Briefly: “Canadian economy posts biggest decline since 1991” and more news

Canada’s economy contracted at an annual pace of 3.4% in the fourth quarter of 2008 — its worst performance since 1991 — due to the global recession, according to Statistics Canada.

Canadian exports fell for the sixth consecutive quarter, by 4.7%, while imports were down 6.4%. “Declines were registered for both goods and services imports, as domestic demand faltered and prices for imported goods and services rose,” StatsCan reported.

The Bank of Canada is expected to cut its key lending rate — currently at a record low of 1% — by another 50 basis points in an effort to help pull the country out of the economic downturn.

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Tax refunds earmarked for savings, debt payment

You’ve counselled your clients on how to prepare for tax season, showing them the benefits of tax-loss selling and encouraging them to make the most of their RRSP contribution room. As of midnight tonight, it’s in the hands of the tax preparers.

But what are your clients’ plans for their tax refunds? According to a poll conducted by Harris/Decima for Scotiabank, 45% of Canadians claim they will handle the money responsibly: 24% say they will save their refund, either as a deposit or by reinvesting it. Another 21% say they will use it to pay down debt.

“In today’s environment, it’s great to see that so many Canadians are thinking about how they can make the most of their tax refund,” says Adam Salahudeen, senior manager, tax advisory services, Scotia Private Client Group.

Very few say they plan to spend their refund, with 8% saying it would go toward consumer purchases, 5% planning to spend it on a vacation, and 4% planning home renovations. Twenty per cent of Canadians don’t expect to receive a refund.

“If you have ever considered getting professional tax advice, this is definitely the year to consult a qualified tax accountant, who can help you ensure that you are taking advantage of all available tax credits and deductions,” says Salahudeen.

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Dynamic launches Strategic Yield Fund

Dynamic Funds has launched a new income-focused fund that will invest in a diversified portfolio of fixed income and income-oriented equity securities.

The Dynamic Strategic Yield Fund will be managed by Oscar Belaiche, who will manage the equity portion of the portfolio, and Michael McHugh, who will oversee the fixed income side. The pair have complete discretion on asset allocation.

Belaiche is perhaps best known as lead manager of the Dynamic Focus+ Diversified Income and Dynamic Dividend Income funds. McHugh’s other mandates include the Dynamic Advantage Bond and Dynamic Canadian Bond funds.

“We are continuously enhancing our product platform to ensure our clients are able to capitalize on market opportunities,” said David Goodman, president and CEO of DundeeWealth Inc. “The environment for securities providing yield is, in fact, very attractive. The Dynamic Strategic Yield Fund has the flexibility to cautiously source an attractive yield throughout a business cycle.”

Based on the initial offering price, the fund targets a yield of 7% per annum, or 5.84 cents per unit per month. That distribution is fixed but not guaranteed.

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RBC acquires institutional services firm

RBC Capital Markets has struck a deal to acquire Commission Direct Inc., one of Canada’s largest independent providers of independent commission-compensated investment services (IC-CIS) for Canadian institutional investors.

Firms in the IC-CIS sector facilitate payment of qualified independent research and brokerage obligations, commission sharing arrangements (CSA), commission recapture, transition restructures, and discount trading.

“This transaction will allow us to provide an enhanced range of services to our client investors, backed by the financial strength and stability of RBC,” said Wayne McAlpine, CEO of CDI. “During our 17-year partnership, RBC has supported and believed in our independent approach and our commitment to the highest standards of trade execution, administrative excellence and diligent compliance with soft dollar practices.”

Prior to the deal, RBC had a 50% stake in the company.

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BMO makes Aussie alliance

Bank of Montreal has announced a strategic alliance between its specialist high-yield asset manager, HIM Monegy, and Australia’s Colonial First State Global Asset Management.

Monegy will now become CFSGAM’s sole specialist provider of North American high-yield asset management services. Monegy is a boutique investment management company that is wholly owned by BMO’s Chicago-based subsidiary, Harris Investment Management.

“The depth of our shared investment philosophy and Monegy’s consistent skill in their management of North American high-yield assets has encouraged CFSGAM to develop and strengthen the relationship with Monegy,” said Tony Adams, co-head of global fixed interest and credit at the Australian firm.

“This alliance acknowledges the close relationship built during the past eight years between the global fixed interest and credit team within CFSGAM and Monegy,” said Sadhana Valia, president and senior portfolio manager at Monegy. “Our relationship has centred around a shared focus on managing high-quality, defensive portfolios with an emphasis on optimizing risk-adjusted returns and minimizing downside risk.”

(03/02/09)