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  • Private Wealth Canada News
    September 4 2012 Mercedes B Class Combines Power and Safety Mercedes Benz Canada 2013 B Class will arrive in dealerships across Canada in November Starting at 29 900 the 2013 B 250 features a more powerful yet extremely fuel efficient 4 cylinder turbo engine advanced safety systems and an array of standard equipment The vehicle will be powered by a 2 0 litre 4 cylinder turbo engine that produces 208 horsepower and 258 lb ft of torque representing a 55 per cent gain over the previous generation B 200 engine It also offers an extremely compact and variable 7G DCT dual clutch transmission that combines the comfort of an automatic with the efficiency of a manual transmission Substantial fuel savings have been achieved through the addition of the ECO start stop function In safety features collision prevention assist is a radar based collision warning system that can identify the threat of a rear end collision Other standard safety equipment includes 11 airbags adaptive brake assist with hold function attention assist and run flat tires Russell Offers Short term Income Pool Russell Investments Canada Limited has introduced a short term income pool and class The new product is suitable for investors who are concerned about ongoing volatility and future interest rate increases says David Feather president and CEO The pool will invest in a broad range of Canadian investment grade securities including a selection of domestic short term corporate bonds floating rate notes asset backed securities mortgage backed securities and other investment grade credit products with maturities of up to five years It may also invest in foreign fixed income securities on a currency hedged basis The pool will be sub advised by Phillips Hager North Investment Management AEGON Capital Management and Canso Investment Counsel Alternative Indices May Underperform New forms of alternative weighted equity indices run the risk of seriously underperforming traditional cap weighted indices says the EDHEC Risk Institute Its research paper Diversifying the Diversifiers and Tracking the Tracking Error Outperforming Cap Weighted Indices with Limited Risk of Underperformance shows that the main alternative indices on the market while superior performers over the long term have considerable relative drawdowns with regard to their cap weighted counterparts These drawdowns can be long more than two years and significant more than 13 per cent The research identifies two major sources of risk One is risks that stem from a more pronounced structural exposure to risk factors which through their associated premia lead to outperformance over cap weighted indices over the long term but which in certain conditions can negatively affect the performance of these new indices The other is that every weighting scheme whether it is qualitative or quantitative corresponds to a choice of model and therefore contains model risk On the basis of this it recommends diversifying beta investment monitoring explicit information on tracking error and extreme tracking error and managing this constraint explicitly Scotiabank Purchases ING Scotiabank will purchase ING Bank of Canada ING DIRECT from its Netherlands based parent ING Group With approximately 40 billion in assets 30 billion in deposits 1 8 million customers and more than 1 100 employees ING DIRECT is the eighth largest bank in Canada It is a direct bank that serves customers online via contact centres and mobile devices and offers savings and chequing accounts mortgages and four mutual funds It has five ING DIRECT Cafés and no physical branches The ING DIRECT branding will be maintained and any future branding will reflect the type of experience that customers receive now The acquisition is subject to regulatory approvals Goldman Sachs Invests In Social Impact Bond Goldman Sachs has signed on as an investor in the U S s first social impact bond a public private financing structure where investors bear partial risk for the outcomes of government funded social programs The investment suggests that a proper social impact bond market might not be too far away While they are a new concept to the U S there is already a developed infrastructure which supports U S bank community re investment practices It could be easily adapted for a social impact bond market This bond will cover the costs of a program designed to reduce youth recidivism in New York City by providing education training and counseling to incarcerated 16 to 18 year olds Manulife Acquires Wellington Manulife Financial will acquire independent financial planning firm Wellington West Financial Services Inc from National Bank Financial Group The deal will add 39 financial advisors and approximately 900 million in assets under administration to Manulife Securities Wellington West provides personal and corporate financial planning services through its network of independent financial advisors in British Columbia Alberta Manitoba and Ontario Confidence Down From July The State Street Investor Confidence Index ICI for August 2012 fell from July s revised reading of 94 3 to 90 9 Driving the decline was a sharp deterioration in risk appetite among North American investors The North American ICI declined 8 7 points from July s revised level of 93 1 to settle at 84 4 The European ICI was close to unchanged ticking down half a point from 101 7 to 101 2 Among Asian investors risk appetite improved for the fourth successive month and the Asian ICI rose 2 9 points from a revised level of 90 6 to finish at 93 5 While confidence among European and Asian investors has broadly stabilized this month s reading on North American risk appetite signals a clear setback says Kenneth Froot the Harvard University professor who co developed the index We did note some concrete buying of European equities excluding the UK as policy makers took pains to try to limit the tail risk of a euro currency break up but in other regions flows were negative One change we did note is that the composition of flows is slightly less defensive than was true earlier in the year For example the materials and financial sectors gained at the expense of utilities and consumer staples Average Increase For 2013 Is 3 2 Per Cent Salary budget increases for Canadian employees are improving says Mercer s 2012 2013 Canada Compensation Planning Survey It says the average raise in base pay is expected to be 3 2 per cent in 2013 the same as the average actual salary increase reported for 2012 and also up slightly from the three per cent and 2 9 per cent in 2011 and 2010 respectively For top performing employees salary increases will remain higher as companies strive to balance compensation planning budgets with retention of critical talent The survey shows that in 2012 highest performing employees received average base pay increases of 4 9 per cent compared to 2 9 per cent for average performers and 0 1 per cent for the weakest performers Iain Morris leader of Mercer s Human Capital consulting business for Canada says differentiating salary increases based on performance is the norm and remains an effective way for employers to wisely spend their reward dollars on the most impactful employees CFIB Wants Regulatory Burden Reduced The Canadian Federation of Independent Business CFIB wants the Ontario government to address the regulatory burden on small business Government red tape costs Ontario businesses a staggering 11 billion a year says Satinder Chera Ontario vice president CFIB It will meet with senior representatives from the government where CFIB will identify five priorities that would remove barriers to small business growth They include reducing the paper burden imposed by the Workplace Safety and Insurance Board WSIB undertaking a regular review of all new and existing regulations on businesses and improving customer service with online tools to enable businesses to provide feedback and obtain answers to existing regulations The province will be given 60 days to address those priorities or explain why they cannot be addressed and recommend alternative solutions The outreach follows Premier Dalton McGuinty s 2011 election commitment to CFIB members to reduce the red tape burden they face August 27 2012 Auction Offers New Perspective Sotheby s London will present its inaugural Collections auction September 27 Sourced from private collections the sale will offer clients the opportunity to acquire fine and decorative arts dating from the 16th to the 20th century Assembled from locations ranging from the state rooms of a Roman Palazzo to a Lutyens designed manor house in England previously owned by American businessman Tom Perkins the auction will offer a combination of objects including English and Continental furniture clocks tapestries rugs silver Chinese export porcelain sculpture and Old Master paintings The sale focuses on privately owned items which are fresh to the market and in the case of specially commissioned works appearing for the first time The 306 lots which have a combined estimated value in excess of 1 7 million ranging from 500 to 100 000 Mercedes Benz Opening Gatineau Location Mercedes Benz will open a dealership in Gatineau QC The ground breaking ceremony was attended by Tim A Reuss president and CEO of Mercedes Benz Canada members of the company s senior management and Philippe St Pierre president of Mercedes Benz Gatineau Construction of the facility will begin immediately and it will be operational in the spring of 2013 Covering almost 50 000 square feet the building will include an open concept showroom service department and a pre owned showroom The dealership will be designed to be one of the greenest car dealerships in eastern Canada in terms of energy and environmental sustainability Optimism Lower Among CAs The U S economy and European debt crisis are the two biggest factors contributing to a sharp drop in optimism among Canadian executive chartered accountants says the second quarter CICA Business Monitor Roughly one in five 21 per cent of the respondents surveyed are optimistic about the outlook for the Canadian economy That is down from 32 per cent in the first quarter of the year Most of the respondents 62 per cent remain neutral about the prospects for the national economy over the next 12 months The survey respondents believe the three biggest hurdles for growth in Canada are the state of the U S economy 37 per cent the European debt crisis 28 per cent and uncertainty surrounding the economy 18 per cent The executive CAs surveyed are not so optimistic about the prospects for their own companies over the coming year either Company optimism fell to 49 per cent in the second quarter report down from 57 per cent in the first quarter Most surveyed still expect revenues and profits to rise and a significant number of respondents anticipate a climb in employment numbers at their company The decline in optimism however is evident in lower projected revenue profit and employment forecasts for the next 12 months Bank All Talk On Rate Hikes The Bank of Canada is likely to be all talk and no action on rate hikes says BCA Research an independent global investment company It points out that with the Canadian economy strongly outperforming the U S during the recovery the Bank of Canada BoC is clearly showing a hawkish bias hinting that it is prepared to raise rates as the recovery gathers strength However BCA says it believes the central bank will be reluctant to deviate too much from the U S Federal Reserve Board s policy stance for fear that this could significantly boost the Canadian dollar With the Fed contemplating further quantitative easing or at the very least staying on hold for the foreseeable future any rise in interest rates would put additional upward pressure on the Canadian dollar says BCA A much stronger dollar could harm the economy it suggests which should keep the BoC from hiking rates for the time being Canadian policymakers are attuned to this risk so our base case is that the central bank will continue to threaten to hike rates to persuade households into deleveraging However policy is more likely to remain on hold until well into 2013 Automotive Auction Sees Record Sales Gooding Company the official auction house of the Pebble Beach Concours d Elegance had sales of 113 7 million a world record sale total for an automotive auction at its auctions for significant and valuable collector cars Twenty four collector cars sold in excess of 1 million highlighted by the von Krieger Special Roadster a 1936 Mercedes Benz 540 K that sold for 11 770 000 a double world record for a Mercedes Benz and a pre war car at auction A 1960 Ferrari 250 GT LWB California Spider sold for 11 275 000 a world record for a Ferrari California Spider Ferrari was a big part of the weekend with eight models between1953 and 1962 selling above 2 million each From the Sherman M Wolf collection the 1960 Ferrari 250 GT LWB California Spider Competizione attracted the most demand selling for 11 275 000 which made it the second most valuable car sold of Pebble Beach auction week The 1957 Ferrari 250 GT LWB California Spider Prototype sold for 6 6 million Americans Getting Richer Living Longer America s oldest citizens are generally getting healthier living longer and doing better financially but there s lots of room for improvement says the Federal Interagency Forum on Aging Related Statistics in its report Older Americans 2012 Key Indicators of Well being The report shows that gains in longevity continue and today s 65 year olds can expect to live about 20 more years That s a jump from 1980 when they could expect 14 more years But many developed nations have life expectancies higher than the U S topped by Japan where today s 65 year olds can expect on average to celebrate their 89th birthdays In 1980 Japan and the U S were about equal on this index Today s elderly Americans are doing better economically than their predecessors The proportion classed as poor living on less than 10 458 a year has fallen from 15 per cent to nine per cent over the past couple of decades and those considered to have higher incomes above 41 832 jumped from 18 to 31 per cent in that period Old age is still a time of increasing physical limitations Nearly half of men over 65 have trouble hearing and almost a third of women this age do too A quarter of elderly people have no natural teeth But when it comes to disability two decades ago almost half of Americans over 65 had difficulty with personal care and vital chores That has dropped to 41 per cent Older Americans are more likely to carry around extra weight these days Nearly half of 65 to 74 year old women are obese today and men aren t far behind In 1990 about a quarter of elders tipped the scales that much The report also shows that death is less likely to happen in a hospital today 32 per cent than in 1999 49 per cent and more likely to be at home with hospice care Salary Increases 2 9 Per Cent Next Year Canadian employees can expect an average salary increase of 2 9 per cent in 2013 says a survey by the Hay Group The projected increase is slightly more than that projected in 2012 2 8 per cent The sectors expecting the biggest gains are the oil and gas sector at 3 9 per cent followed by mining at 3 6 per cent However these higher forecasts are more of a reflection of the demand for key skills and the competition for skilled talent rather than boom times says the Hay Group The sectors with the lowest projections for 2013 are healthcare two per cent media 2 2 per cent and government and telecommunications both at 2 3 per cent Overall the public sector is forecasting noticeably lower salary increases 2 5 per cent than is the private sector industrial and financial at 2 9 per cent Canadian projections ranks about average against some of the other advanced industrialized nations above France 2 6 per cent and Japan two per cent but slightly behind other industrial countries such as the U S and United Kingdom both at three per cent Crestpoint Acquires Edmonton Property Crestpoint Real Estate Investments Ltd a business dedicated to providing institutional and high net worth investors with direct access to high quality Canadian commercial real estate assets has purchased a six storey office building in western Canada With this acquisition it continues to strategically diversify its real estate portfolio both geographically and by asset type We are very pleased to acquire an investment grade asset in a highly sought after market like Edmonton AB says Kevin Leon president of Crestpoint The West Chambers property is an attractive investment for a couple of key reasons Firstly it is located in an improving office node but has average rents below local market rates providing upside potential for the property s income generation Secondly the tenant quality is extremely high profile Having one of Alberta s finest law firms in McLennan Ross LLP committed as a long term tenant to approximately half of the building adds a degree of stability And finally with long term financing at historically low rates we feel the West Chambers property should provide a solid foundation for future returns for our investors Common Sense Sends Update Common Sense Investment Management is sending its Update on Market Environment letter to the Canadian marketplace for the first time The letter looks at its Common Sense Partners Common Sense Long Biased and Common Sense Special Opportunity strategies in the context of the current market environment Founded in 1991 Common Sense is an independent privately held fund of hedge funds manager whose primary focus is investing in hedge funds specializing in equities both long and short Its investor base consists of corporate and public pension plans endowments foundations healthcare organizations high net worth individuals and family offices August 20 2012 Million Dollar Home Sales Increase Sales

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  • Private Wealth Canada News
    Canada from 25 000to 60 000 kilometres per year for three four and five years The Lifecycle Cost Analysis methodology examined depreciation fuel costs insurance maintenance repairs financing fees and taxes and opportunity cost which is the loss of potential interest income as a result of owning and operating a vehicle Zuckerberg Falls From Top Ten Mark Zuckerberg co founder of Facebook Inc is no longer one of the world s 10 richest technology billionaires says the Bloomberg Billionaires Index His fortune dropped by 423 million when shares of the world s largest social media company fell four per cent and reached a record low Zuckerberg s fortune is based on ownership of 503 6 million shares of Facebook including 60 million options He also has about 150 million in cash and other liquid assets Facebook shares have fallen 47 per cent from their initial public offering price of 38 Brands Expect Increased Sales From London 2012 The Olympic Games held in London England are expected to provide boosts for many luxury brands says a study from Walpole an organization that represents more than 120 luxury brands Sixty three per cent of brands expect sales to improve as a result of the event with companies such as Burberry Rolls Royce and Bentley experiencing sales increases On the other hand some retailers have voiced their disappointment about slower than expected sales Despite the double dip recession Britain s luxury market is expected to grow by 8 5 per cent this year Emerging Markets Funds Launched Milltrust International Group one of Singapore s newest asset management businesses has launched a Dublin Ireland based emerging markets UCITS funds advised by its London affiliate Milltrust International LLP Despite being headquartered in Singapore its first range of funds are Dublin based UCITS enabling them to be distributed across Europe UCITS regulations offer a belt and braces regulatory framework that then permits the funds to be sold across Europe but also in a numerous other countries including Hong Kong and South Africa says Eric Anderson managing partner of the London affiliate We plan to distribute into our institutional client base in Asia North America and Europe Milltrust can already boast a presence in Canada France and Switzerland with distribution agreements in Japan and Australia ready for a formal launch this fall Deflation Lurks On Horizon The challenge that is on the horizon if it is not already imminently before us is indeed deflation says a The View from Burgundy from Burgundy Asset Management Its research paper Dealing With Flat Investment Markets Lessons from Long Expertise in Japan says Japan s prolonged experience with stagnant markets and deflation has typically been regarded as an anomaly related to poor or poorly implemented policy decisions and unique demographics However following the financial upheaval that began in 2008 a familiar economic pattern has emerged in North America and Europe that bears striking resemblance to Japan s experience since the late 80s While prevailing trends may create an unfavorable climate for investing at a macro level they do not necessarily have a universal impact and well managed companies will continue to perform in hostile conditions it says Key factors in handling deflation include investing in companies with a quality business and management that offer product and geographic diversity and which compete on low prices as a main strategy Better Board Leadership Needed Recent events have clearly shown us that better board leadership is needed says Matt Orsagh director for capital markets policy at CFA Institute At a CFA Institute media seminar on corporate governance he said what is needed are visionary boards with the leadership and foresight necessary to combat the short term thinking that has dominated our markets for too many years and exacerbated the effects of the current global financial crisis These boards are not only stewards of the long term interests of the corporations they serve but also of their shareowners The CFA Institute has released a report Visionary Board Leadership Stewardship for the Long Term which aims to change the historically short term thinking of publicly traded companies and to identify tangible ways in which visionary boards can foster and promote longer term thinking that restores the trust and confidence of investors globally For example a visionary board expects management to deliver investor guidance with a longer term bias and in greater detail by identifying long term value drivers for the company As well it proactively and continually sees risk as a board level responsibility overseeing robust processes for identifying managing and when necessary mitigating risks to the operations strategy assets and reputation of the company At the same time a visionary board understands that companies generate profits by taking risks and encourages intelligent risk taking that aligns with a company s strategy Confidence Rises Marginally Globally investor confidence was marginally up in the State Street Investor Confidence Index ICI for July 2012 The Global ICI rose by 0 7 points from June s reading of 93 3 to reach 94 Confidence among both North American and European investors ticked downwards while sentiment among Asian investors was slightly improved The North American ICI declined 0 6 points from June s revised reading of 93 7 to settle at 93 1 while the European ICI fell 0 5 points from June s revised reading of 102 2 to reach 101 7 The Asian ICI was up 0 8 points from June s revised figure of 90 2 to finish at 91 The message being sent by institutional investors this month is one of caution says Harvard University professor Kenneth Froot who co developed the index The pick up in equity buying that we noted last month proved short lived and flows had turned negative by the end of our July sample It should be noted that the sample ends just before the latest round of policy pronouncements from European policy makers As such it remains to be seen whether these policy moves will have a meaningful impact on risk appetite Canada s SMEs Less Optimistic Optimism among Canada s small and medium size businesses continued to decline in July says the Canadian Federation of Independent Business CFIB Its Business Barometer index dropped from 62 1 in June to 60 9 its lowest reading since July 2009 The major difference between now and two years ago was that the index was trending in the opposite direction towards greater confidence says Ted Mallett CFIB s chief economist and vice president The index s current position against GDP puts it very close to the zero growth mark suggesting Canada s economy is nearing a standstill July 30 2012 B C Policy Changes Affect Executive Compensation The British Columbia government has introduced changes to executive compensation in the public sector including the province s securities regulator Changes include immediately freezing the compensation of all current executives recruiting new senior executives at a salary 10 per cent lower than the incumbent limiting executives to 85 per cent of CEO salaries and phasing out incentive pay for new non executive staff as well as phasing out bonuses for new staff Together these measures will reduce overall compensation deliver savings and set an increased tone of restraint says the government It notes that many Crown corporations already meet some or most of these policies and if they don t their boards have to come up with plans by January 1 showing how they will align with the new policy Returns Lowest In 15 Years The U S based Institute for Private Investors IPI a provider of networking and educational resources for ultra high net worth investors says investors are evenly split into two strategy camps timing the market versus staying the course Its follow up to its Family Performance Tracking survey found 22 per cent classified themselves as making very few if any changes while 18 per cent made dramatic shifts in or out of various asset classes Families who sought principal protection while factoring in inflation did a bit better in 2011 than families who pursued growth Almost two thirds of the low risk set reported positive returns while less than half those seeking growth saw positive returns Overall returns were the lowest in 15 years Although the range of returns was significant varying from 10 per cent to more than 25 per cent a majority of members reported annual net of fee returns between 2 16 per cent and 2 28 per cent in 2011 In the past five years average returns were 2 4 per cent with the median return at 1 5 per cent net of fees Vancouver Wealthiest City Vancouver BC is the wealthiest city in Canada with an average net worth per household of 612 197 It is followed by Toronto ON at 542 039 then Calgary AB at 540 798 says Environics Analytics WealthScapes When it comes to increases in net worth the biggest jumps were seen in Regina SK at 3 8 per cent Winnipeg MB at 3 1 per cent and Ottawa Gatineau ON at 2 8 per cent In terms of real estate values Toronto leads Vancouver with both seeing over six per cent growth while growth in Calgary declined by one half a per cent Overall the wealthiest province is British Columbia and the fastest growing province in terms of wealth is Manitoba Rise Of Startup Investing With an environment that currently fosters a low barrier to entry investors have had to become more reliant on and more disciplined in their due diligence when vetting technology startup deals says Jamie Clarke of PODIUM Ventures In the article The Rise Of Startup Investing at www privatewealthcanada com he says the upside in the risk reward payoff is often greater than can be achieved through public investments However while a large and hyperactive market place does symbolize health it doesn t necessarily mean that every startup that comes along looking for investment dollars is going to be a home run In fact it is just the opposite The article is at Startup Investing Qatar Named Best Airline Qatar Airways was named Best Airline of the World for the second consecutive year at the Skytrax 2012 World Airline Awards The airline was also named the best regional airline in the Middle East as well as receiving top rankings in the categories of World s Best First Class Airline Lounges World s Best Business Class Onboard Catering and World s Best Business Class Airline Seat The Skytrax awards measure passenger satisfaction levels for 38 key performance indicators such as check in boarding onboard seat comfort in flight entertainment and staff service This year s survey covered more than 200 international and domestic carriers Hennessy Releases Limited Edition Hennessy in collaboration with graffiti provocateur Futura 2000 is releasing a limited edition VS cognac Retaining Hennessy s refined palette the ambrosia is said to emanate a delicious nose of plum almonds and walnuts The bottle has splashes of blue yellow and red with swirling vortexes helixes and the artist s signature atomic symbol on the front and cap Only 2 000 bottles of the collectable bottle will be produced and released in select stores world wide starting late August London Gets New Mercedes Dealership The Finch Automotive Group celebrated the official ground breaking of its new retail facility in London ON Construction of the facility will begin immediately and is expected to be fully operational by the end of this year The layout of the dealership follows the proprietary Mercedes Benz Autohaus concept promotes the widespread use of glass to maintain transparency and create a bright open concept feeling This design provides consistent brand identity Volatility Drives Investors To Cash Market volatility continues to drive investors to cash says a survey by BlackRock Asset Management Canada Ltd It shows a high level of anxiety among investors with at least 100 000 in investable assets More than two thirds feel much less confident about the investment decisions they make now than they did in the past And a growing number believe market conditions offer diminishing prospects for positive returns so their top priority has become protection of assets While they are turning to cash 67 per cent acknowledge their cash holdings will produce a negative return HighView Acquires Bull HighView Financial Group will acquire the outstanding shares of the Bull Wealth Management Group of Companies from EFG International a Swiss private banking group With almost 2 5 billion of client assets across approximately 150 client relationships the merger of our two firms will solidify our industry position as a leader in the outsourced chief investment officer segment in Canada and provide us with the scale to continue to prudently grow our business both organically and through select strategic acquisitions of like minded firms in Canada over the next several years says Mark Barnicutt president CEO and co founder of HighView Jim Bull founder president and CEO of Bull Wealth Management Group will be a member of the senior management team of HighView and lead the Bull Wealth Management Group The transaction is subject to regulatory approval Guidelines Make CMBS More Palatable The CRE Finance Council has published a set of guidelines aimed at making new generation CMBS more palatable to investors Its market principles focus primarily on reporting and making sure would be investors understand how new CMBS will be structured They also include provisions around liquidity a significant issue for legacy CMBS including a recommendation that arrangers set out a cash flow model in advance July 23 2012 Investor Sentiment Slides Investor sentiment in Canada continued to slide through the first half of 2012 says the latest Manulife Financial Investor Sentiment Index Results from the first half of 2012 show the index now sitting at 24 down two points from December 2011 26 and another five points from June 2011 29 Overall investor enthusiasm has decreased across almost all investment vehicles including fixed income investments investment properties balanced funds and cash The exception this period was appetite for investing in the stock market where sentiment is up by six points Measured against the December 2011 results Canadians are less likely to agree that it s a good time to invest in savings vehicles Attitudes to investing in mutual funds remain relatively steady this period with a drop of only one point In addition TFSA remains high but dropped four points and RESP RRSP and segregated funds all dropped significantly eight seven and eight points respectively Recent economic challenges including the persistent financial instability in Europe help us understand why Canadians remain cautious about investing says Paul Rooney president and CEO of Manulife Canada As these global economic challenges dominate headlines without any significant signs of recovery confidence in financial markets will continue to be uncertain Offshore Wealth A Black Hole Rich individuals and their families have as much as 32 trillion of hidden financial assets in offshore tax havens representing up to 280 billion in lost income tax revenues says James Henry economist conducting a study on behalf of the Tax Justice Network a pressure group against tax havens The study estimates the extent of global private financial wealth held in offshore accounts at between 21 and 32 trillion excluding non financial assets such as real estate gold yachts and racehorses The report also outlines the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites putting wealth beyond the reach of local tax authorities Estimates are that the richest citizens of these 139 countries had amassed 7 3 to 9 3 trillion of unrecorded offshore wealth between 1970 and 2010 Henry says that private wealth held offshore represents a huge black hole in the world economy Nordstrom Moves In On Canadian Market Nordstrom Inc is finalizing its plans to set up shop in four locations in Canada including three sites that Sears Canada Inc is vacating this fall It plans to launch its first Canadian stores at the Pacific Centre in Vancouver BC the Chinook Centre in Calgary AB the Rideau Centre in Ottawa ON and Sherway Gardens in Toronto ON Nordstrom will compete with mid to high end fashion incumbents such as Holt Renfrew the Bay and Harry Rosen Canadians Richer Than Americans Canadians have a higher household worth than Americans says Environics Analytics WealthScapes On average Canadian households have a net worth of 363 202 while American households have an average net worth of 319 970 The main reason we are richer is the housing crisis in the United States says Michael Adams president of Environics The collapse of the American housing market led to a plunge in home prices and Canadian real estate is now much more highly valued than American real estate FACTA Implications Felt North Of Border Individual tax reporting changes introduced in the United States under the Foreign Account Tax Compliance Act FATCA have implications for U S citizens taxpayers participating in Canadian registered retirement plans supplemental plans deferred compensation plans and equity compensation plans involving stock in a non U S corporation says a Towers Watson Client Advisory U S taxpayers participating in these arrangements may be required to provide additional information on their foreign property in their annual tax filings with the Internal Revenue Service IRS Reporting and withholding tax obligations are also imposed on foreign financial institutions FFI which could impact certain funded and unfunded Canadian retirement supplemental and deferred compensation plans The individual taxpayer reporting requirement is effective now and the other changes will be phased in over the next few years The IRS recently introduced proposed foreign plan exemption regulations that would exempt FFIs from requirements imposed under FATCA for qualifying funded foreign retirement plans which have U S taxpayer participants FATCA places the reporting onus on individual U S taxpayers and its impact is accordingly primarily individual in nature However U S taxpayers participating in Canadian retirement supplemental and compensation plans may direct general information requests on FATCA rules

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    their relative valuations even more attractive Assessing the Canadian market as a whole 73 per cent of investment managers say it is undervalued That is a big shift from the previous quarter when only 17 per cent of investment managers thought the Canadian market was undervalued Eurozone About Containment Not Cure Focus on the European debt crisis is and always was about getting it out of the headlines not about a cure says Warren Jestin senior vice president and chief economist at Scotiabank Speaking at the ISCS Canadian Economic Update Breakfast he said that resolution strategies have not resolved the crisis and have in fact left Greece with a very unhealthy debt ratio Last fall was a game changer he said because investors began to see Greece as a mathematically impossible situation The fallout from that resulted in other countries getting caught up in the tailspin and those that were once seen as solution countries have moved or have the potential to move to being problem countries France once viewed as a strong solution is at risk of losing its AAA rating and may potentially join the problem and Germany s underlying political and social issues could move it from being the biggest potential solution to being a part of the problem as well At a time when people are asking when they will stop hearing about the Eurozone crisis Jestin said it will be an ongoing issue for at least five more years Canadian Portfolios Take Flexible Approach While some factors dominate the Canadian market they do not do so consistently through different market cycles says research from Pyramis Global Advisors Leadership Series The Search for Consistent Returns says this means constructing portfolios based on a single favourable characteristic or style can lead to the exclusion of a significant number of strongly performing stocks in addition to capturing many underperformers The analysis also suggests that an approach to portfolio construction based on more flexible and factor agnostic security selection criteria offers the potential to generate relatively strong and perhaps more consistent risk adjusted returns across varied market conditions Research specific to the Canadian market also shows that value and momentum factors were the most successful and consistent at predicting outperforming stocks However they did not necessarily outperform other factors when examined individually in down markets or up markets SRI Downside Protection Not Proven Socially responsible investing SRI strategies alone have not improved the average risk return profile of a European equity fund in the recent past says a report from Fitch Ratings It says even on a longer term basis including 2008 downside protection is not statistically proven In fact while exhibiting similar Total Expense Ratios SRI funds have on average underperformed non SRI funds by 0 6 per cent annually over the past three years in the European and eurozone equity Lipper categories However the report acknowledges that this doesn t take into account the non performance related benefits that SRI investors may receive such as the carbon footprint or social impact of their investments June 25 2012 Wills Alone Will Not Do Wills do not address potential incapacity and other health issues and for many Canadians health directives and a general Power of Attorney POA or other financial directives will likely be needed before a will is invoked says the RBC Myths and Realities poll It shows that while most retired boomers 81 per cent have a current will only half 49 per cent have a current health directive and even fewer 39 per cent have a current financial directive Financial planning is not complete without planning for potential unforeseen health issues or incapacity says Suzanne Michaud senior advisory counsel at RBC Law Group Your plan should address your wishes relating to personal care and include the right documents in place to appoint someone to act upon your behalf for both property and personal care matters She adds that Canadians recognize the reality of aging and health concerns but they are not taking action while they are young enough to address this reality without undue pressure or failing health Inheritance Not A Given Thirty two per cent of high and ultra high net worth Americans don t feel it s important to leave an inheritance for their children says U S Trust Bank of America s private wealth management division The report which classified individuals with 3 million or more in assets as high net worth and those with more than 10 million in assets as ultra high net worth coincides with a survey by Merrill Lynch says the importance of giving an inheritance has fallen from 54 per cent in 2009 to 41 per cent in 2012 It indicated that 25 per cent would rather give their money to charity while the majority planned to withhold funds because they thought each generation should earn its own wealth Others were more concerned with future healthcare costs and whether they would have any money left to bequeath Of the survey respondents who plan to pass on their wealth the majority felt it was important to keep money within the family and that doing so would have a positive effect on their children s lives Luxury Sector Proves Resilient The luxury sector in Canada has proven its resiliency in economic uncertainty as compared to Europe and the U S says American Express Business Insights Optimism amongst Canadians appears to be on the rise as luxury spending increases but what has proven most surprising is that in a soft job market younger Canadians are dominating luxury spending growth in the core areas of fashion travel and fine dining The findings are based on actual aggregated spending data from 2009 through 2011 and suggests that not only was the Canadian luxury sector less impacted by the downturn down nine per cent in 2009 than its counterparts in the U S and Europe down 14 per cent and 10 per cent respectively but that Europe and the U S have yet to

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    governments investors and companies scramble to prepare for the chaos that could arise from a Greek exit from the euro zone it is interesting to note that few seem at all concerned about how global foreign exchange markets would function amid a sudden breakup of one of the world s major currencies The reason says the Greenwich Associates The Impact of the Greece Crisis on Global FX Markets is the global FX market is perhaps the most liquid robust and well functioning market on the planet As well since a Greek government determined to exit the euro would have every incentive to cut the cord as quickly as possible to stem capital flight what was built over the course of years could split essentially overnight It also says due to recent efforts by the EU the ECB national governments companies investors and to the longer term evolution of FX into perhaps the world s most liquid and resilient marketplace a euro breakup is unlikely to materially disrupt the normal functioning of global foreign exchange trading Gold Conditions Remain Despite a move down in gold prices in recent day and weeks the conditions that drove the price of gold to record highs have not gone away says Nick Barisheff CEO of Bullion Management Group He says in many ways they are worse than before and people are being complacent and out of touch with the new economic realities the world now faces Holding cash for portfolio protection does not work The five major currencies have shown dismal performance versus gold since 2001 he says and more funds and fund managers are now stating that allocations between five per cent and 10 per cent to bullion are prudent He cites Kevin O Leary chairman of O Leary Funds and star of ABC s Shark Tank and CBC s Dragon s Den who has owned gold for decades and maintains a five per cent weighting When the price dips and his weighting drops he says O Leary buys into weakness Real Estate In Canada Overpriced At a country level U S and Canadian real estate is broadly overpriced says Aberdeen Asset Management s Global Real Estate Market Outlook It says however investment opportunities can be found in retail warehouses and certain suburban apartment and office locations throughout both countries At a segment level Canadian offices are highly overpriced and are likely to underperform over the next few years However it expects capital value to fall eventually providing buying opportunities Better value can be found in Canadian retail which offers the highest five year total return in its projections The best investment opportunities in Canada are likely to be in the western provinces where rents grow on a real basis and the economies are driven by the energy industry Calgary AB in particular is gaining relevance in the financial services industry Retail properties located near overbuilt suburban housing markets in Toronto ON and Vancouver BC are likely to be the most negatively affected should a housing correction materialize Hedged Global Bonds Improve Profile For many investors particularly those seeking assets to match long term liabilities adding exposure to hedged global bonds can improve the risk return profile of their portfolio versus a domestic only bond portfolio says AllianceBernstein s LDI Reducing Downside Risk with Global Bonds It says exposure to global bonds offers what amounts to a natural hedging strategy against domestic tail risk as while global bonds have a high correlation to domestic long term bonds they protect against large downside losses in domestic bonds As well the ability of a hedged portfolio of global bonds to reduce downside risk while capturing most of the upside potential return creates an opportunity to improve a pension plan s funded ratio relative to its liabilities However while global bond exposure has many positives it says it would not advise liability driven investors to convert their entire fixed income portfolios to global bonds There is generally a close correlation between returns for domestic only long bonds and hedged global bonds but the gap between the two can be significant at times Financial Industry Should Be Barbell ed The financial industry needs to be barbell ed with those who can take risks on one side and those who shouldn t on the other says Nassim Taleb author of Fooled by Randomness and The Black Swan Speaking at an AIMA Canada session he said the more robust an industry the better suited it is to take risk He cited the number of hedge funds that fail each year yet no one hears about it The investors who suffers those losses are the ones able to take on this risk of loss and the fact that new blood comes in to replace those funds helps keep it robust Banks and insurance companies on the other hand should not be allowed to take on risk because their business model is to make small profits over several years because if they suffer a huge lose it has an impact on the system Better Boards Smaller In the end either you have a great board of directors or you don t have a great board of directors says Robert Pozen former chairman of MFS Investment Management currently a senior lecturer at the Harvard Business School and a senior research fellow at the Brookings Institution and author of Too Big to Save How to fix the U S Financial System He told the annual meeting of the Canadian Coalition for Good Governance that one of the problems is most boards are too big Boards with 16 to 18 members can result in social loafing where directors are content to let other board members take care of issues The ideal board in his opinion would have six independent members and the CEO These smaller boards can reach a consensus faster enabling them to take action faster He also suggested that boards should have at least half of their members with some experience in the

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    seven years Women already control 60 percent of the nation s personal wealth they outnumber men and they are traditionally the shoppers says financial expert Scott T Schultz author of Scott Schultz s Guide to Closed End Funds With the first of the boomers hitting 65 this year the U S will see an even greater number of retirement aged women holding the country s purse strings Many will inherit money and property from their parents and or their husbands and many will live another 30 to 40 years Schultz says citing a Cornell study They ll need to invest their money to ensure they have enough to avoid that impoverished retirement they fear Insurance Planning Review Timely Now Now an opportune time for people to review insurance planning initiatives says The Harbour Group RBC Wealth Management Dominion Securities In the article Federal Budget Impacts Financial Plans at Private Wealth Canada it says proposed changes in the federal budget may result in a reduction of the savings component that is permitted to grow on a tax sheltered basis with an exempt policy This would not eliminate the value that the savings component provides but does limit the attractiveness of the feature For those with term policies in place now would be a crucial time to review the policy to check if it is convertible to permanent coverage Crestpoint Makes 12th Acquisition Crestpoint Real Estate Investments Ltd has completed its 12th acquisition in just over one year of operation Part of the Connor Clark Lunn Financial Group it has acquired a 50 per cent interest in a shopping centre located in Brantford ON This transaction brings to completion a solid first year of operation says Kevin Leon its president We are pleased to have amassed such a high quality portfolio of commercial retail office and industrial real estate assets that now exceed 180 million in assets under management Equity Funds In Negative Territory After posting solid returns during the first three months of 2012 most equity funds in Canada were in negative territory in April say preliminary performance numbers from Morningstar Research Inc Among its Canada fund indices that measure the aggregate performance of equity fund categories only four managed to stay positive last month Balanced funds for the most part had flat or slightly negative returns Within the diversified equity categories funds that invest outside of Canada typically had a harder time than their domestic counterparts in April The Japanese equity fund index one of the worst performers decreased by 3 9 per cent but still outperformed the benchmark Nikkei 225 index s 5 6 per cent loss thanks to the appreciation of the yen versus the Canadian dollar Also near the bottom were the fund indices that track the European equity emerging markets equity global equity and international equity categories with pullbacks ranging from 2 2 per cent to 2 8 per cent Active Management Environment Continues The favourable active management environment that ended 2011 has extended into 2012 with 66 per cent of large cap Canadian equity investment managers outperforming the S P TSX Composite Index s return in the first quarter says the Russell Active Manager Report That compares to 76 per cent who beat the benchmark in the fourth quarter of 2011 The median large cap manager return was 5 3 per cent compared to the S P TSX Composite Index s return of 4 4 per cent It was another excellent quarter for active managers overall says Kathleen Wylie senior research analyst at Russell Investments In fact taking the fourth quarter into account the back to back percentage of managers beating the benchmark was the highest since 2004 Fundamentals mattered in the quarter with the market focused more on company specifics and less on the macro environment On average over the last 10 years 52 per cent of large cap managers have beaten the benchmark SMEs Less Optimistic Canada s small and mid sized businesses SMEs were less optimistic in April than the month before says the Canadian Federation of Independent Business CFIB A 1 3 point drop in its Business Barometer Index to 66 4 gave back most of the gains seen earlier The reading remains the second best reading for the year and is the first decline the index registered since August last year For the most part overall survey findings still point to stable business conditions and a modestly growing economy says Ted Malett chief economist and vice president for CFIB The outlook for business owners both by sector and by region shows very little relative change in April which is also another sign of general stability April 30 2012 Ontario Hikes Tax On Wealthy Ontario will hike taxes for the wealthy in order to stave off another election The minority Liberals have agreed to an NDP demand to surtax those earning more than 500 000 and all money raised by the surtax about 470 million next year will go towards paying down Ontario s 15 2 billion deficit The surtax will end once the budget is balanced in 2017 Trust Ruling Confirmed The Supreme Court of Canada the SCC has confirmed the original ruling of Woods J of the Tax Court of Canada the Tax Court that the central management and control test used to determine residency of corporations for tax purposes also applies to the determination of the residence of trusts Jeffrey Shafer and Ed Kroft of the tax group at Blake Cassels and Graydon LLP examine the decision in Fundy Settlement v Canada a k a St Michael Trust Corp or Garron Family Trust at www bpmmagazine com The article is at Trust Decision Amendment Restores IPP Effectiveness Only a small number of Individual Pension Plan IPP will be affected by the new federal tax measures says Michael Marmoreo business development manager group savings and retirement with Industrial Alliance Writing in the article Pensions IPPs Are Alive And Well at www privatewealthcanada ca he says that Finance Canada has

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    the growth rate of retail e commerce which is good news for non profits says Vinay Bhagat founder and chief strategy officer for Convio Mercedes Benz Has Record March Mercedes Benz Canada and its national dealer network have delivered a grand total of 3 403 Mercedes Benz and smart units representing the best March on record for the group At the end of the first quarter of 2012 a grand total of 7 853 units have been retailed which is the best first quarter ever for Mercedes Benz Canada Overall a total of 7 005 units have been delivered in 2012 which is ahead by 872 units or 14 2 per cent year to date Glass Ceiling Exists For CFOs A glass ceiling does exist says research from GMI Ratings a U S corporate governance firm It has found that pay for female chief financial officers of U S companies is at least 10 per cent below that of male CFOs The choice of examining the CFO position allowed for a statistically meaningful sample as there is a population of executives who have roughly similar job responsibilities and financial backgrounds It found at companies with market capitalizations between 100 million and 25 billion male CFOs made an average of 1 56 million versus 1 35 million for female CFOs It chose that market capitalization range because there are hardly any female CFOs at companies which fall outside that range Williams Sonoma Launches Healthy Living Products Williams Sonoma Inc has launched Agrarian a collection of products that supports a lifestyle of healthy living and brings the virtues of homegrown and homemade into customers everyday lives Agrarian offers products resources and inspiration for customers who want to go beyond cooking by cultivating a healthy awareness of where their food comes from Agrarian products range from heirloom seeds live plants and raised beds to do it yourself cheese making kits chicken coops and home canning and preserving supplies Emerging Markets Economic Drivers Emerging markets are today s fastest growing markets and global economic drivers and Mark Carney governor of the Back of Canada is urging Canadian businesses to refocus their strategies towards them In a Chamber of Commerce address he said these high growth economies have a rapidly rising middle class supported by increasing disposable incomes which is making these nations an attractive investment for Canadians Since the recession these economies have accounted for roughly two thirds of global economic growth and one half of the growth in global imports he said In a process that can be expected to continue for decades emerging Asia is rapidly urbanizing China and India are housing the equivalent of the entire population of Canada every 18 months Payroll Solution Designed Ceridian Canada has launched Powerpay Plus an enhanced web based payroll solution designed to meet the pay and workforce management needs of mid sized businesses Designed to relieve payroll administrators from the complexities associated with payroll systems it provides easy cost effective compliant payroll processing that can be combined with business intelligence analytics tools to ensure accurate and efficient operational success without headaches Its features include mass compensation deduction contribution and organizational updating tools a newly designed easily navigable user interface and customers can access it from their choice of mobile device Equity Fund Performance Lacklustre Equity funds in Canada posted lacklustre performance in March but most posted gains many in the double digits for the first quarter of 2012 say preliminary performance numbers from Morningstar Canada Among its 22 fund indices eight increased by more than 10 per cent while only one had a negative result for the quarter The top performer for the quarter was the Morningstar U S equity fund index which increased by 11 4 per cent its best result over any three month period in more than a year The biggest losers in March were the natural resources equity and precious metals equity fund indices which were down 8 4 per cent and 10 6 per cent respectively Sentiment Returns To Normal Small business sentiment has now returned to what can be considered normal for a sustainably growing economy says the Canadian Federation of Independent Business CFIB Business Barometer Index With its seventh consecutive monthly gain since late last summer it climbed to 67 7 in March more than a point and a half above February s level and six points above its August 2011 low Even though government debts continue to cast a shadow the small business community is confident that increased government spending restraints will help to encourage domestic business activity says Ted Mallett vice president and chief economist for CFIB Business owners in Alberta 74 6 and Saskatchewan 72 continue to be the most optimistic in the country Big gains in business sentiment in Ontario 68 2 pushed its index above the national average for the first time in a year and a half There s improving optimism in Manitoba 69 8 Quebec 64 6 and Nova Scotia 64 1 while levels fell back somewhat in British Columbia 63 8 and New Brunswick 66 April 2 2012 Factors Determine Family Involvement Different factors determine whether a family is involved in managing a business and therefore in managing the family s wealth says a study from Forbes Media These factors include the life cycle of the economy and that of the business its sector of activity the geographic region where the company carries out its business and the obligations imposed by society Key findings show nearly half of these large fortunes are run with family involvement while the other half are managed by individuals Family managed fortunes are concentrated in certain regions of the world and hardly exist in others Mature markets have more fortunes that are run with family involvement than is the case in emerging markets The highest percentages of family run businesses are found in Hong Kong India and the Middle East while the lowest rates of family run fortunes are seen in Russia or China where the free market is a relatively new phenomenon It also shows individual fortunes grow more rapidly than family run fortunes Variety Of Reforms Necessary Delivering quality investment advice isn t just a question of the appropriate compensation structure a variety of reforms are needed to ensure the quality of advice says a report from Deutsche Bank Research It argues that both commission and fee based remuneration structures should continue to be allowed in order to meet the needs of different sorts of clients However it acknowledges that reforms are necessary For example it says a ban on commissions won t solve all forms of mis selling While a commission ban would solve the issue of mis selling due to the payment of trailer fees that influence product recommendations it maintains that there are still other forms of bad advice that are not due to the method of remuneration such as improper investor classification or improper assessment of product features It recommends that having unconditional transparency on remuneration payments flowing from a product maker to an advisor would allow both models to exist Corporate Canada In Better Shape Corporate Canada is in better shape than it was before the recession and its strong financial health should help it weather any short term challenges and take advantage of growth opportunities says a composite indicator developed by CIBC World Markets Inc It s encouraging that a health check on Canada s corporate sector shows businesses across the country passing with flying colours says Avery Shenfeld its chief economist History points to a solid medium term outlook when the various indicators in our composite are in a position of strength The strength in Corporate Canada runs across sectors and the indicator was not driven up by the performance of one or two major industries In fact improvements in cash positions and profit margins over recent years are more impressive when the energy sector is excluded IIROC Can Use CRM Model The Investment Industry Regulatory Organization of Canada has received approval to begin implementation of its reform package Designed to enhance the relationship between investors and their financial advisors the amended rules in the Client Relationship Model will be implemented in stages effective immediately Its reforms provide greater disclosure requirements for advisors and enhance the standards they must meet when assessing the suitability of investments for their clients The objective is increased transparency for investors surrounding the fees they pay the services they receive potential conflicts of interest and the performance of their accounts Stewart Declines Cash Bonus Sun Life Financial Inc s retired chief executive Donald Stewart declined his cash bonus for 2011 because of the life insurance company s poor financial performance last year Stewart who retired November 30 received total compensation for his 11 months in 2011 of 6 85 million which includes a salary of C 1 million and share awards valued at C 2 75 million Dean Connor who succeeded Stewart received total compensation of 5 12 million including 743 577 in salary a 500 000 bonus and share awards and options valued at 3 3 million Managing People Improves Change Projects Change projects are six times more likely to meet business objectives when organizations effectively manage the people side of change says research from Prosci The 2012 edition of Best Practices in Change Management shows that over a 14 year period success during change is not only possible it is repeatable with the effective application of change management However Jeff Hiatt its CEO and founder says the problem is that three quarters of organizations are change saturated and are failing to build change management competency within the organization Fewer Small Business Owners Store Away Funds Fewer small business owners feel the need to store away funds in case of another economic downturn says the third annual Brother Small Business Survey It found that 44 per cent of small business owners believe stockpiling cash is the better option than investing in their business now down from 54 per cent last year and 53 per cent in 2010 In 2010 36 per cent of owners were looking to invest in their businesses growth which increased last year to 44 per cent but has dropped back to 38 per cent in 2012 as owners take a wait and see approach to their business It also shows more female business owners 44 per cent are apt to invest in their business now compared to 35 per cent of males Nearly half of men 48 per cent feel the need to stockpile cash compared to 36 per cent of women Auspice Enters Partnerships Auspice Capital Advisors Ltd has entered into partnerships with two North American fund providers which have licensed its eBeta Enhanced Indices to use in new mandates Direxion Funds will license the Broad Commodity ER Index and Managed Futures ER Index for distribution to U S investors in a mutual fund format It will also partner with Horizons Exchange Traded Funds Inc and its affiliates and a member of the Mirae Asset Financial Group Horizons ETFs has licensed the Managed Futures ER Index for distribution to Canadian investors Financial Rewards Not As Motivating Money and other financial rewards have been replaced by less tangible sources of motivation for employees says PsychTests com Its research reveals that employee motivation is no longer as simple or one sided as the old dangle the carrot in front the donkey bit or in this case dangle the big fat bonus It found that financial rewards do not even crack the top 10 of its 23 work motivators The top five motivators were customer orientation desire to make customers happy achievement desire to work in a goal oriented and challenging work environment inspiration desire to inspire others through one s work identity and purpose desire to work in a company field that is in line with one s values and ethics and fun and enjoyment desire to work in a position corporate culture that is inherently entertaining Financial rewards took the 12th spot Gender comparisons reveal that women are motivated by factors like altruism desire to help make the world a better place and balanced lifestyle Men however were motivated by power desire to be in a position of leadership authority and status driven by the social standing their job will bring them Investor Confidence Rises In March Globally the State Street Investor Confidence Index for March 2012 rose to 91 6 up five points from February s revised level of 86 6 The increase was driven by North American investors whose confidence rose 8 7 points to 89 5 The outlook of European investors was similarly improved rising 5 4 points to 100 6 from a revised February reading of 95 2 Among Asian institutional investors sentiment declined slightly down 2 2 points from a revised February reading of 96 7 to end at 94 5 One of the index developers Harvard University professor Kenneth Froot says This month we saw a significant curtailment of the selling that institutional investors have been engaged in since late 2011 Indeed we observed net buying of equities by real money investors in the week ended March 19 As mentioned in past commentaries institutions have been content to play the role of liquidity provider over much of the recent rally taking the other side of non institutional trades This month they have engaged in more liquidity taking behaviour adding further to core equity positions March 26 2012 Work Ethic Key To Achieving Wealth Ultra wealthy Americans say work ethic is the key to achieving wealth but it takes innovation to sustain it says an SEI poll It reveals that while the overwhelming majority of wealthy individuals 80 per cent believe work ethic was either very important or the most important quality in achieving their financial success nearly all of those polled 95 per cent agreed that innovation is important to their families ability to continue being successful The results point to the realization among wealthy families that sustaining wealth for multiple generations requires an ability to adapt to changing conditions and at times reinvent business or financial strategies SMEs Exposed To Fraud Nationally one quarter of Canadian small and medium sized enterprises SMEs were hit by fraud in the past year says a report from the Certified General Accountants Association of Canada CGA Canada Does Canada Have a Problem with Occupational Fraud says workplace fraud in Canada is a disturbing reality that costs SMEs billions of dollars each year CGA Canada encourages SMEs to have measures in place to detect deter and prevent fraud which includes having a fraud response plan The report says 80 per cent of SMEs do not have a fraud response plan in place The association has provided five top fraud prevention tips to businesses which include raising awareness in the workplace spotting the warning signs catching the potential aggressor developing a fraud response plan and stopping fraud at its source Businesses Lack Confidence In Politicians Small business owners lack confidence in the provincial government s ability to balance Ontario s budget says a survey by the Canadian Federation of Independent Business CFIB The survey asked business owners about the current state of Ontario s finances It showed 91 per cent agreed that Ontario faces more severe economic and fiscal challenges than most Ontarians realize and 88 per cent agree that without action Ontario faces a series of deficits that would undermine the province s economic and social future As well 87 per cent agree that we can no longer assume Ontario s traditional strong economic growth and continued prosperity on which the province has built its public services will carry on While 78 per cent of respondents want the government to act now to balance the budget by 2017 18 most have no faith in the current minority parliament to meet that target Economy To Pick Up Steam Canada s economy grew at a moderate pace in the final quarter of 2011 and is expected to pick up steam in the year ahead says an RBC Economic Outlook It says burgeoning signs of strength in the U S economy low interest rates solid balance sheets across corporate Canada and elevated commodity prices are setting the stage for continued economic expansion It is forecasting real GDP to increase by 2 6 per cent in both 2012 and 2013 Canada s economic growth clocked in at 2 5 per cent in 2011 shaking off a few speed bumps in the middle of the year and ending the fourth quarter with only moderate real GDP growth of 1 8 per cent says Craig Wright senior vice president and chief economist The country s main engines of economic activity from the early days of the recovery consumer spending and residential investment are likely to play supplementary roles as the economy shifts into slightly higher gear on the road ahead VRSPs Coming January 2013 Quebec s voluntary retirement savings plans VRSP will come into effect January 1 2013 says Raymond Bachand its minister of finance in tabling the government s 2012 2013 budget He called them a flexible and inexpensive solution to encourage Quebecers to save Workers will automatically be enrolled in the plan by their employer and a set of default parameters will be offered to them A worker will be able to change his contribution rate and continue contributing to the same plan if he changes employer He will be able to dispose of the funds accumulated withdraw them before retirement and leave the plan at any time In addition as with an RRSP contributions to a VRSP may be deducted from taxable income for Québec and federal tax purposes the amounts accumulated will not be taxed as long as they are not withdrawn Companies with five employees or more that currently do not offer a pension plan will have to offer a VRSP to their employees by January 1 2015 They will not be required to

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    Over the next several years the first of Canada s nine million baby boomers will find themselves deciding whether to stay in their homes transition to a smaller place of residence or relocate to another city or country And says a report from the BMO Retirement Institute among the top factors that boomers stated as reasons to relocate upon retirement are weather 57 per cent financial reasons 54 per cent proximity to family and friends 45 per cent and better access to healthcare support services 35 per cent Although downsizing may seem like a straightforward move there are several factors to consider before making the decision Even if downsizing may be years away it s important not only to think about all of the factors that can affect your decision but to maintain an open dialogue with your loved ones says Dr Amy D Aprix BMO life transition expert Being proactive will help you remain in control rather than having to deal with an unexpected move when you re not prepared Arrow Offers Garrison Hill Fund Garrison Hill Capital Management Inc a Canadian based global macro investment management firm has entered into an arrangement with Arrow Capital Management Inc which will result in a closer partnership between the two firms Arrow Capital is already a direct investor in the Garrison Hill Macro Opportunities LP through its Arrow Maple Leaf Fund It will now be making the fund strategy available directly to investors through its Global Manager Series Solutions as the Garrison Hill Fund In addition Arrow Capital has acquired the right to become a significant minority shareholder in Garrison Hill and will be providing it with additional operational compliance and risk management support in order to further strengthen the offering to investors Features More Important Than Brand Seventy eight per cent of Canadians feel getting the features they want in a product is more important than the brand they buy says Hyundai Canada s Consumer Gauge It shows that in light of the global economic changes over the past five years consumer confidence has shifted and traditional luxury is now low in the list In fact one in four Canadians admit their definition of luxury has changed since the 2008 global financial crisis The study goes on to reveal that 66 per cent of Canadians prefer to buy modern brands that combine luxury at a fair price and more than 50 per cent of Canadians have no intentions of buying a luxury item in the next 12 months Price was found to be the most influential determinant of luxury across all groups followed by personal gain enjoyment impact on lifestyle and exclusivity Men are more likely to purchase luxury products that are functional and tangible such as cars and appliances while women are more likely to spend on luxury products that are aesthetically pleasing However they are most likely to seek high value in their purchases and shop around for the best price Cuban Cigar Sales Jump Cuban cigar sales jumped nine per cent to 401 million in 2011 as spending on luxury items increased in countries with stronger economies says Habanos SA the worldwide distributor of Cuban cigars Smokers in China the Middle East Russia and Brazil helped overcome declining sales in economically troubled Spain and Greece However Spain held on to its position as the top consumer of what are generally considered the world s best cigars Western Europe is its biggest market accounting for 53 per cent of sales last year followed in descending order by the Americas minus the United States the Asia Pacific region the Middle East and Africa and eastern Europe Due to the 50 year long U S trade embargo against Cuba Cuban cigars cannot be sold legally in the United States the world s largest cigar market Global Markets Look For Signs Global markets are looking for signs that conditions are improving and any sliver of good news no matter how small is driving gains in the market says a report from CIBC World Markets Inc These are not normal times says Benjamin Tal its deputy chief economist In normal times investors overreact to bad news more than they react to good news In today s environment good news has the upper hand Investors are highly responsive to positive data surprises while negative news is often ignored or creatively interpreted as good news Despite the negative surprises that dominated the news during the past three months the Canadian market has managed to grow by nine per cent as investors seemingly ignored Canadian data and paid more attention to positive factors in the U S and international economies In the U S the 12 per cent rally in the S P 500 since mid December is largely attributed to the better than expected economic data during that period But on average the market has also reacted positively to negative data surprises Tal expects Canadian investors will continue to focus on U S economic data and largely ignore further negative news from Canada s manufacturing sector where the drag of the strong dollar is still clearly evident Investor Confidence Slips The State Street Investor Confidence Index ICI fell to 86 5 down 6 1 points from January s revised level of 92 6 The decline was most pronounced among North American investors whose confidence fell 9 5 points to 80 5 its lowest reading in more than three years The outlook of European investors by contrast improved with the ICI rising four points from January s revised reading of 91 2 to reach 95 2 In Asia investor sentiment stayed relatively static ticking down 0 3 points from a revised January reading of 96 6 to end at 96 3 This month institutional investors in the aggregate continued the pattern established late in 2011 of reducing allocations to equities says Kenneth Froot the Harvard University professor who helped develop the index Given that equity returns have been positive over the last one and three

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    the U S dollar Japanese Yen British Pound Sterling and the Euro are all in crisis and it is hard to decide which one is worse Because the big four are so unattractive the Canadian dollar is attractive as a global reserve currency However the attractiveness of the Canadian dollar is limited by the central bank s inability to raise interest rates and its large current account deficit For investors who want to hedge they should avoid the Euro and the Pound among the big four Or they can switch to small country currencies and take a market neutral approach using a basket of these currencies February 6 2012 Beliefs About Innovation Inaccurate Canada s weak innovation performance is partly a result of Canadian business leaders sometimes inaccurate beliefs about the innovation environment says a Conference Board of Canada report based on results from the World Economic Forum s Global Competitiveness Survey 2011 12 Canadian business leaders may be less inclined than their global counterparts to adopt innovation as a business strategy because they do not see it as rational or necessary in their current environment says Daniel Munro principal research associate Many Canadian business leaders feel that competitive pressures are not strong enough to motivate innovation capital markets are too weak and the tax burden is too high But their perceptions do not always align with reality The report From Perception to Performance How Canadian Business Leaders View the Innovation Environment shows Canada ranks 11 th among the 142 countries ranked on innovation in the WEF s report trailing key competitors such as Japan the United States and Germany as well as small advanced economies such as Switzerland Sweden and Finland Perceptions of high taxation less intense competition and weak capital markets help to explain why Canadian firms are less likely to innovate than global peers Advisors Bullish On Equity Markets After reasonably strong equity returns during the last quarter of 2011 the majority of Canadian investment advisors believe equity markets should increase again during the first quarter of 2012 says Horizons Exchange Traded Funds Inc s Q1 Advisor Sentiment Survey Roughly two out of three Canadian advisors 60 per cent were bullish on Canadian equities as represented by the S P TSX 60 Total Return Index after this index posted a positive 2 07 per cent return on the quarter Similarly bullish sentiment increased more than seven percentage points from the previous advisor survey on U S large cap equities as represented by the S P 500 to 58 per cent after an 11 per cent gain on that index last quarter Fisker Comes To Canada The Fisker Karma the world s first true Electric Vehicle with extended range is coming to Canada As its initial entrée into the Canadian market Fisker Automotive has partnered with established retailers to bring its uncompromised responsible luxury cars to locations in Toronto ON Calgary AB and Vancouver BC Fisker an American car company was founded in 2007 The company is designing and developing the world s first line of premium electric plug in hybrid luxury autos for the modern sports car buyer Senior Management Involved In Benefits Decisions As the benefits decision making process continues to gain importance in corporate America there is growing trend of senior management boards of directors and finance treasury as well as human resources increasingly becoming involved in or making these decisions says A Changing Benefits Landscape the third in a series of research briefs from Prudential s Sixth Annual Study of Employee Benefits Today Beyond It found that 40 per cent of plan sponsors say the employee benefits decision making process in their company has changed to some extent over the past five years demonstrating increased attention to the bottom line impact of benefits The influence of senior management has increased the most with 45 per cent of respondents saying they are more involved in these decisions More than 20 per cent of plan sponsors indicated that the boards of directors finance treasury and employees themselves are all playing a more important role in the benefits decision making process Denison Warns About Protectionist Measures The head of the Canada Pension Plan Investment Board CPPIB is calling for policymakers to carefully consider the implications of protectionist measures on capital flows In a speech to the Canadian Australian Chamber of Commerce David Denison president and chief executive officer said at a time when the world arguably most needs to accelerate trade capital flows and economic activity to stimulate growth we see growing signs that economic nationalism and protectionism continue to influence outcomes Instead our overarching belief is that there needs to be a large and strong presence of long term investors for capital markets to function well and economies to flourish The various roles played by long term investors including how they help stabilize markets in times of stress provide patient capital and support for companies to pursue long term value creation helps offset the predominant quarter by quarter mindset Citing the shrinking universe of long horizon investors he encouraged policy makers to consider carefully the implications of policy frameworks and rule changes on the availability of true long term capital Equity Managers End Year Positively The year ended on a positive note for large cap Canadian equity investment managers with 76 per cent outperforming the S P TSX Composite Index s return in the fourth quarter of 2011 the highest outperformance since the second quarter of 2004 says the Russell Active Manager Report That compares to only 40 per cent who beat the benchmark in the third quarter The median large cap manager return was 4 7 per cent in the fourth quarter compared to the S P TSX Composite s return of 3 6 per cent the largest outperformance in three years The focus came back to fundamentals with many of the companies that were beat up in the third quarter rebounding strongly in the fourth primarily in the month of October says Kathleen Wylie senior research analyst The market seemed to recognize that good companies with good management trading at reasonable valuations should be rewarded HSBC Identifies Opportunities Investment grade and emerging corporate bonds and emerging markets sovereign debt are providing among the most attractive investment opportunities says HSBC Global Asset Management s Investment Quarterly Report The report shows that other themes where valuations are considered to be attractive include selective commodities hard and soft via outright exposure or to stocks in the sector and exposure to emerging consumption and infrastructure themes via both emerging and developed market stocks Philip Poole global head of macro and investment strategy says We currently favour the so called cyclical sectors in emerging markets namely industrials materials financials and energy as central banks in countries including China Brazil Indonesia and Thailand have cut interest rates or reserve ratios to stimulate growth as concern about inflation recedes And many such countries still have the scope to ease further and to fund development projects with bond sales In many Western countries rates are already near zero and public debt is significant RBC Brings Funds To Canada RBC Global Asset Management Inc has made the BlueBay Emerging Markets Corporate Bond Fund RBC U S Mid Cap Value Equity Fund and RBC U S Small Cap Core Equity Fund available for purchase by individual and institutional investors in Canada BlueBay Emerging Markets Corporate Bond Fund invests primarily in debt securities of corporations based in emerging market countries The fund is appropriate for investors seeking a combination of income and capital growth potential while looking to diversify the fixed income portion of their portfolios through exposure to emerging market debt securities The RBC U S Mid Cap Value Equity and U S Small Cap Core Equity Funds invest primarily in equity securities of U S mid cap and small cap companies that are deemed to be undervalued in order to provide broad exposure to economic growth opportunities in the equity markets Business Optimism Improves Optimism among Canadian small and mid size businesses continues to improve but at a reserved pace says the Canadian Federation of Independent Business CFIB Its Business Barometer Index ended January at 65 2 just slightly above the 65 registered in December but not enough to register as a statistically significant movement The East West divide on economic performance continues Alberta businesses lead the way as Canada s most optimistic with an index level at a very healthy 73 3 In fact all four Western provinces are well above the national average Ontario and Quebec businesses slide in just below average while the Atlantic region remains least optimistic U S Economy Expected To Grow The U S economy is expected to grow by 2 7 per cent in 2012 but even this modest gain depends on whether governments on both sides of the Atlantic Ocean deal with their respective debt challenges says the Conference Board of Canada s U S Outlook Winter 2012 The outlook assumes that even if Europe enters a recession its governments will find a way to keep the euro currency from collapsing The forecast also includes the assumption that the United States adopts fiscal policies that support continued growth in the economy Lower payroll taxes and maintenance of unemployment insurance benefits are two measures that would stimulate the economy in the short term However Congress and the Obama Administration must reach an agreement on these measures otherwise the effects of tighter fiscal policy will reduce economic growth this year Business Confidence On Knife Edge Global business confidence is balancing on a knife edge heading into 2012 says a report from Grant Thornton International The fourth quarter results of the International Business Report IBR shows the global economic outlook is still dominated by the crisis in the eurozone and fears are increasing that business growth will become even more difficult than in 2011 Global business optimism in the fourth quarter of 2011 stands at net zero per cent indicating a balance between those business leaders feeling optimistic about their economies in 2012 and those feeling pessimistic It represents a further deterioration from three per cent in the third quarter of 2011 and 31 per cent in the second quarter Canada which stood out in the third quarter by posting net business optimism of 60 per cent saw this fall to 46 per cent in the fourth quarter Though not immune from the global slowdown Canada is still significantly above the global average and alongside Germany is the most optimistic mature economy January 30 2012 CEOs See Global Decline Nearly half 48 per cent of the CEOs polled worldwide believe the global economy will decline even further in the next 12 months says PwC s 15th Annual Global CEO Survey Just 15 per cent said the global economy will improve during 2012 The outlook was almost identical for the 130 Canadian CEOs who responded to this year s survey with 48 per cent seeing a decline over the next year and only 13 per cent believing the market will improve However Canadian CEOs believe their organizations have been less affected by global turmoil than leaders in other countries For instance while the sovereign debt crisis was cited as the key global issue to affect Canadian businesses a reduced number of Canadian CEOs 38 per cent said the crisis had an impact on their operations this year compared to 56 per cent of CEOs globally Similarly this held true for other significant global events including the Japan earthquake and nuclear crisis 18 per cent compared to 29 per cent globally and the political upheaval in Arab economies 14 per cent compared to 21 per cent globally In general CEOs in Canada believe their companies have greater resilience and growth prospects than their global peers says Gino Scapillati national managing partner markets Compared to other leaders Canadian CEOs found their companies to be less affected financially by major 2011 crises events CN Suspend Ex CEO s Pension Canadian National Railway Co has suspended Hunter Harrison s pension payments alleging that its former chief executive officer will breach provisions of his retirement deal and poses a serious threat to CN if he joins rival Canadian Pacific Railway Ltd says a report in the Globe and Mail Harrison is in the midst of a proxy battle by U S hedge fund Pershing Square Capital Management LP on CP which is lagging behind other freight carriers in the industry It wants to replace current CEO Fred Green with Harrison Now CP s largest shareholder it hired Harrison as a consultant last fall to help the hedge fund assess its potential investment in CP The report says Pershing Square is prepared to guarantee Harrison s retirement benefits if CN prevails with its suit Harrison had a non compete clause that expired at the end of 2011 His pension benefits have a present value of 20 6 million and restricted share units worth 17 9 million Special Rolls Sells Out In China Luxury car sales in China show no signs of slowing In fact a special edition Rolls Royce Phantom built to commemorate the Chinese New Year sold out within two months of being announced even though it was priced from 1 2 million Torsten Mueller Oetvoes Rolls Royce CEO Chinese customers aren t satisfied with plain old luxury cars but prefer highly bespoke models Already some 56 per cent of orders for the entry level Ghost sedan contain some element of bespoke personalization ranging from custom paint through picnic sets and cigar humidors The automaker plans to build even more dealerships in China on top of the existing 14 it has just to keep up with demand Investors Suffer From Fatigue The Canadian stock market has become narrower with more exposure to resource and financials says Jeff Tory a partner at Pembroke Management Ltd Speaking at its Outlook 2012 he said this is compounded by the fact that Canadian investors are too focused on Canada Heading into 2012 he also said that investors being bombarded by negative news and experiencing a loss of faith in government This has left them suffering from fatigue and feeling no love for equities The end result is inaction as they are uncertain about what to do Monetary Policy Needs Watchdog Canada should improve its oversight of financial stability in the economy with a watchdog committee co chaired by the Bank of Canada and Finance Canada says a report by the C D Howe Institute Financial Stability The Next Frontier for Canadian Monetary Policy says the next goal of monetary policy in Canada as elsewhere is to achieve and maintain financial stability in the economy A new Canadian institutional framework to oversee financial market regulation with an eye to enhancing financial stability would take a systemic approach to safeguarding the financial system as a whole and clearly define the role of the Bank of Canada within it It says while Canada weathered the recent financial crisis well a better system could improve the odds of forestalling the next one North American Investors Optimistic North American investors are feeling optimistic say Investor Sentiment Index ISI surveys from Manulife Financial and John Hancock In the first ever comparison of the two surveys results suggest that Canadians are nearly twice as likely to view the present as a good or very good time to be investing in a range of investment vehicles as are their American counterparts The Canadian index rose five points and hit a year end high of 26 while the American index also increased five points ending the year at 15 Growing consumer confidence is an important barometer when looking at the future health of the economy on either side of the border says Bill Cheney chief economist for the companies Consumer confidence usually translates into increased spending a critical component to keep their economies moving forward ETF Servicing Capability Enhanced State Street Corporation has expanded its global servicing capability for exchange traded funds ETFs Now leveraging state of the art cloud enabled technology its ETF servicing solution TotalETFSM drives full automation throughout the lifecycle of an ETF from the basket creation process to trade processing and settlement The enhancements provide complete integration to core applications end to end automation and full client transparency via an ETF dashboard available on the company s client website Additional functionality includes the geographic expansion of its Fund Connect ETF order management system and a daily performance attribution capability RBC Commits To Impact Investing The Royal Bank of Canada will commit 10 million to impact investing The RBC Impact Fund will help finance projects by organizations and entrepreneurs that address social and environmental challenges And it s also making a 10 million investment by the RBC Foundation of its own assets into socially responsible investment funds The bank will assemble an advisory panel to assist an internal group in developing criteria for the fund including types of organizations eligible for funding terms of funding geographical limitations etc an appropriate governance structure and processes Details on the eligibility criteria and application process for the fund will be communicated in the coming months Effort Needed To Educate ETF Investors The exchange traded fund ETF industry needs to be responsible in developing new products and make greater efforts to educate investors about ETFs says Gus Sauter CIO at Vanguard In a speech at the IndexUniverse Inside ETFs conference he said the ETF industry has been characterized by growth and innovation From 2000 to 2010 assets in ETFs grew by about 30 per cent per year The rapid growth of ETFs has been largely good news for investors providing them with greater access to diversified low cost index funds and giving advisors simple flexible investment tools for building well constructed portfolios for their clients However he encouraged ETF providers and investment advisors to play the role of an educator when it comes to ETFs I believe that as providers of ETFs and as distributors of ETFs we

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2012-02-16 (2016-04-26)
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