Briefly: “S&P launches MegaCap index” and more news

Standard & Poor’s launched its new S&P/TSX MegaCap Index Monday, a large-cap index that highlights the 25 largest, most liquid stocks on the Toronto Stock Exchange.

“The index covers over 50% of the market-cap of Canadian listed equities, providing investors with a gauge to measure the performance of this segment of the market,” said Sid Oberoi, senior director at S&P Indices.

Securities must be among the 25 largest constituents in the S&P/TSX Composite in terms of float quoted market value (the value determined by multiplying the number of float shares of a security by the price for one such float share), and have listed options on the Montreal Exchange, in order to be included in the new S&P/TSX MegaCap Index.

The additions and deletions will be made at the Index’s quarterly review.

The TSX welcomed the launch.

“It provides a complementary offering to the core S&P/TSX benchmark indices and further demonstrates our joint commitment to providing new and innovative products for the capital markets,” said Andre Craig, vice-president, TMX Datalinx.

– Mihira Lakshman

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Franklin Templeton offers capital gain yield funds

Franklin Templeton Investments has introduced two new capital yield funds, which employ derivative strategies to generate capital gains payments, rather than interest income.

“With interest rates near historic lows, Canadian investors are looking for ways to increase their after-tax income,” said Don Reed, president and chief executive officer, Franklin Templeton Investments Corp.

The Templeton Global Bond Hedged Yield Class fund invests in a portfolio of Canadian equity securities and enters into forward contracts under which it will forward sell the equity securities at a future date. This will provide a return in a tax-efficient manner similar to its reference fund, the Templeton Global Bond Fund.

Not only does it provides yield in the form of capital gains, but also includes a currency hedging overlay on the forward contracts that achieve the tax efficiency. Michael Hasenstab, who manages the five-star Morningstar rated Templeton Global Bond Fund, will also manage Templeton Global Bond Hedged Yield Class.

The Bissett Canadian Short Term Bond Yield Class fund will employ a similar strategy, but its reference fund will be the Bissett Short Term Bond Fund. The new offering is managed by Heather McOuatt and Darcy Briggs, who co-manage the reference fund.

At the same time, the company introduced a corporate class version of the Bissett Canadian Dividend Fund.

All of the above funds are available in Series T units, which provide tax-efficient monthly cash flows through return of capital.

– Steven Lamb

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Helping low-income families with RESPs

A new program has been launched to assist low income families to participate in a Registered Education Savings Plan (RESP). The OMEGA Foundation has teamed up with Scotiabank to create www.smartsaver.org, which supports a multi-faceted community outreach program to increase low-income families’ financial literacy.

“The Government of Canada’s RESP and Canada Learning Bond (CLB) programs help families to save for their children’s education, but many low-income families don’t know about and don’t benefit from these useful financial tools,” said Martin P. Connell, chairman of OMEGA. “We thank Scotiabank for their partnership in the development of smartsaver.org, providing valuable information to help low-income families better access these important financial resources.”

The website provides encouraging, accessible and practical how-to information in 14 languages in both text and video formats and connects families to RESP providers. It facilitates step-by-step actions to start building education savings. Over time the site will evolved to host promotions, a calendar for community events and RESP workshops, as well as a chat room.

– Steven Lamb

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HSBC proposes fund mergers

HSBC Investment Funds has announced a series of mergers, proposing to merge each of the four LifeMap MM Portfolios (moderate conservative, balanced, growth and aggressive growth) into their equivalent LifeMap Portfolios.

It’s meant to provide unitholders of the LifeMap MM Portfolios with the opportunity to hold units of the LifeMap Portfolios, which offer lower management fees.

As of Monday, units of the LifeMap MM Portfolios will no longer be available for purchase, except for those investors who have existing arrangements in place, such as those involved in group RRSP payroll contributions.

The proposed mergers are expected to be take effect on or about Dec. 10, subject to regulatory approval and the approval of the unitholders of each of the LifeMap MM Portfolios.

Unitholder meetings will take place on Nov. 26.

– Mihira Lakshman

(09/27/10)