archive-ca.com » CA » P » PRIVATEWEALTHMAGAZINE.CA

Total: 201

Choose link from "Titles, links and description words view":

Or switch to "Titles and links view".
  • Private Wealth Canada News
    among investors between the desire for portfolio growth to meet their income needs and the willingness to employ solutions that will get them there The overriding emotions driving this misalignment are cautiousness and volatility fears says a Mackenzie Investments poll It found 52 per cent cite market volatility as an impediment to attaining investment goals As well over 50 per cent are investing more conservatively 39 per cent or no longer wanting to invest at all 12 per cent To help investors get back on track Mackenzie is launching five new funds and is seeking investor approval to change another fund s objectives The new funds and the repurposed fund directly address the need for either volatility management or income generation amidst changing market conditions Reported Returns May Not Be Returns Be a little wary of reported returns for illiquid assets says Andrew Ang Ann F Kaplan professor of business at the Columbia Business School Speaking at the CFA Society Toronto 2014 Pension Conference he said this is because there are problems with measuring the returns of illiquid assets such as private equity and real estate The reported returns are not returns he said due to biases in how these returns are reported In some cases infrequent sampling of returns can make the returns look more attractive with low risk Measured more frequently the returns and risks can be much different In real estate sample selection is sometimes used but this sees properties only valuated when the markets are high as the property is not likely to be sold when prices are down Instead investors need to work with cash flows and what is actually accruing to investors he said European Equity Outperformance Continued European equities the top performer in 2012 continued to outperform in 2013 says research by Baring Asset Management However North American equities reached the top spot driven by continued economic growth in the U S with good employment data stronger retail sales a recovery in house prices and improvement in consumer confidence The research also reflects the improving environment in Europe However it is clear that volatility remains in a number of major asset classes with many of the best and worst performing assets changing dramatically from one year to the next The study provides one explanation why multi asset investing with an unrestricted mandate to dynamically move into and out of asset classes has found favour with investors looking to achieve their targeted returns with less volatility than investing in equities alone Six Per Cent World Looms A world with a six to eight per cent return in equity markets is looming says Bill Priest chief executive officer co chief investment officer and portfolio manager at Epoch Investment Partners In the session Focus on Fundamentals Equities in a Slow growth Environment at TD Asset Management s Sharing of Knowledge Learning Series 2014 he said that currently it is a tale of two economies For the financial economy it is the best of times while for the real economy it is the worst of times as the quantitative easing that has fuelled equity market performance has not done a lot for the real economy He expects operations margins and productivity gains to continue because of globalization and technology Globalization means production can be moved to where it is most beneficial while the growth of technology is changing the way people do work However we are living in a world where growth is slow due in part to the threat of deflation and low interest rates which he doubts will rise very high Advisors Predict Negative Returns Canadian investment advisors are predicting negative stock returns for Canadian stock markets and 11 other asset classes for the second quarter of this year a dramatic departure from the positive outlook they shared in the first quarter of 2014 The change in sentiment was reported in the second quarter edition of Horizons ETFs Management Canada Inc s 2014 Advisor Sentiment Survey The survey asked Canadian advisors to share their outlook on 15 distinct asset classes and express their sentiment bullish bearish or neutral on the anticipated returns for these asset classes in the second quarter Collectively advisors were over 50 per cent bullish on only three of the 15 asset classes surveyed Less than half 47 per cent of the Canadian advisors surveyed expect Canadian stocks to deliver a positive return over the next quarter This is a stark turnaround in sentiment compared to the onset of 2014 in which 74 per cent of advisors stated they were bullish on the S P TSX 60 Index s performance for the first quarter CFIB Wants Broader Use The Canadian Federation of Independent Business CFIB supports the federal government consultations on more sustainable pension plans for federally regulated industries and crown corporations However it is disappointed that the target benefit plans which share risk between employers and employees would not apply to the core public service where this kind of plan is badly needed to address massive unfunded pension liabilities With the private sector moving quickly away from traditional defined benefit pension plans a shared risk model will be a terrific addition to Canada s pension landscape says Dan Kelly its president A shared risk plan could also help taxpayers get out from under massive unfunded pension liabilities such as the 6 5 billion liability at Canada Post alone We hope the federal government doesn t stop with Crown corporations and considers moving the core civil service to a less costly shared risk pension plan Canada Has Richest Middle Class In The World For the first time in history the Canadian middle class is the richest in the developed world says a New York Times study After tax middle class incomes in Canada substantially behind in 2000 are now higher even than the middle class in the U S This shows that middle class incomes have increased faster in Canada than anywhere else Canada s poor also seem to be better off

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-05-07 (2016-04-26)
    Open archived version from archive


  • Private Wealth Canada News
    crisis decline in bank lending It finds that capital markets support economic growth by providing new sources of funding for long term investment and facilitating improvements in corporate governance It goes on to link activities by pension funds non bank lenders and active investors such as hedge funds to growth in the real economy Ukraine Crisis Impact Unlikely The tensions between Russia and Ukraine will not likely impact the global economy significantly says a report from Standish Mellon Asset Management Its March Global Macro Views report says while it could potentially increase volatility Ukraine s nominal gross domestic product of 175 billion is a small part of the 73 trillion global economy As well Europe is reluctant to escalate the conflict with Russia so the macro economic effect of the current conflict will likely be small Its forecast for global GDP growth for 2014 remains at 3 5 per cent with an increase to 3 7 per cent in 2015 Markets Proving Resilient Markets have proven reasonably resilient amid mounting geopolitical tensions in the Ukraine and weak U S economic statistics that were hampered by harsh winter weather says economists at Desjardins Group As a result they have boosted their forecast for the Canadian stock market citing the market s strength so far this year While the start to the year was painful for stock markets the firm notes that investors managed to get beyond the initial turbulence in emerging markets and have since performed well Since the beginning of February the S P 500 is up by more than seven per cent and the S P TSX index has gained 6 1 per cent And in the face of concerns about growth in emerging markets which could imperil stocks in the materials sector the Canadian stock market has made gains too Despite a difficult global environment for mining companies the sector has managed to hold onto the gains recorded since the end of 2013 it says March 17 2014 Jewelry Ranks As Investment Of Passion Europeans are more likely to invest in wine art and watches before fine jewels says the Rapaport Report a report that serves as the jewelry industry standard for the pricing of diamonds In North America jewelry as an investment of passion ranks third behind art and watches In other areas of the world it hit the number one top spot for ultra wealthy investors Jewelry is the most collected and pleasurable asset in Africa Asia Latin America the Middle East and Russia It ranks third in the Australasia region Diamonds as an investment of passion rank fifth globally placing third in Asia fourth in Africa the Middle East and Russia fifth place in Australasia and Latin America and sixth place in Europe and North America Overall the most popular luxury item for rich investors globally is art followed by wine watches cars diamonds and jewelry They make an investment of passion simply for personal pleasure compared to just 15 per cent who purchase items as status symbols and one per cent who purchase items because they are fashionable SOP Trends Coming North Although say on pay SOP is not required in Canada it is still possible to see trends and potential long term ramifications among voluntary adopters and to extrapolate from the experience in the U S says a Mercer Executive Compensation Perspective There is clearly greater accountability for pay and governance decisions and incremental changes in pay practices resulting from SOP But some changes may have unintended effects that could ultimately have negative consequences if companies simply fall into line with proxy advisor policies without tailoring their pay and governance practices to their own needs and circumstances For example companies are eliminating problematic pay practices such as tax gross ups and excessive perquisites to respond to shareholder and proxy advisor concerns However in some cases companies may be replacing these takeaways with higher salary or larger bonuses potentially leading to higher pay As well companies may be adopting clawback and hedging policies stock ownership guidelines and other shareholder friendly policies without fully understanding how they will be implemented Concerns about pay levels and pay and governance practices will likely be raised again in 2014 and leading this push are institutional investors and proxy advisors whose influence is apt to increase as more companies adopt SOP Proactive Steps Protect Investors From Fraud Canadian securities regulators are encouraging investors to take early and proactive steps to protect themselves from investment fraud First steps investors can take to avoid falling victim to investment fraud says Bill Rice chair of the Canadian Securities Administrators CSA and chair and CEO of the Alberta Securities Commission are to check registration and ask questions when choosing a financial adviser Securities regulators stress that being an informed investor is the best defense against investment fraud The CSA offers free educational tools and resources for investors including how to check the background of an individual or firm what to ask when choosing a financial adviser and how to maintain a successful working relationship with an adviser The CSA also offers the National Registration Search that allows investors to easily check if a firm or individual is registered to sell securities or offer investment advice in their jurisdiction Mercedes Sees Sustained Sales Mercedes Benz Canada and its national dealer network delivered 2 328 Mercedes Benz Sprinter and smart vehicles throughout February which translates into an overall gain of 5 3 per cent for the month A total of 1 953 Mercedes Benz passenger cars and luxury light trucks were retailed representing a 14 7 per cent year to date sales increase Passenger car sales totaled 1 009 units attributable to strong CLA Class and B Class model sales along with a particularly remarkable performance for the S Class up 204 5 per cent compared to last year On the luxury light truck side a total of 944 units were sold This was fueled by M Class deliveries growing by 34 5 per cent

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-04-06 (2016-04-26)
    Open archived version from archive

  • Private Wealth Canada News
    on domestic real estate pension funds could be seriously overexposed in the event of a downdraft in the market At the same time we are expecting attractive returns over the intermediate term in some markets in Europe and Asia so this is an excellent time to think about diversification and look at opportunities in those markets Canadian commercial real estate has delivered a 10 year annualized total return of 11 9 per cent says the Investment Property Databank That s the highest of all developed markets covered by IPD and second only to South Africa in that time period William Hughes global head of the UBS real estate group says near term performance will be more impacted by perception and pricing than fundamental changes the timing of which is very difficult to predict Canadian commercial real estate has enjoyed the status of safe haven attracting new investment capital and driving down yield If capital becomes less risk averse and seeks higher yield commercial real estate values may be affected he says Fiera Launches Private Infrastructure Fund Fiera Capital Corporation has launched a private infrastructure fund which provides Canadian accredited investors with access to investments in core infrastructure assets previously only available to institutional and private wealth investors The company feels that a wider group of investors from the retail channel should have access to and invest in infrastructure projects backed by creditworthy counterparties opportunities which are typically limited to institutional investors In addition to providing accredited investors with increased portfolio diversification the fund seeks to offer attractive long term returns generated from cash yield and capital appreciation The fund will aim to generate stable and predictable cash flows providing high single digit return per annum over five year moving periods says François Bourdon chief investment solutions officer at Fiera March 24 2014 Companies Should Leverage Retirement Strategies More than one fifth of the Canadian workforce has passed or is nearing retirement age says Statistics Canada yet research suggests many executives aren t too concerned with losing baby boomer employees to retirement in the next couple of years Only 26 per centof chief financial officers CFOs interviewed in a Robert Half survey said they were worried about this possibility while 64 per cent reported being unconcerned Among CFOs who are worried about losing baby boomers to retirement executives most commonly cited legacy knowledge functional skills and leadership as the greatest potential losses to their organization As a best practice all organizations should prepare their operations for the departure of experienced professionals be it to retirement or otherwise says Greg Scileppi president of Robert Half international staffing operations Properly developed succession plans can ensure that legacy knowledge functional skillsets and leadership will stay with the firm Scileppi adds that implementing programs that allow professionals to transition into retirement can be a win win situation for the employee and the employer Active Management Creates Returns What is happening with the money investors have invested in Canadian equities is the focus of an 18 Asset Management white paper The Return of Returns by Melanie Blue its head of Canadian equities It discusses the drivers of active management in the hope that by understanding how active managers outperform investors can have confidence in the active management opportunity It is at Return of Returns Capital Market Growth Fuels GDP Growing capital markets by one third could fuel a long term real growth rate in per capita GDP of around 20 per cent says research by two academics commissioned by AIMA The paper by Christoph Kaserer professor of finance chair of financial management and capital markets at the TUM School of Management in Munich and Marc Steffen Rapp professor of finance accounting and finance group school of business and economics at Philipps Universität Marburg in Germany says capital markets are significant drivers of economic growth and increasing their size could compensate for the post financial crisis decline in bank lending It finds that capital markets support economic growth by providing new sources of funding for long term investment and facilitating improvements in corporate governance It goes on to link activities by pension funds non bank lenders and active investors such as hedge funds to growth in the real economy Ukraine Crisis Impact Unlikely The tensions between Russia and Ukraine will not likely impact the global economy significantly says a report from Standish Mellon Asset Management Its March Global Macro Views report says while it could potentially increase volatility Ukraine s nominal gross domestic product of 175 billion is a small part of the 73 trillion global economy As well Europe is reluctant to escalate the conflict with Russia so the macro economic effect of the current conflict will likely be small Its forecast for global GDP growth for 2014 remains at 3 5 per cent with an increase to 3 7 per cent in 2015 Markets Proving Resilient Markets have proven reasonably resilient amid mounting geopolitical tensions in the Ukraine and weak U S economic statistics that were hampered by harsh winter weather says economists at Desjardins Group As a result they have boosted their forecast for the Canadian stock market citing the market s strength so far this year While the start to the year was painful for stock markets the firm notes that investors managed to get beyond the initial turbulence in emerging markets and have since performed well Since the beginning of February the S P 500 is up by more than seven per cent and the S P TSX index has gained 6 1 per cent And in the face of concerns about growth in emerging markets which could imperil stocks in the materials sector the Canadian stock market has made gains too Despite a difficult global environment for mining companies the sector has managed to hold onto the gains recorded since the end of 2013 it says March 17 2014 Jewelry Ranks As Investment Of Passion Europeans are more likely to invest in wine art and watches before fine jewels says the

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-04-07 (2016-04-26)
    Open archived version from archive



  • Private Wealth Canada News
    pan Canadian harmonization has remained elusive The authors recommend relaunching a national process aimed at achieving a pan Canadian system in which corporations need only register once to do business across the country February 24 2014 Affluent Consumers Curb Luxury Spending Affluent consumer confidence was up slightly in January says the Unity Marketing Consumption Index But affluent consumers show more inclination to save and invest in the next 12 months than they do to spend more on luxury high end products Only 22 per cent of the over 1 300 luxury consumers surveyed expect to spend more on luxury or high end goods and services in 2014 says Pam Danziger president of Unity Marketing At the start of 2011 28 per cent expected to spend more on luxury products in the coming year while at the start of 2012 26 per cent expected to spend more These number mean 2014 is shaping up to be challenging for companies and brands that target the affluent heavy lifting shoppers those who make up only 20 per cent of U S households but account for more than 40 per cent of total consumer spending says Danziger BMW Sales Growth Continues The BMW Group s sales growth of last year continued in January 2014 with deliveries increasing by 7 8 per cent In the first month of the year a total of 132 892 BMW MINI and Rolls Royce brand vehicles were delivered to customers compared to 123 302 the previous year This is a positive start building on last year s success says Ian Robertson member of the board of management of BMW AG sales and marketing The BMW 5 Series was a significant growth driver and the BMW 6 Series Gran Coupé saw high demand Sales of the MINI Clubman increased 18 9 per cent and the MINI Countryman continues to be in strong demand The new MINI model is expected to bring further momentum to sales as of spring Mutual Funds Reach 1 Trillion Canadians have accumulated savings of 1 trillion in mutual funds marking the first time in their 82 year history in Canada that funds have topped this significant milestone says the Investment Funds Institute of Canada IFIC Assets under management AUM for the mutual funds industry reached 1 01 trillion as of January 31 an increase of 140 1 billion or 16 1 per cent over the previous 12 months The importance of this milestone is the increase in wealth it represents for the roughly 4 6 million Canadian households that choose to save for their financial goals through mutual funds says Joanne De Laurentiis president and CEO of IFIC Mutual funds have grown tenfold in value since 1990 and are a cornerstone of Canadians retirement savings Large Cap Managers Post Strong Numbers Large cap managers in Canada posted their strongest benchmark relative performance in 12 years in 2013 says the Russell Investments Active Manager Report The median return for the year was 19 1 per cent more than six per cent ahead of the S P TSX Composite Index s return of 13 per cent Using annual returns 94 per cent of large cap managers beat the benchmark in 2013 compared to 76 per cent in 2012 This was the highest percentage since Russell began to closely track the data in 2000 The strong environment for large cap managers in Canada was not a surprise last year says Kathleen Wylie head of Canadian equity research at Russell Investments because active managers beat the benchmark in every quarter In fact they have outperformed the benchmark for five consecutive quarters which we have not experienced since 2001 Sub styles Play Significant Role While investors embrace concepts of growth and value as dominant influences of large capitalization equity management Ruo Tan president of Segal Rogerscasey Canada says sub styles also play a significant role in determining an investors outcome Using data for a 10 year period it found that not only do growth and value rotate over time but the sub styles also alternate In some cases these differences are quite stark The take away here says Tan is that investors should be keenly aware that simply owning growth or value in active portfolios only tells part of the story While sub styles tend to move with other similar styles some substantial differences occur along the way This certainly would seem to argue for having a program that is diversified across styles and sub styles and rebalancing regularly he says Canadians Stick To Canada Only 32 per cent of Canadians who hold stocks in their retirement portfolios plan to invest in markets outside of Canada says a poll from CIBC Asset Management The poll results also show that nearly half of investors surveyed 44 per cent say their main objective is long term growth which underscores the need to diversify their portfolios Key findings show 68 per cent of Canadians plan to invest mainly in Canada and 59 per cent of Canadians plan to invest primarily in GICs or other guaranteed investments savings accounts bonds or bond funds Just 35 per cent plan to invest mainly in stocks or equity funds and nearly half 48 per cent of Canadians between the ages of 18 and 34 plan to invest in global equities or mutual funds with that number declining sharply to 30 per cent for those between the ages of 35 and44 a demographic that is typically in their primary wealth building years ETF Assets Fall In January In January 2014 global ETF ETP assets fell by 3 2 per cent to 2 32 trillion based on negative market performance and net outflows of 7 6 billion say preliminary findings from ETFGI s January 2014 Global ETF and ETP industry insights report Concerns about economic uncertainty and unrest in emerging markets a fear that U S stocks are overbought and uncertainty over the impact of Fed tapering caused investors to take money from ETFs ETPs says Deborah Fuhr managing partner

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-03-07 (2016-04-26)
    Open archived version from archive

  • Private Wealth Canada News
    pan Canadian harmonization has remained elusive The authors recommend relaunching a national process aimed at achieving a pan Canadian system in which corporations need only register once to do business across the country February 24 2014 Affluent Consumers Curb Luxury Spending Affluent consumer confidence was up slightly in January says the Unity Marketing Consumption Index But affluent consumers show more inclination to save and invest in the next 12 months than they do to spend more on luxury high end products Only 22 per cent of the over 1 300 luxury consumers surveyed expect to spend more on luxury or high end goods and services in 2014 says Pam Danziger president of Unity Marketing At the start of 2011 28 per cent expected to spend more on luxury products in the coming year while at the start of 2012 26 per cent expected to spend more These number mean 2014 is shaping up to be challenging for companies and brands that target the affluent heavy lifting shoppers those who make up only 20 per cent of U S households but account for more than 40 per cent of total consumer spending says Danziger BMW Sales Growth Continues The BMW Group s sales growth of last year continued in January 2014 with deliveries increasing by 7 8 per cent In the first month of the year a total of 132 892 BMW MINI and Rolls Royce brand vehicles were delivered to customers compared to 123 302 the previous year This is a positive start building on last year s success says Ian Robertson member of the board of management of BMW AG sales and marketing The BMW 5 Series was a significant growth driver and the BMW 6 Series Gran Coupé saw high demand Sales of the MINI Clubman increased 18 9 per cent and the MINI Countryman continues to be in strong demand The new MINI model is expected to bring further momentum to sales as of spring Mutual Funds Reach 1 Trillion Canadians have accumulated savings of 1 trillion in mutual funds marking the first time in their 82 year history in Canada that funds have topped this significant milestone says the Investment Funds Institute of Canada IFIC Assets under management AUM for the mutual funds industry reached 1 01 trillion as of January 31 an increase of 140 1 billion or 16 1 per cent over the previous 12 months The importance of this milestone is the increase in wealth it represents for the roughly 4 6 million Canadian households that choose to save for their financial goals through mutual funds says Joanne De Laurentiis president and CEO of IFIC Mutual funds have grown tenfold in value since 1990 and are a cornerstone of Canadians retirement savings Large Cap Managers Post Strong Numbers Large cap managers in Canada posted their strongest benchmark relative performance in 12 years in 2013 says the Russell Investments Active Manager Report The median return for the year was 19 1 per cent more than six per cent ahead of the S P TSX Composite Index s return of 13 per cent Using annual returns 94 per cent of large cap managers beat the benchmark in 2013 compared to 76 per cent in 2012 This was the highest percentage since Russell began to closely track the data in 2000 The strong environment for large cap managers in Canada was not a surprise last year says Kathleen Wylie head of Canadian equity research at Russell Investments because active managers beat the benchmark in every quarter In fact they have outperformed the benchmark for five consecutive quarters which we have not experienced since 2001 Sub styles Play Significant Role While investors embrace concepts of growth and value as dominant influences of large capitalization equity management Ruo Tan president of Segal Rogerscasey Canada says sub styles also play a significant role in determining an investors outcome Using data for a 10 year period it found that not only do growth and value rotate over time but the sub styles also alternate In some cases these differences are quite stark The take away here says Tan is that investors should be keenly aware that simply owning growth or value in active portfolios only tells part of the story While sub styles tend to move with other similar styles some substantial differences occur along the way This certainly would seem to argue for having a program that is diversified across styles and sub styles and rebalancing regularly he says Canadians Stick To Canada Only 32 per cent of Canadians who hold stocks in their retirement portfolios plan to invest in markets outside of Canada says a poll from CIBC Asset Management The poll results also show that nearly half of investors surveyed 44 per cent say their main objective is long term growth which underscores the need to diversify their portfolios Key findings show 68 per cent of Canadians plan to invest mainly in Canada and 59 per cent of Canadians plan to invest primarily in GICs or other guaranteed investments savings accounts bonds or bond funds Just 35 per cent plan to invest mainly in stocks or equity funds and nearly half 48 per cent of Canadians between the ages of 18 and 34 plan to invest in global equities or mutual funds with that number declining sharply to 30 per cent for those between the ages of 35 and44 a demographic that is typically in their primary wealth building years ETF Assets Fall In January In January 2014 global ETF ETP assets fell by 3 2 per cent to 2 32 trillion based on negative market performance and net outflows of 7 6 billion say preliminary findings from ETFGI s January 2014 Global ETF and ETP industry insights report Concerns about economic uncertainty and unrest in emerging markets a fear that U S stocks are overbought and uncertainty over the impact of Fed tapering caused investors to take money from ETFs ETPs says Deborah Fuhr managing partner

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-03-08 (2016-04-26)
    Open archived version from archive

  • Private Wealth Canada News
    risk low Volatility is likely to remain high and could be exacerbated by fund flows She suggested investors should go global increase credit exposure adopt absolute return and shorten TIPS duration Global GDP To Pick Up Less fiscal drag in the U S a return to modest growth in Europe and a stabilizing Chinese growth rate all point to a notable pick up in global GDP in 2014 which should also give a small boost to Canada s outlook says Douglas Porter chief economist at BMO In the article Global Economic Outlook 2014 Brave Old World he says 2013 saw major equity markets thrive even as the global economy and many other financial markets muddled through another sub par year Those roles may reverse in 2014 as conditions appear to be falling neatly into place for a marked improvement in global growth in the year ahead with the U S in the lead U S GDP growth is expected to find a higher gear in 2014 accelerating from 1 9 per cent last year to 2 9 per cent European economic growth is also expected to improve After two years of recession the Eurozone has returned to growth and is putting the worst of its crisis into the rear view mirror For financial markets 2014 may prove to be more challenging with the Fed tapering bond yields expected to rise another 50 to 75 bps and stocks having skated through the past two years without a full blown correction Advisors Expect Torrid Pace To Continue Canadian investment advisors expect stocks to continue their torrid pace in the first quarter of 2014 but are bearish on every other asset class says the Q1 2014 Advisor Sentiment Survey by Horizons ETFs Management Canada Inc Collectively advisors were bullish on only six of the 15 asset classes surveyed all of which were equity indices Nearly three quarters of Canadian advisors 74 per cent are bullish on the S P TSX 60 Index which saw bullish sentiment increase from 68 per cent in the previous survey Canadian stocks generated a 6 94 per cent return last quarter The same bullish sentiment 74 per cent was observed on the S P 500 Index as well after an approximately 10 per cent return in the fourth quarter of 2013 Bullish sentiment on the NASDAQ 100 Index is at 75 per cent after a fourth quarter return 2013 return of 11 62 per cent Paper Looks At Commodity Prices Commodity prices exhibit longer bear phases compared to bull phases whereas the opposite is true for individual stocks says the 2014 Canadian Investment Research Award winning paper Bull and Bear Markets in Commodity Prices and Commodity Stocks Is There a Relation was submitted by Christos Ntantamis of the department of economics at Mount Allison University and Jun Zhou of the Rowe School of Business at Dalhousie University The motivation for the paper came after observing significant buzz in the mainstream media that questioned the performance of commodity stocks in view of increasing commodity prices say the authors They checked the academic literature to find results on how prices of commodities such as oil and gold affect stock prices of firms engaged in their production and found mixed results So instead of focusing on the direct relation between prices they investigated the relationship between the bull and bear markets of commodity prices and commodity stocks The paper also shows there is little evidence that the markets identified for the individual stocks are related to those for the commodity prices and commodity market phases tend to have longer durations compared to stock prices The award is sponsored by CFA Society Toronto and Hillsdale Investment Management Investors Must Remain Vigilant Returns from fixed income will come if investors remain vigilant in this low interest environment says Christine Horoyski senior vice president and portfolio manager fixed income Aurion Capital Management In the session Active Fixed Income Management Extracting Value in a Low Interest Rate Environment at the Strategy Institute s 11th Annual Foundation Endowment Not For Profit Investment Summit she said yields will not rise significantly this year so investors need to look for ways to add value and manage risk The outlook last year was to be careful This year she said they are cautious but the environment is starting to improve To add return investors need to seek value added opportunities and maintain control over the risks in their portfolio One solution is active fixed income management but active fixed income managers need to look different than the index She said this can be done by using active duration management getting paid for risk when credit risk is taken and looking for value added opportunities As well because Canada is so concentrated investors should look south of the border and across the pond where there is lots of opportunity January 27 2014 Growth Strategies Different For Canadian CEOs The PwC Global CEO Survey says that 85 per cent of the CEOs surveyed globally are confident in their revenue growth prospects over the next 12 months However there are some differences between Canadian CEOs and their global peers when it comes to growth strategies Forty per cent of Canadian CEOs see their main opportunity for growth coming through new joint ventures strategic alliances or mergers and acquisitions compared to just 20 per cent of CEOs globally To this end 58 per cent of Canadian CEOs entered into a new strategic alliance or joint venture over the past year and 67 per cent plan to do so within the next 12 months In both cases Canada sits well above the global average 34 per cent and 44 per cent respectively Seventy per cent of Canadian CEOs see the U S as the most critical country to their growth prospects over the next year well ahead of the UK China and Australia Global results show a very different picture with China the U S Germany and Brazil identified as the top countries What we re seeing is that CEOs worldwide have a glass half full approach to their growth prospects While strategies may differ we ve observed a consistent theme in our research that there is appetite to grow despite the higher costs associated with over regulation says Bill McFarland CEO of PwC Canada Opportunities Found Outside Canada Equity markets are in a good position to continue their winning ways through 2014 and by far the best place to reap these rewards is outside Canada says Sadiq S Adatia chief investment officer of Sun Life Global Investments In the article Look Outside Canada For Equity Opportunities at http www privatewealthcanada ca he says investors finally seem to believe in a healthy economy and have welcomed the U S Federal Reserve s plan to taper its economic stimulus program during the course of this year Acura MDX Up For Award The Acura MDX luxury performance SUV is one of three finalists for Canadian Utility Vehicle of the Year by the Automobile Journalists Association of Canada AJAC Already named AJAC s Best New SUV over 60 000 the model offers comfort and quietness dynamic performance fuel economy and advanced safety features The Acura MDX helped to create the luxury SUV segment and we re thrilled to see AJAC recognize its continued segment leadership by choosing it as a finalist for Canadian Utility Vehicle of the Year says Dave Gardner vice president of sales and marketing Honda Canada The award winners will be announced in February at the Canadian International Auto Show in Toronto ON Investors Unaware Of Rate Hike Impact Almost 60 per cent of Canadians with a retirement portfolio are unaware that rising interest rates can erode the value of some of their investments says a poll from CIBC Asset Management And those investors closest to retirement between the ages of 55 and 64 are particularly in the dark with 65 per cent unaware of the impact of rising rates Rising rates can negatively impact investors who own bonds or fixed income securities because when interest rates rise bond prices fall An extended period of falling interest rates and a flight to safety from equity market volatility has resulted in many Canadians investors loading up on bonds in recent years But most experts agree that this era of record low interest rates has reached an end Nobody knows exactly when and how fast interest rates will rise but Canadians need to understand the risk this poses to their retirement funds and plans says Steve Geist president of CIBC Asset Management Inc Canadians understand the impact that rising rates have on household expenses such as mortgages and loans But it s equally important for Canadians especially those approaching retirement and preparing to draw income from their portfolios to be aware of the impact that rising rates can have on their investments Sideways Market Has Year To Go There is at least one year for go before the current sideways market ends says Kim Shannon president and CIO at Sionna Investment Managers She told the What Market History Suggests Canada Well positioned in a Sideways Market session at the CPBI Pension Summit that this could be good news for Canada Markets have two speeds she said bull markets and sideways markets Sideways markets usually last 15 years and are a period when the excess is taken out of the markets When P Es drop to single digits they are usually followed by a bull market which is good for equities However when equities are in a sideways market commodities generally perform well Since the current sideways market may only have one to four years to run the prospects for commodities are good news for the Canadian economy she said Normalization Needed To Sustain Current Cycle Normalization of monetary policy is necessary to sustain the current cycle of economic growth says Joseph G Carson senior vice president and director of global economic research at AllianceBernstein Speaking at its Global Economic Outlook and the Changing Structure of Business Cycles over the Post War Period session he said with forecasts of five per cent growth in the U S it makes no sense for the central bank to keep the interest rate at zero In fact from a risk management standpoint increasing the interest rate would provide some measure of flexibility to fight future economic downturns As well a modest increase in interest rates won t kill the cycle it would make it more sustainable he said Overall he said economists are more optimistic entering the sixth year of economic expansion which started in 2009 However until recently leadership in the recovery was coming from emerging markets Now the U S and Japan are starting to show leadership Global Prospects Make Investors Optimistic Investors have started 2014 more optimistic about global growth prospects especially for the U S but increasingly for Europe as well says the BofA Merrill Lynch Fund Manager Survey for January The proportion of investors who believe the global economy will strengthen this year has risen to a net 75 per cent from a net 71 per cent in December continuing a trend of rising optimism that started in late 2012 This optimism is reflected in rising expectations for corporate profits with a net 48 per cent looking for an improvement up from a net 41 per cent in December Among the regions a net 29 per cent of investors choose both the U S and Japan with the most favourable prospects for profits Europe has improved to a net eight per cent expecting profit improvement from a net four per cent expecting deterioration in the December survey As investors growth convictions rise investors preference for global equities remains strong A net 55 per cent say they re overweight equities continuing a trend which started in mid 2012 when a net four per cent were underweight equities Pay Model Leads To Excess Some 72 per cent of institutional investors believe the U S executive pay model has led to excessive CEO compensation levels almost four times the 20 per cent of corporate directors holding such a view says a joint survey by Towers Watson and Alliance Advisors Only 34 per cent of responding institutional investors say the executive pay model at most companies is closely linked to company strategy compared to 70 per cent of responding directors Institutional investors and corporate directors also displayed sharp differences on the influence of say on pay voting on executive compensation Some 63 per cent of institutional investors believe say on pay votes have been a key driver of pay decisions by boards compared with only 26 per cent of responding directors However only 41 per cent of investors in contrast to 72 per cent of directors believe say on pay voting has affirmed the alignment of executive pay and company performance January 20 2014 High net Worth Need More In Retirement High net worth Canadians those with investible assets of 1 million or more require on average 2 3 million to be able to live out their ideal retirement lifestyle says a study by BMO Harris Private Banking This amount is two and half times more than the 908 000 average that Canadians as a whole irrespective of income level identified as the optimal amount required for retirement It found that the vast majority of high net worth Canadians are upbeat about saving for retirement with 95 per cent stating that they are confident about their ability to achieve their ideal retirement lifestyle versus 69 per cent of Canadians overall This optimism should not come as too much of a surprise given that the study also found that 86 per cent of high net worth Canadians say they are quite comfortable with their current savings and investment plan Further 70 per cent expect stocks to generate the most solid returns over the next five years well ahead of real estate 39 per cent bonds 24 per cent and cash 19 per cent Self managing Wealth Requires Consideration Making the decision to become a self directed investor is a question of whether managing your own wealth can make your life better and help you achieve your financial goals says Robert Stammers in Will Self directed Investing Simplify Your Life If you feel you have the required knowledge and experience to make complex financial decisions and plans for your wealth after you pass then you may be well placed to take the reins of your financial future he says However financial astuteness is only one part of the puzzle and Stammers offers up some points to consider before striking out on your own Read more Wealthy Hold Riches In Property Globally almost 200 000 ultra high net worth UHNW individuals hold a fifth of their wealth in property estimated at 5 328 billion says a report by Savills an international real estate advisor in association with Wealth X Europe s super rich hold the biggest share of all privately owned real estate assets followed by Asians Rich people in Europe hold 31 per cent of their wealth in real estate assets worth 2 391 billion followed by Asia 27 per cent at 1 800 billion and the Middle East 26 per cent at 880 billion Global real estate is mostly residential and held by occupiers but private owners are becoming more important in the world of traded investable property says Yolande Barnes head of Savills world research Porsche To Premiere 911 Targa The North American International Auto Show NAIAS in Detroit MI will see the world premiere of the Porsche 911 Targa This model is the first to combine the classic Targa concept with state of the art roof technology Just like the legendary original Targa model the new model features the characteristic wide bar in place of the B pillars a movable roof section above the front seats and a wraparound rear window with no C pillar But unlike the classic models the roof segment on the new Targa can be opened and closed at the push of a button When the button is actuated the fully automatic roof system stows the convertible top behind the rear seat system The combination of the wide rear end that is typical of all wheel drive models the Targa bar and the dome shaped rear window gives the latest 911 an extremely sporty appearance and a low slung profile It is powered by a 3 4 litre 350 hp 257 kW flat engine and is equipped with the Porsche Doppelkupplung PDK and Sport Chrono package It accelerates from zero to 100 km h in just 4 8 seconds and boasts a top speed of 282 km h Modest Growth Ahead For Canada Canada s top economists strategists and portfolio managers predict modest growth for both Canada and the United States with Canada lagging the U S in both economic activity and job creation over the next few years says the Annual Survey of Economic Expectations by Towers Watson Global growth is expected to improve but remain relatively subdued leading to continued low interest rates in most countries for at least another year In addition despite rising long term interest rates economic activity in Canada remains fragile and reliant on improvement in the United States and Europe and continuing strength in China In the near term survey respondents expect Canadian GDP growth to remain around two per cent rising to 2 4 per cent over the longer term Crestpoint Acquires Properties Crestpoint Real Estate Investments Ltd has acquired five properties in Toronto ON Vancouver BC and Montreal QC Together with other acquisitions completed in 2013 the value of its real estate portfolio has doubled in size to approximately 600 million over the past 12 months During 2013 its portfolio retail industrial and office properties located throughout Canada grew to a total of 3 5 million square feet of commercial space It says demand for exposure to high quality commercial real estate from institutional and

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-02-05 (2016-04-26)
    Open archived version from archive

  • Private Wealth Canada News
    risk low Volatility is likely to remain high and could be exacerbated by fund flows She suggested investors should go global increase credit exposure adopt absolute return and shorten TIPS duration Global GDP To Pick Up Less fiscal drag in the U S a return to modest growth in Europe and a stabilizing Chinese growth rate all point to a notable pick up in global GDP in 2014 which should also give a small boost to Canada s outlook says Douglas Porter chief economist at BMO In the article Global Economic Outlook 2014 Brave Old World he says 2013 saw major equity markets thrive even as the global economy and many other financial markets muddled through another sub par year Those roles may reverse in 2014 as conditions appear to be falling neatly into place for a marked improvement in global growth in the year ahead with the U S in the lead U S GDP growth is expected to find a higher gear in 2014 accelerating from 1 9 per cent last year to 2 9 per cent European economic growth is also expected to improve After two years of recession the Eurozone has returned to growth and is putting the worst of its crisis into the rear view mirror For financial markets 2014 may prove to be more challenging with the Fed tapering bond yields expected to rise another 50 to 75 bps and stocks having skated through the past two years without a full blown correction Advisors Expect Torrid Pace To Continue Canadian investment advisors expect stocks to continue their torrid pace in the first quarter of 2014 but are bearish on every other asset class says the Q1 2014 Advisor Sentiment Survey by Horizons ETFs Management Canada Inc Collectively advisors were bullish on only six of the 15 asset classes surveyed all of which were equity indices Nearly three quarters of Canadian advisors 74 per cent are bullish on the S P TSX 60 Index which saw bullish sentiment increase from 68 per cent in the previous survey Canadian stocks generated a 6 94 per cent return last quarter The same bullish sentiment 74 per cent was observed on the S P 500 Index as well after an approximately 10 per cent return in the fourth quarter of 2013 Bullish sentiment on the NASDAQ 100 Index is at 75 per cent after a fourth quarter return 2013 return of 11 62 per cent Paper Looks At Commodity Prices Commodity prices exhibit longer bear phases compared to bull phases whereas the opposite is true for individual stocks says the 2014 Canadian Investment Research Award winning paper Bull and Bear Markets in Commodity Prices and Commodity Stocks Is There a Relation was submitted by Christos Ntantamis of the department of economics at Mount Allison University and Jun Zhou of the Rowe School of Business at Dalhousie University The motivation for the paper came after observing significant buzz in the mainstream media that questioned the performance of commodity stocks in view of increasing commodity prices say the authors They checked the academic literature to find results on how prices of commodities such as oil and gold affect stock prices of firms engaged in their production and found mixed results So instead of focusing on the direct relation between prices they investigated the relationship between the bull and bear markets of commodity prices and commodity stocks The paper also shows there is little evidence that the markets identified for the individual stocks are related to those for the commodity prices and commodity market phases tend to have longer durations compared to stock prices The award is sponsored by CFA Society Toronto and Hillsdale Investment Management Investors Must Remain Vigilant Returns from fixed income will come if investors remain vigilant in this low interest environment says Christine Horoyski senior vice president and portfolio manager fixed income Aurion Capital Management In the session Active Fixed Income Management Extracting Value in a Low Interest Rate Environment at the Strategy Institute s 11th Annual Foundation Endowment Not For Profit Investment Summit she said yields will not rise significantly this year so investors need to look for ways to add value and manage risk The outlook last year was to be careful This year she said they are cautious but the environment is starting to improve To add return investors need to seek value added opportunities and maintain control over the risks in their portfolio One solution is active fixed income management but active fixed income managers need to look different than the index She said this can be done by using active duration management getting paid for risk when credit risk is taken and looking for value added opportunities As well because Canada is so concentrated investors should look south of the border and across the pond where there is lots of opportunity January 27 2014 Growth Strategies Different For Canadian CEOs The PwC Global CEO Survey says that 85 per cent of the CEOs surveyed globally are confident in their revenue growth prospects over the next 12 months However there are some differences between Canadian CEOs and their global peers when it comes to growth strategies Forty per cent of Canadian CEOs see their main opportunity for growth coming through new joint ventures strategic alliances or mergers and acquisitions compared to just 20 per cent of CEOs globally To this end 58 per cent of Canadian CEOs entered into a new strategic alliance or joint venture over the past year and 67 per cent plan to do so within the next 12 months In both cases Canada sits well above the global average 34 per cent and 44 per cent respectively Seventy per cent of Canadian CEOs see the U S as the most critical country to their growth prospects over the next year well ahead of the UK China and Australia Global results show a very different picture with China the U S Germany and Brazil identified as the top countries What we re seeing is that CEOs worldwide have a glass half full approach to their growth prospects While strategies may differ we ve observed a consistent theme in our research that there is appetite to grow despite the higher costs associated with over regulation says Bill McFarland CEO of PwC Canada Opportunities Found Outside Canada Equity markets are in a good position to continue their winning ways through 2014 and by far the best place to reap these rewards is outside Canada says Sadiq S Adatia chief investment officer of Sun Life Global Investments In the article Look Outside Canada For Equity Opportunities at http www privatewealthcanada ca he says investors finally seem to believe in a healthy economy and have welcomed the U S Federal Reserve s plan to taper its economic stimulus program during the course of this year Acura MDX Up For Award The Acura MDX luxury performance SUV is one of three finalists for Canadian Utility Vehicle of the Year by the Automobile Journalists Association of Canada AJAC Already named AJAC s Best New SUV over 60 000 the model offers comfort and quietness dynamic performance fuel economy and advanced safety features The Acura MDX helped to create the luxury SUV segment and we re thrilled to see AJAC recognize its continued segment leadership by choosing it as a finalist for Canadian Utility Vehicle of the Year says Dave Gardner vice president of sales and marketing Honda Canada The award winners will be announced in February at the Canadian International Auto Show in Toronto ON Investors Unaware Of Rate Hike Impact Almost 60 per cent of Canadians with a retirement portfolio are unaware that rising interest rates can erode the value of some of their investments says a poll from CIBC Asset Management And those investors closest to retirement between the ages of 55 and 64 are particularly in the dark with 65 per cent unaware of the impact of rising rates Rising rates can negatively impact investors who own bonds or fixed income securities because when interest rates rise bond prices fall An extended period of falling interest rates and a flight to safety from equity market volatility has resulted in many Canadians investors loading up on bonds in recent years But most experts agree that this era of record low interest rates has reached an end Nobody knows exactly when and how fast interest rates will rise but Canadians need to understand the risk this poses to their retirement funds and plans says Steve Geist president of CIBC Asset Management Inc Canadians understand the impact that rising rates have on household expenses such as mortgages and loans But it s equally important for Canadians especially those approaching retirement and preparing to draw income from their portfolios to be aware of the impact that rising rates can have on their investments Sideways Market Has Year To Go There is at least one year for go before the current sideways market ends says Kim Shannon president and CIO at Sionna Investment Managers She told the What Market History Suggests Canada Well positioned in a Sideways Market session at the CPBI Pension Summit that this could be good news for Canada Markets have two speeds she said bull markets and sideways markets Sideways markets usually last 15 years and are a period when the excess is taken out of the markets When P Es drop to single digits they are usually followed by a bull market which is good for equities However when equities are in a sideways market commodities generally perform well Since the current sideways market may only have one to four years to run the prospects for commodities are good news for the Canadian economy she said Normalization Needed To Sustain Current Cycle Normalization of monetary policy is necessary to sustain the current cycle of economic growth says Joseph G Carson senior vice president and director of global economic research at AllianceBernstein Speaking at its Global Economic Outlook and the Changing Structure of Business Cycles over the Post War Period session he said with forecasts of five per cent growth in the U S it makes no sense for the central bank to keep the interest rate at zero In fact from a risk management standpoint increasing the interest rate would provide some measure of flexibility to fight future economic downturns As well a modest increase in interest rates won t kill the cycle it would make it more sustainable he said Overall he said economists are more optimistic entering the sixth year of economic expansion which started in 2009 However until recently leadership in the recovery was coming from emerging markets Now the U S and Japan are starting to show leadership Global Prospects Make Investors Optimistic Investors have started 2014 more optimistic about global growth prospects especially for the U S but increasingly for Europe as well says the BofA Merrill Lynch Fund Manager Survey for January The proportion of investors who believe the global economy will strengthen this year has risen to a net 75 per cent from a net 71 per cent in December continuing a trend of rising optimism that started in late 2012 This optimism is reflected in rising expectations for corporate profits with a net 48 per cent looking for an improvement up from a net 41 per cent in December Among the regions a net 29 per cent of investors choose both the U S and Japan with the most favourable prospects for profits Europe has improved to a net eight per cent expecting profit improvement from a net four per cent expecting deterioration in the December survey As investors growth convictions rise investors preference for global equities remains strong A net 55 per cent say they re overweight equities continuing a trend which started in mid 2012 when a net four per cent were underweight equities Pay Model Leads To Excess Some 72 per cent of institutional investors believe the U S executive pay model has led to excessive CEO compensation levels almost four times the 20 per cent of corporate directors holding such a view says a joint survey by Towers Watson and Alliance Advisors Only 34 per cent of responding institutional investors say the executive pay model at most companies is closely linked to company strategy compared to 70 per cent of responding directors Institutional investors and corporate directors also displayed sharp differences on the influence of say on pay voting on executive compensation Some 63 per cent of institutional investors believe say on pay votes have been a key driver of pay decisions by boards compared with only 26 per cent of responding directors However only 41 per cent of investors in contrast to 72 per cent of directors believe say on pay voting has affirmed the alignment of executive pay and company performance January 20 2014 High net Worth Need More In Retirement High net worth Canadians those with investible assets of 1 million or more require on average 2 3 million to be able to live out their ideal retirement lifestyle says a study by BMO Harris Private Banking This amount is two and half times more than the 908 000 average that Canadians as a whole irrespective of income level identified as the optimal amount required for retirement It found that the vast majority of high net worth Canadians are upbeat about saving for retirement with 95 per cent stating that they are confident about their ability to achieve their ideal retirement lifestyle versus 69 per cent of Canadians overall This optimism should not come as too much of a surprise given that the study also found that 86 per cent of high net worth Canadians say they are quite comfortable with their current savings and investment plan Further 70 per cent expect stocks to generate the most solid returns over the next five years well ahead of real estate 39 per cent bonds 24 per cent and cash 19 per cent Self managing Wealth Requires Consideration Making the decision to become a self directed investor is a question of whether managing your own wealth can make your life better and help you achieve your financial goals says Robert Stammers in Will Self directed Investing Simplify Your Life If you feel you have the required knowledge and experience to make complex financial decisions and plans for your wealth after you pass then you may be well placed to take the reins of your financial future he says However financial astuteness is only one part of the puzzle and Stammers offers up some points to consider before striking out on your own Read more Wealthy Hold Riches In Property Globally almost 200 000 ultra high net worth UHNW individuals hold a fifth of their wealth in property estimated at 5 328 billion says a report by Savills an international real estate advisor in association with Wealth X Europe s super rich hold the biggest share of all privately owned real estate assets followed by Asians Rich people in Europe hold 31 per cent of their wealth in real estate assets worth 2 391 billion followed by Asia 27 per cent at 1 800 billion and the Middle East 26 per cent at 880 billion Global real estate is mostly residential and held by occupiers but private owners are becoming more important in the world of traded investable property says Yolande Barnes head of Savills world research Porsche To Premiere 911 Targa The North American International Auto Show NAIAS in Detroit MI will see the world premiere of the Porsche 911 Targa This model is the first to combine the classic Targa concept with state of the art roof technology Just like the legendary original Targa model the new model features the characteristic wide bar in place of the B pillars a movable roof section above the front seats and a wraparound rear window with no C pillar But unlike the classic models the roof segment on the new Targa can be opened and closed at the push of a button When the button is actuated the fully automatic roof system stows the convertible top behind the rear seat system The combination of the wide rear end that is typical of all wheel drive models the Targa bar and the dome shaped rear window gives the latest 911 an extremely sporty appearance and a low slung profile It is powered by a 3 4 litre 350 hp 257 kW flat engine and is equipped with the Porsche Doppelkupplung PDK and Sport Chrono package It accelerates from zero to 100 km h in just 4 8 seconds and boasts a top speed of 282 km h Modest Growth Ahead For Canada Canada s top economists strategists and portfolio managers predict modest growth for both Canada and the United States with Canada lagging the U S in both economic activity and job creation over the next few years says the Annual Survey of Economic Expectations by Towers Watson Global growth is expected to improve but remain relatively subdued leading to continued low interest rates in most countries for at least another year In addition despite rising long term interest rates economic activity in Canada remains fragile and reliant on improvement in the United States and Europe and continuing strength in China In the near term survey respondents expect Canadian GDP growth to remain around two per cent rising to 2 4 per cent over the longer term Crestpoint Acquires Properties Crestpoint Real Estate Investments Ltd has acquired five properties in Toronto ON Vancouver BC and Montreal QC Together with other acquisitions completed in 2013 the value of its real estate portfolio has doubled in size to approximately 600 million over the past 12 months During 2013 its portfolio retail industrial and office properties located throughout Canada grew to a total of 3 5 million square feet of commercial space It says demand for exposure to high quality commercial real estate from institutional and

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-02-06 (2016-04-26)
    Open archived version from archive

  • Private Wealth Canada News
    While fundraising throughout 2013 has seen notable growth and there has been an increase in the number and value of exits deal volume has stayed relatively flat for three consecutive years The aggregate value of buyout investments globally totalled 264 4 billion in 2011 263 8 billion in 2012 and 265 8 billion provoking concerns about the ability of private equity firms to deploy all the capital they have raised from investors Current total private equity dry powder stood at 1 074 billion as of December 17 compared to a previous high of 1 067 billion witnessed at the end of 2008 Aggregate global private equity dry powder has seen a 14 per cent increase over the past year alone Over nine per cent of current dry powder is attributed to funds with vintages prior to 2008 Based on an industry average five year investment period this capital should theoretically have already been invested and may expire unless investors grant these funds investment period extensions Small Business In Glum Mood Small businesses in Canada ended 2013 in a glum mood says the Canadian Federation of Independent Business Business Barometer Index The index that tracks small business confidence recorded the biggest one month decline in almost 2 years likely due to retailers worrying about holiday sales and firms fretting about higher taxes and other costs It fell 3 6 points in December to 62 3 the lowest level since June The magnitude of decline was the largest since a 6 6 point drop between July and August 2011 Sentiment was particularly sour in the retail sector where the index dropped almost seven points to 60 Generally businesses are concerned about higher taxes and other costs Some 64 per cent of small business owners cited taxes and costs of complying with government regulation as a major constraint The figure has crept up as businesses fear provincial governments will attempt to balance their books by hiking taxes instead of cutting spending December 23 2013 Most Companies To Keep Bonuses The Same Financial executives don t anticipate bonus levels will differ much this year compared to 2012 says a survey by Robert Half Further at companies where bonuses will change they are more likely to fall than rise Only eight per cent of chief financial officers CFOs at firms that offer bonuses said their bonus levels in 2013 will increase over last year compared to a slightly higher 12 per cent of respondents who expect a decline Sixty two per cent of executives foresee no changes Changes to bonus levels are projected to vary by industry Manufacturing the sector with the largest percentage of CFOs has 33 per cent expecting to pay lower bonuses Whereas workers in wholesale and transportation are likely to receive bigger bonuses with 17 and 14 per cent of CFOs in those sectors respectively anticipating increases this year Twelve Tips For Tax Planning While many Canadians may be aware of the importance of year end tax planning there are some equally important deadlines for implementing tax saving strategies that may only be available in January and February That s why we encourage individuals and business owners to take advantage of some downtime they may have over the holidays to consider some important tax planning strategies says Tony Maiorino vice president and head wealth management services at RBC Wealth Management RBC offers The 12 Tips of Tax Planning as a guide which offers tips for both individuals and businesses For individuals the tips include such things as RRSP and TFSA contributions family income splitting loans labour sponsored investment funds and home buyers plan withdrawals For businesses tips include paying oneself a bonus and the sale of private business shares Read more Canada Can Expect Growth Canadian economic growth is expected to improve in 2014 relative to the lacklustre pace of 2013 says Russell Investments 2014 Global Annual Outlook However the outlook is less optimistic about the impact a strengthening U S economy may have on domestic fundamentals in the coming year While a forecasted U S growth rate of 2 9 per cent would naturally lead to a more positive outlook for the Canadian economy trends such as U S onshoring of higher end manufacturing and greater energy independence will weigh on momentum on this side of the border says Shailesh Kshatriya associate director with the Canadian strategy group at Russell Investments Canada Loyalty Rewards Lack Support While investors corporations fund managers academics and other thought leaders broadly agree that short term investment behaviour does have a negative impact on the way companies make key decisions there is little support for the introduction of loyalty rewards loyalty dividends warrants or additional voting rights says a report from Mercer Stikeman Elliott LLP and the Generation Foundation Building a Long Term Shareholder Base Assessing the Potential of Loyalty Driven Securities identified four main obstacles in utilizing loyalty rewards as a means to overcome the root cause of the short term pressures found in the full investment chain They are discrimination between shareholders due to belief in 1 share 1 vote the risk of unintended consequences administrative complexities and uncertainty that loyalty driven securities would incent a significant change in behaviour and address the root causes of short termism To solve the short termism dilemma the report sets out several solutions It says a longer term perspective and focus on economic value creation is only possible if supported by appropriately aligned performance measurement and reward frameworks As well a more constructive relationship between companies and their long horizon investors is required The report is at Loyalty Rewards Dollar Rise Probable There is a reasonable probability that the Canada dollar can rise somewhat from today s levels says RBC Dominion Securities Inc Its Harbour Group Market Notes show the Canadian dollar had been in a broad range for the past three years trending between US 0 95 and US 1 05 but has recently broken through 0 95 to a three year low Longer term it advocates increasing U S dollar exposure U S economic growth looks poised to pick up and U S monetary policy is shifting toward fewer bond purchases while Canadian policy is likely to remain unchanged at best From a risk management perspective a position in U S dollars has historically acted as an effective hedge to equity market volatility Weak Year Looming For Stocks Despite an improving economic outlook BMO Capital Markets is forecasting a weak year ahead for stocks In its outlook for the coming year it says 2013 saw major equity markets thrive even as the global economy and many other financial markets muddled through another sub par year Those roles may reverse in 2014 It only sees U S and Canadian equity markets recording mid single digit gains with the S P 500 reaching 1 900 by the end of 2014 and the TSX hitting 13 575 It says that the markets reaction to the expected tapering in U S monetary policy is likely the biggest risk to the 2014 call with stocks and bonds struggling in recent days as the inevitably of a less generous Fed sets in December 16 2013 Americans Regain Lost Wealth American households have regained almost all of the wealth they lost during the Great Recession thanks to surging stock prices and recovering home values Total household net worth assets minus liabilities expanded 2 6 per cent or 1 9 trillion in the third quarter from the second quarter says a Federal Reserve report It was the eighth straight quarter of increases and brought the net worth for households and non profit organizations to 77 26 trillion at the end of September The biggest contributor to the latest quarterly gain in wealth was the booming stock market Household assets in the form of corporate equities and mutual funds jumped by 917 billion the Fed says The value of residential real estate owned by households also helped to push up net worth with an increase of about 428 billion The resulting improvements in net worth should give a boost to consumer spending People tend to spend more when they see their home and stock values rising Consumer spending accounts for about 70 per cent of American economic activity but it has been tepid during the recovery largely because of slow job growth and weak wage gains Investments Not Gender Influenced When it comes to investing gender differences may be overstated says a report from the Merrill Lynch Wealth Management Institute Its study of 11 500 investors found that while men and women differ in their approach to investment decision making gender is less a determinant of investing success than other social demographic and circumstantial factors It aims to challenge conclusions drawn from research that has found women tend to be more risk averse are less engaged in investment decision making and trade less often Its research found that men and women who have a similar level of financial knowledge share similar risk behavior The greatest differentiating factor among investors is their perceived financial knowledge and women are more likely than men to say they have lower levels of financial knowledge Our research reinforces the importance of concentrating on the unique personal goals of each investor Doing so can identify a deeper understanding of the individual s concerns and priorities which may better align investments to achieve the outcomes the investor desires says Michael Liersch head of behavioural finance for Merrill Lynch Wealth Management Legislation Caps Executive Compensation Ontario s governing Liberals plan to bring in legislation next spring that would allow them to limit compensation to senior executives across the broader public sector from hospitals and universities to the province s big utilities and Crown corporations If the upcoming legislation goes through the government would have direct control over compensation including salary bonuses and severance packages SEI Terminates Funds SEI Investments Canada Company intends to officially terminate five target date funds the 2015 2020 2025 2030 and 2040 funds Unit holders will continue to have the right to redeem their units in the funds prior to the termination date All units not redeemed prior to the termination date will be automatically redeemed at that time Healthcare Drives Investment Planning Worries over healthcare needs have emerged as the second most important driver behind retirement itself of investment planning for Canadians with more than 100 000 in investable assets says a study by Dundee Goodman Private Wealth Among investors under 50 34 per cent identify healthcare as a priority compared to the average of 46 per cent of all respondents However even among this younger group healthcare needs emerge as a significant rationale for investments Among respondents with more than 1 million in investable assets 41 per cent identify healthcare needs as an important investment objective The findings around healthcare were a surprise says John Cucchiella senior vice president and head of retail at Dundee Goodman We thought that priorities like travel and leaving a legacy for kids or charities would be top of mind I think the wealth management industry in Canada may be a bit out of touch with their clients This was definitely an eye opening experience for us Global Growth Expected Rising equity prices are signaling better times ahead for investors but firmer global growth will depend on central banks keeping interest rates steady in 2014 says a report from CIBC World Markets Inc Equity markets are sensing it and this time they re right Global growth should finally surprise on the high side in 2014 says Avery Shenfeld chief economist at CIBC A year of four per cent global growth is hardly spectacular but will be a point faster than 2013 and a half point above the last IMF forecast Typically upside surprises in growth bring higher bond yields But the causation also goes the other way at a still fragile point in the cycle easy monetary policy is a necessary condition for growth to accelerate Central bankers in North America Europe and Japan are each in their own way going to ask markets to give low rates a chance Chinese Hotel Receives Top Award The Peninsula Shanghai has been recognized as the world s top business hotel for the second consecutive year by Travel Leisure magazine The hotel received a score of 97 27 out of 100 The accolade acknowledges the prominent role of the Peninsula Shanghai in promoting hospitality excellence in China which is predicted by the Global Business Travel Association to become the world s largest business travel market by 2016 The hotel s rooms come with VoIP phones portable master control panels and spa tubs with music and light settings Airline Merger Complete The merger of American and US Airways is completed The companies are combining to form a stronger airline with an extensive network greater schedule options and a modern and fuel efficient fleet Despite the merger the two airlines will continue to function separately for quite some time and very few changes will happen immediately Beginning in early January the airlines will announce new benefits such as the ability to earn and redeem miles on both carriers and reciprocal lounge access There is no impact to any existing reservations people may have with American Airlines or US Airways and any earned mileage balance or elite status in either frequent flyer program will remain Small Business Owners Risk Too Much Tax Small business owners risk paying too much in income tax by making the wrong decision on whether to withdraw funds from their corporations as salary bonus or as dividends says Jamie Golombek a tax and estate planning expert at CIBC Each year small business owners who run their businesses through corporations can choose to receive compensation from their corporations as either salary or dividends This year changes such as increases in the highest personal marginal tax rates in several provinces and modifications to taxation of dividends will significantly impact the compensation decision he says Paying dividends is generally the best option for SBD Income which is income up to the small business deduction limit of 500 000 in most provinces due to the tax rate advantage in most provinces which ranges from 0 56 per cent to 4 54 per cent in 2013 For ABI which is active business income above the small business deduction limit paying salary is generally a better option due to the 2013 tax rate disadvantage in most provinces ranging from 0 47 per cent to 5 88 per cent For small business owners who don t need to withdraw funds in 2013 it can pay to defer dividends to a future year says Golombek However while paying dividends may be advantageous in many cases distributing corporate income as salary rather than dividends creates earned income that allows small business owners to contribute to an RRSP Taxation rules for businesses are quite complex and can change regularly says Golombek Business owners should consult with a tax professional and a financial advisor for a complete analysis of all factors in the compensation decision December 9 2013 Private Equity Rates Well Canadian business owners are often unaware of private equity until they stumble across it while searching for new investment for their firms says The Private Equity Experience of Canadian Business a Conference Board of Canada report Although there are some pitfalls private equity rated well with company owners once they succeeded in tapping into this source of capital The report also indicated that owners and senior managers of portfolios gave high scores in terms of the overall experience they had with private equity and that private equity made two main contributions strategic focus and finance It can also be a good fit as a source of investment capital for family owned firms Private equity is a specialized form of investment and currently amounts to just a fraction of the overall Canadian equity market These investments are distinguished by their relatively high risk and long term typically seven to 10 years investment horizon Index Measures Advisor Confidence Advocis The Financial Advisors Association of Canada and Western University have developed an industry benchmark to measure advisor confidence across Canada Based on the views and sentiments of financial advisors the Advocis Financial Advisors Index FAI will measure advisor confidence which is defined as the degree of optimism about the state of the economy expressed by advisors and their clients through their savings investing and risk protection activities Over time the goal is to identify the attributes of advisor confidence that provide a lead indicator for economic capital market asset management and risk management activity Business Airfare Costs Declining As a result of budget airlines expanding their U S Canada transborder networks significant declines in transborder fares are anticipated next year for both the U S and Canada says the global Business Travel Forecast by American Express The forecast indicates that low cost carriers are expected to introduce premium economy offerings that will likely provide more travelers with an alternative to business class travel and together with the increase in international capacity is expected to contribute to lowering prices Conversely travel costs in the ground transportation and hotel sectors are expected to rise Prices are anticipated to climb in the ground transportation sector due to rising fleet costs and consolidation Hotel sector costs are also expected to increase With the potential for travel costs to reach into the hundreds of millions of dollars for many companies next year it s more important than ever for companies to adequately plan and manage their travel investments says Colin Temple vice president and general manager of global business travel at American Express Canada Formulating an efficient and effective program that aligns with senior leadership can help achieve business priorities to not only help facilitate discussion but help shift thinking from travel as an expense line item to travel as an investment S Class Wins Prestige Car Award The 2014 Mercedes Benz S Class has been named the Best

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2014-01-06 (2016-04-26)
    Open archived version from archive



  •