided to corporations and high-income earners, such as maintaining the income trust tax loophole, cutting the corporate and dividend tax rates, eliminating the capital tax and raising the top personal income tax bracket to $200,000.

“Almost 25% of the benefit of tax cuts in the economic and fiscal update will go to corporations, and, when they are fully phased-in, the personal tax cuts will provide up to 10 times the benefit to those with high incomes,” the centre says.

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CIBC boosts TSX target

(January 5, 2006) CIBC World Markets has raised its 2006 prediction for the S&P/TSX Composite Index, saying the benchmark will hit 13,200 by the end of the year, up from an original target of 12,000.

Citing continued strength in the gold and energy markets, CIBC is also increasing the equity allocation in its model portfolio, shifting 2% of the portfolio out of bonds to compensate. The equity allocation stands at 54% now, with 5% in income trusts, 35% in bonds and only 1% in cash.

“Rising energy prices and rising cash flow multiples, in part merger related, should drive the energy sector up another 40% this year, following on the heels of last year’s 60% hike in sector valuations,” wrote chief economist Jeff Rubin in a research note.

The equity portion of the portfolio will hold an overweight position in energy, at 35.4% compared to the benchmark 27.4%.

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VentureLink changes hands

(January 5, 2006) Skylon Advisors has completed the sale of its VentureLink Group of labour-sponsored investment funds to VentureLink LP, a new entity controlled by the funds’ management team.

“This will be a seamless transition for investors,” said John Varghese, managing partner of VentureLink LP. “Our funds remain well-positioned and our proven strategy of focusing on debt-oriented investments will continue.”

Under the deal Skylon’s parent company, CI Financial, will continue to provide administrative and other services to the funds, which had $198 million in assets as of December 31, 2005.

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Ameritrade, Waterhouse deal approved

(January 5, 2006) TD Bank Financial Group has announced that Ameritrade shareholders have voted in favour of acquiring TD Waterhouse USA, creating TD Ameritrade. In Canada, TD Waterhouse will acquire Ameritrade’s Canadian brokerage operations.

“The new TD Ameritrade will be a powerful industry leader whose expertise will deliver an even stronger client-focused offer,” said Ed Clark, president and CEO, TD Bank Financial Group. “For TD shareholders, this is an excellent complement to TD’s U.S. personal and commercial banking operations of TD Banknorth and extends our opportunities for further growth in the U.S.”

Under terms of the deal, TD will own a 39.9% stake in TD Ameritrade. TD executives will take five of the seats on the new firm’s board. The deal is expected to close on January 24th, 2006.

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CIBC Mellon names new CFO

(January 5, 2006) CIBC Mellon has announced the appointment of John Riviere to the position of senior vice president and chief financial officer.

“Mr. Riviere brings extensive financial management and financial reporting experience to CIBC Mellon,” said Thomas C. MacMillan, president and chief executive officer. “With more than 20 years of experience in the financial services industry, he is a strong addition to our company.”

Riviere has held roles of increasing responsibility at several major Canadian financial institutions, including CIBC, Bank of Nova Scotia and Bank of Montreal.

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Trusts dominated IPO market in 2005

(January 4, 2006) Despite the uncertainty created by Ottawa’s income trust consultation process, the Canadian IPO market enjoyed another strong year, with 119 new offerings worth $7 billion. Trusts accounted for more than 70% of that amount, according to PricewaterhouseCoopers. In 2004, there were 87 IPOs valued at $6.1 billion.

“There was a virtual collapse in income trust activity between Ottawa’s September 19 announcement that it would cease issuing advance tax rulings for income trusts and the November 23 decision [to enhance the dividend tax credit and not tax trusts]” PricewaterhouseCoopers says. “Despite that, income trusts dominated IPO activity on the TSX in 2005 with 40 income trusts worth $5 billion, a 61% increase in value over income trusts in 2004.”

“Our research illustrates inarguably that the structure of income trusts encourages them to grow and prosper, and not simply be an efficient distribution vehicle for the profits of mature businesses,” says PwC’s Ross Sinclair.

Canada’s approximately 200 trusts had a cumulative market capitalization of about $185 billion in 2005, PwC says, more than 10% of the total value of the country’s equity market. Historically, companies have enjoyed a significant appreciation as a result of conversion, the firm adds. “Now with an increase in tax dividends, it will be interesting to see if this trend continues,” notes Sinclair.

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Canadians not benefiting from economic growth, survey suggests

(January 4, 2006) Canadians see the economy as strong, but few report any personal financial benefits, according to a new survey conducted by Pollara.

The survey, released during a breakfast meeting of the Economic Club of Toronto, found that only 11% of Canadians see their income exceeding the cost of living, while 35% say they are falling behind and 51% believe they are standing still.

This seems to conflict with another one of the poll’s findings, which noted that Canadians are quite optimistic about the economy. A record 15% describe the economy as undergoing a period of strong growth, while a further 52% believe it is undergoing moderate growth. Just two years ago, only 5% characterized the economy as being in a period of strong growth.

“Seven in 10 Canadians believe our economy to be strong, yet only one in 10 Canadians is seeing any financial gain,” Michael Marzolini, chairman and CEO of Pollara said. This suggests personal gains are lagging economic growth, he adds.

Despite the various policy differences being touted during the ongoing federal election, like the rollback of the GST or the billions promised in tax cuts, most don’t expect the election results will significantly impact their standard of living.

Looking past the election, only 16% of Canadians expect that they or a member of their immediate family will lose their job over the next 12 months — down from 22% last year.

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Scotia Capital launches new fixed income indexes

(January 4, 2006) Scotia Capital has launched new strip bond and 20+ bond indexes for Canadian fixed income investors.

The Scotia Capital Strip Bond Index includes 540 federal and provincial issues with a total market value of $52 billion, designed to represent market performance of government issued coupons and residuals. The index has a modified duration of 12.53 years. Modified duration is the weighted average term to maturity used to measure a security’s sensitivity to interest rate changes. The company says it is the first index to track performance in the $100 billion strip bond marketplace.

The Scotia Capital 20+ Bond Index meanwhile is designed to provide a measure for institutional investors and pension funds looking for a long duration benchmark. The index includes all issues, from both the Strip Bond Index and the Scotia Capital Universe Bond Index, with an effective term greater than 20 years. The index currently contains 335 issues with a total market value of $22.49 billion and a modified duration of 19.48 years.

The company has also released five years of daily history beginning at the end of December 2000, for both new indexes.

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Loring Ward completes sale of assets to Weinberg

(January 4, 2006) Canada is getting a new high-net worth wealth management firm after Loring Ward International announced that it has closed the sale of its Canadian business to Harrow Partners, a company created by ex-Assante front man and co-founder, Marty Weinberg and partner Jim Morden.

Under the terms of the sale, Loring Ward will provide sub-advisory services to Harrow Partners at least until June 2006.

Weinberg served as chairman of Loring Ward International, originally the high net worth U.S. division of Assante, before Assante was sold to CI in 2003. Morden was the former director of sales and service at Assante before becoming vice president of sales and marketing at the Loring Ward spin-off.

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Alberta will lead Canada until 2015: BMO

(January 4, 2006) Alberta is in good economic shape and should continue to lead the rest of Canada in economic performance for at least another decade, according to BMO Financial Group’s economics department.

In a paper, entitled “Alberta’s Long-Range Outlook: Oil’s Well”, BMO senior vice president and chief economist, Rick Egelton, says Alberta’s economy, measured in constant dollars, will grow 0.9% faster than Canada’s economy, on average, between 2005 and 2015.

“Alberta’s stellar economic and fiscal fundamentals provide a solid base for future growth,” says Egelton. “Barring a collapse of energy prices, the province is poised to widen its economic and competitive lead against the rest of the nation.”

The paper says this economic strength will result from the net impact of five major forces, including relatively high energy prices, increased output from the oil sands, decreased conventional energy production, heavy capital expenditure in the oil sands and high population growth in the province to meet labour demands and production requirements.

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IDA imposes lifetime ban on former Assante advisor

(January 3, 2006) The IDA has imposed discipline penalties on James Michael Brennan, fining the former Assante Capital Management broker $275,000, plus $15,000 in hearing costs, and permanently banning him from the industry.

In a settlement agreement, Brennan, who was based in Ottawa, admitted that he had misappropriated more than $124,000 from three accounts held in his mother’s name. Between November 2000 and June 2003 Brennan forged his mother’s signature to execute 35 separate withdrawals and created at least six false statements for the accounts that inflated values up to 19% in one account and up to 102% in the others. Brennan also created false statements for a fictitious account to make up for and disguise the misappropriation.

Brennan also has a history of falsifying credentials. In 2004, he created a fake proof of passing form for the Investment Management Techniques course. In November 2000 he prepared a false certificate of course completion for the Conduct and Practices Handbook course. He also told the Ontario Securities Commission in July 1998 that he held a degree from the University of Ottawa when submitting a uniform application for registration and approval. And between October 2001 and July 2003 Brennan falsely represented himself as a qualified Certified Financial Planner and Certified Investment Manager on his business cards and in client communications.

For those offences, he was banned for five years from receiving registration approval with any member firm and fined $5,000 plus $7,500 in costs.

Although IDA staff submissions suggested he be permanently banned from receiving registration approval in April 2004, the panel imposed lesser sanctions because Brennan did not have a prior disciplinary record and there were no allegations of negligence at the time regarding his handling of client accounts.

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Northwest files prospectus for new high yield bond trust

(January 3, 2006) Northwest Mutual Funds has filed a preliminary prospectus for the initial public offering of the new Northwest High Yield Bond Trust.

The trust, which is a closed-end investment, aims to provide monthly distributions, a long-term return and, upon the termination of the trust, to return to unitholders at least the original issue price of $10 per unit, the company says.

The trust will invest in an actively managed portfolio consisting of U.S. high yield debt securities with AmerUs Capital Management Group acting as sub-advisor.

Distributions will be announced annually based on the prevailing market conditions and the estimate by the manager and AmerUs. The indicative distribution for the first 12 month period is $0.675 per unit, or a yield of 6.75% based on the issue price.

Northwest currently has about $1.8 billion in assets under administration.

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BluMont Capital announces executive changes

(January 3, 2006) BluMont Capital has separated the roles of president and CEO and appointed a new chairman.

Stephen Kangas has stepped into the role of president, taking over from Toreigh Stuart, who continues to serve as BluMont’s CEO. No reason was given for the separation of the two positions.

According to the firm, Kangas is a leading authority on mutual and hedge funds, bringing with him 10 years of experience in the investment industry with Midland Walwyn (now CIBC Wood Gundy), BMO Nesbitt Burns and TD Canada Trust. He joins the firm after running his own consulting firm which served the investment management community and financial advisors.

Thomas Simpson has been installed as the hedge fund firm’s new chair.

Simpson, who was the executive vice-president for Global Strategy Financial, replaces founding chair David Currie, who is retiring. Simpson is also a director at the University of Toronto Asset Management and was formerly chair of the University of Toronto’s Governing Council and a trustee of the Royal Ontario Museum.

The appointments were effective as of December 23.

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