Briefly: “UBS praises Canada” and more news

Canada is cautiously treading its way back to success, having survived the financial crisis better than most advanced economies. UBS reports that Canada is slowly on its way to an economic recovery.

In terms of the TSX, UBS has raised their 12-month target to 14,500. The estimate is up from 13,500, which reflects a combination of stronger earnings and some additional valuation catch-up. UBS sees more room in variations and have reported that despite the stable price to earnings ratio, the ROE’s are historically high and corporate bond yeilds are low. The target allows for an 8% haircut on 2011 earning per share estimates – more than is likely with nearly 3% GDP growth – and 50 bp rise in corporate bond yields.

The TSX weighting includes the three heavyweight sectors, financials, energy and materials, which represent about 75% of its market cap, and so the remaining 7 sectors only account for 25%.

Looking to key themes for 2011, UBS believes corporate re-leveraging will be an enduring theme that will support equity re-rating, as will the degree to which politics trumps economics. They also call for continuing positive growth in employment rates. Over the past four months, there has even been significant growth in U.S. private payroll. If the trend growth continues, the economy could reach a self-sustaining state.

Looking to 2012, the major risks listed by UBS include the role of China and other emerging markets in shaping resource demand and prices, the U.S., which affects the export environment for our industrial and technology sectors, and the domestic economy, which shapes our financial, consumer and telecom sectors.

Although risks remain much higher than normal and there is still uncertaintly, UBS research has indicated that the emergence of the Canadian economy is steadily improving.

Horizons BetaPro launches S&P ETF

Another ETF has joined Horizons BetaPro’s stable of funds.

The S&P 500 Index ETF (BetaPro S&P 500 ETF or HXS) is now trading on the TSX.

HXS is the second BetaPro ETF that will track an index already available to Canadian investors through another TSX listed index-tracking ETF. HXS offers a low-cost and tax efficient total return structure providing exposure to the S&P 500 Index. The BetaPro S&P 500 ETF seeks to replicate the performance of the S&P 500 Canadian Dollar Hedged Index (Total Return), net of expenses.

“HXS represents another milestone for Canadian ETF investors and continues the new era of competition in the Canadian ETF industrty,” said Howard Atkinson, president of BetaPro Management Inc.

– John Powell

RBC fund manager honoured

RBC is toasting senior portfolio manager Chris Beer.

Beer has been honoured with the 2010 Fund Manager of the Year award by ‘Investment Executive’ newspaper due to his 10-year track record managing the RBC Global Precious Metals Fund.

“It is an honour to receive this recognition and share it with my co-manager Brahm Spilfogel and other members of the RBC GAM Canadian Equity Team, who have been instrumental in providing consistent and rigorous research that has resulted in added value for our clients,” said Beer.

The RBC Global Precious Metals Fund is available to individual investors through the following management fee options: 1.00 per cent for Series D (for those who invest directly through PH&N Investment Services and RBC Direct Investing), 1.75 per cent for Series A, 1.75 per cent for Advisor Series and 0.75 per cent for Series F (available through financial advisors).

– John Powell

Report: Families missing out on education grants

Families across Canada could be saving more money when it comes to their children’s education.

According to a report by Maytree, families are unaware they can receive a grant from the federal government for their child’s education. Getting a Registered Education Savings Plan (RESP) is also the only way that low-income families can receive the Canada Learning Bond, which provides up to $2,000 without any parental contributions.

The report states that approximately 900,000 Canadian children are eligible but are not signed up. In Ontario alone, 340,000 children are missing out.

“Parents are confused and service providers are often not sure how to advise them,” said May Wong, designer of the SmartSAVER project.

The report lists eight recommendations to improve the situation. The first four recommendations are for organizations serving low-income families to provide families with accurate RESP information in their own communities and languages. The final four are for government to make it easier for low-income families to start an RESP that suits their needs.

For a copy of the report, click here.

– John Powell