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November 15, 2018


Ability To Repay Creditors Improves

Canadian pension managers have improved their ability to repay creditors despite increasing their exposure to less-liquid asset classes such as infrastructure, real estate, and private equity, says Moody’s Investors Service. Holding larger shares of highly liquid securities, increasing recurring investment income, and reducing reliance on short-term debt programs is improving pension manager liquidity and, as a result, Canadian pension managers have improved their ability to repay creditors. Overall, its estimates of pension manager liquidity coverage for creditor obligations rose to 335 per cent from 266 per cent in 2015. These exposures are a credit positive from a creditor perspective because they can be easily sold should a pension manager need cash which is especially important during times of market turbulence.

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GSC Creates Pharmacy Ratings

Green Shield Canada (GSC) is introducing quality rating scores for Canadian pharmacies. Its plan members can now search online for a nearby pharmacy, but in doing so, have access to a five-star rating tool that measures the health outcomes achieved by that particular location. The criteria for measurement of the health outcomes focus on the promotion of good adherence to drug therapy, care for chronic disease, and the safe dispensing of drugs to seniors. Zahid Salman, GSC’s president and CEO, says, “While any feedback to health providers, including online plan member feedback, is a positive in the system, we believe our focus on generating and sharing true evidence of health outcomes is the most valuable contribution we can make to move the provision of quality healthcare forward.” Plan members can access the rating scores through GSC’s Google-powered health provider search tool on its online services and mobile app, ‘GSC on the Go.’

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Intact Joins TCFD Pilot

To better protect communities and economies, and aligned with its core value of being socially responsible, Intact Financial Corporation will be part of the United Nations Environment Programme Finance Initiative (UNEP FI) Task Force on Climate-related Financial Disclosures (TCFD) pilot. The pilot brings together 16 of the world’s largest insurers to better understand the impacts of climate change on their business ‒ integral for the insurance industry in their role as risk managers. In addition, Intact signed on to the UNEP FI Principles for Sustainable Insurance (PSI). The PSI is a global best-practice sustainability framework for the insurance industry to address environmental, social, and governance (ESG) risks.

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Board Effectiveness Linked To Long-term Value

An effective board directly links to positive long-term company value and that’s “the driving factor behind all of our ESG (environment, social, and governance) work,” says Adriana Morrison, senior associate on the Canada Pension Plan Investment Board (CPPIB) sustainable investing team. This was the basis for including board effectiveness as a formal focus area for 2018 and beyond. She says formalizing board effectiveness as a focus area allows it to be more proactive and create a top-down strategy on how it will be overseeing the issues related to it. Board effectiveness has two aspects: attributes and processes. Evaluating attributes means looking at things like director independence, skill sets, diversity, and other characteristics of a company’s existing board. On the process side, it examines a range of board processes such as the board’s evaluation processes and how feedback is used to determine its future needs.

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Investments In Technology Reaching Record Levels

Private equity buyout firms are on course to make more investments in the technology sector in 2018 than in any year prior, says Preqin. As at November, there have been 1,079 buyout-backed tech-focused deals announced globally, approaching the record of 1,096 set the previous year. In fact, the number of buyout-backed deals in tech has increased year-on-year since 2009, although the value of these deals peaked at $177 billion in 2015, driven in part by the $67 billion merger of Dell and EMC. Technology-focused private equity funds now hold more than half a trillion dollars in assets under management as of the end of March. This is twice as large as the sector was just five years ago. This momentum seems unlikely to slow in the near future as fund managers focused on tech currently hold a record $190 billion in dry powder ready to be deployed.

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Bearish Investors Signal Short-term Uptick In Risk Assets

Although investors have become the most bearish on global growth since 2008, they haven’t become bearish enough to signal anything but a short-term uptick in risk assets, says the Bank of America Merrill Lynch‘s monthly fund manager survey. This month, the average cash balance of managers remained steady at 5.1 per cent, above the 10-year average of 4.5 per cent. In addition, a record 85 per cent of managers surveyed said they believe the global economy is in the late cycle, 11 percentage points above previous highs in December 2007. When asked how the global economy will develop over the next year, a net 38 per cent of respondents said they expect deceleration, representing the worst outlook on global growth since November 2008. For the fifth consecutive month, a possible trade war remains the biggest tail risk for managers, with 35 per cent of respondents putting it at the top of their list of concerns. However, that concern continues to recede. Last month, 43 per cent of respondents considered a trade war the biggest tail risk.

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Caisse Acquires Power Solutions

The Caisse de dépôt et placement du Québec (CDPQ) will acquire 100 per cent of Johnson Controls’ power solutions from Brookfield Business Partners L.P. and its institutional partners. The business produces batteries for global automakers and aftermarket distributors and retailers for use in nearly all types of vehicles, including hybrid and electrical models.

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Dealing With Disruption Discussed

‘Thriving in the Era of Disruptive Innovation’ is the topic of a CPBI Atlantic Spotlight with Jim Harris, a disruptive innovation and organizational change expert. The author of ‘Blindsided!’ and ‘The Learning Paradox’ will look at the forces that are disrupting companies and industries and presents strategies for preventing it in a world where technology is changing faster than ever before. It takes place March 7, 2019, in Halifax, NS. For information, visit CPBI Spotlight

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November 14, 2018


Good Governance Worth 15 BPS

Companies with social characteristics are earning investors on average 15 basis points (bps) more each month than those with poor or deteriorating social characteristics, says research by Hermes Investment Management. Its ‘ESG investing: A social uprising’ report says this is the first time a statistical link between social factors and returns had been made in its research, which has been carried out three times in total. The research looks at the impact of environmental, social, and governance (ESG) factors on equity returns from the MSCI World Index. It reaffirmed the benefit of good or improving corporate governance. Although the average monthly return had fallen from 30 bps in a previous study, it was still positive at 24 bps. While well-governed companies have tended to outperform poorly governed companies since the start of 2009, the governance factor was “particularly ineffective” in the past 12 months when poorly governed companies tended to outperform well-governed companies. As for the environmental element, there was “no evidence” of underperformance by companies showing attractive environmental characteristics. Social factors such as employee turnover rates and workplace accidents, as well as policies on human rights, have been harder to quantify for investors due to their “intangible nature.”

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Demographic Problems Will Get Worse

The demographic changes being experienced worldwide today are unprecedented and are going to continue to accelerate in the near future, says Wilfred Hahn, founder and global strategic advisor at Forstrong Global Asset Management Inc. Speaking on the ‘Demographic Challenges Create Epic Implications for Investment Policy’ session at the Benefits and Pensions Monitor Meeting & Events ‘Pension Investment Trends’ session, he said that these changes will impact the cost of longevity as well as retirement lifestyles. “We have to look at all the realistic scenarios and the possible future impact of demographic changes,” he said. “There are going to be some real implications and we need to consider this when we put together investment policies.” Currently, there is both a depopulation and population explosion at the same time. The result is a global income crisis ‒ a mismatch between future income demand and supply. And, the problems will continue to worsen, said Hahn. Global aging continues to accelerate with the biggest gain from 1997 to 2017 in the 50- to 54-year age group. From 2017 to 2037, the biggest gain will be in the 70- to 74-year-old age group. Fertility rates are decreasing, with the average number of children per women roughly half of what it was in 1960. Post-familialism, a negative growth in 15- to 45-year-olds, and an increasing aging population will contribute to the global demographic problems going forward. Added to this is inflation resulting in an increasing cost for a retirement lifestyle. Hahn said investors need to anticipate these changes in order to take advantage of strategies that can still offer some mitigation. Among his recommendations are seeking assets that produce real underlying income, anticipating lower lows on long-term rates at some point, pursuing global strategies, and paying attention to what central banks are buying and selling.

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Managers Waiting On Treasury Yields

Money managers are waiting on 10-year Treasury yields to reach 3.7 per cent before rotating into bonds from stocks, says Bank of America Merrill Lynch‘s monthly fund manager survey. Only 11 per cent of respondents said they expect a global recession next year. However, when asked how the global economy will develop over the next year, a net 44 per cent of respondents expect global growth to decelerate in the next 12 months, the worst outlook on the global economy since November 2008. A net 54 per cent expect a slowdown in Chinese growth in the next year, the most bearish outlook in more than two years. Nearly half (45 per cent) of respondents expect international equities to be the best-performing assets, while 25 per cent expect corporate bonds to be the worst and 24 per cent believe government bonds will be the worst. Managers believe the S&P 500 will peak at 3,056, up 12 per cent from its current level. For the sixth consecutive month, a possible trade war remains the biggest tail risk for managers, with 35 per cent of respondents putting it at the top of their list of concerns.

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Cyber Risk Program Should Look At Technology, People, Vendors

There are three pillars to a cyber risk program – technology, people, and vendors, says Kelly Hastings, chief risk officer, CIBC Mellon. She told the Benefits and Pensions Monitor Meeting & Events ‘Pension Investment Trends’ session, ‘Governance Issues Impacting the Industry,’ that all institutions must monitor their environments for vulnerabilities and threats. A breach could cause systems to shut down, manipulate fund positions, impact investment valuations, and risk member privacy, to name a few. For technology there are three considerations – ransomware, personal devices, and secure movement of information. Organizations need to monitor for potential liabilities and threats. Systems must be in place for companies of all sizes and they must not just rely on technology. For people, companies must look at data classification, phishing programs, and employee training. People can be the first line of defense but companies need to work with individuals to raise awareness of vulnerabilities and teach them steps to take if they identify something suspicious. “Employees need to understand the criticality of data,” said Hastings. Vendor management is also crucial in a cyber risk strategy because any weakness a supplier has, the company that hires it also has. Any function that is outsourced has risk. “They may not adhere to the same standards.” Hastings said organizations should have an active and ongoing business continuity process. They should also have a recovery process in place.

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CDC Arrangements Proposed

The UK government is seeking input from plan sponsors, trustees, and employers on a proposal that will allow workplace retirement plans to take the form of collective defined contribution (CDC) arrangements. The Department for Work and Pensions intends to consult the industry on a CDC model, which provides for contributions to be pooled in an effort to deliver a target benefit, rather than a guaranteed one. Under the current legislation framework, only defined benefit funds or individual DC workplace arrangements are allowed. CDC plans, if introduced, could give plan sponsors the ability to provide a savings option and an income-in-retirement option within the same arrangement. This would give participants in CDC plans a better chance to be cushioned from volatility as investment risk is adjusted for over time. These plans also enable longevity risk protection through risk sharing without participants bearing the cost of accessing insurance products on their own.

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CAAT Strategic Risk Management Looks At Prime Risks

When considering risk management, the prime risks for CAAT Pension Plan include the funded status, managing plan maturity risk, and protecting the plan from key operational risks, says Julie Cays, chief investment officer of the CAAT Pension Plan. Speaking at the Benefits and Pensions Monitor Meeting & Events ‘Pension Investment Trends’ session, ‘The Evolving Nature of Pension Investment Risk Management,’ she said, “our funded status is a key metric of risk, so we’re very careful about building reserves.” Plan maturity risk is looking at asset liability modeling. “We stress our demographics and our liabilities almost as much as we stress the economic potential outcomes on the asset side. We have determined that plan maturity risk actually dwarfs investment risk over the long term.” Finally, key operational risks include cyber risk ‒ which concerns the privacy of member information. CAAT spends a lot of time and resources in keeping this information safe. Liquidity risk is a lesson learned from the Great Recession in 2008-2009, “when we went through a time where the only thing we could sell was government bonds to come up with pension payments. You have to maintain a cash balance,” said Cays. As part of its strategy to manage a number of risks, CAAT has put in place a secondary plan design called DB Plus. It is a plan design that is more attractive to part-timers and easy to administer for employers. It has fixed contributions and may appeal to organizations that are at this point defined contribution, but might be interested in shifting to another form of defined benefit with fixed contributions. It is open to all sectors of the pension sphere ‒ not-for-profit, private and public sectors, and all types of plan designs ‒ DB, group RRSPs, or exiting DB plans.

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Melton Joins Medcan

Tiffany Melton is director of communications at Medcan. Most recently, she was manager of communications and change management at TD. Prior to that, she was strategic communications manager at Scotiabank.

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DC Greatness Examined

‘Making DC Great Again’ is the focus of a Toronto Area Chapter of the International Society of Certified Employee Benefit Specialists professional education opportunity. Joe Nunes, executive chairman of Actuarial Solutions, Inc., will discuss retirement readiness and the role of defined contribution pension plans in helping their members to be financially prepared for retirement. It takes place December 6 in Toronto, ON. For information, visit DC Greatness

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November 13, 2018


Mawer Investigates Options

Mawer Investment Management Ltd. has reportedly hired the Bank of Nova Scotia to explore options such as a sale, following a wave of transactions involving Canadian money managers. While it says no decision has been made to change firm ownership, given recent activity in the industry, it has engaged an advisor to obtain more information on the options available to the firm as part of its strategic planning process. Earlier this month, Toronto-Dominion Bank completed the purchase of Greystone Capital Management as part of its push to become the largest Canadian money manager. Scotiabank recently acquired Jarislowsky Fraser Ltd. Founded in 1974, Mawer oversees more than C$50 billion for individual and institutional investors across all major asset classes.

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Global Credit Conditions To Weaken

Global credit conditions will weaken in 2019 amid slowing growth and rising risks, says Moody’s Investors Service. It forecasts global credit conditions deteriorating in 2019, as “growth decelerates, funding costs increase, liquidity tightens, and market volatility returns.” Geopolitical and domestic political tensions will dominate the risk landscape for global credit conditions and credit quality in 2019 as tensions between the U.S. and China spread far beyond trade disputes. As well, there is a risk of the United Kingdom withdrawing from the European Union without a trade agreement in place and domestic political risks will continue to weigh on the credit outlooks for Italy, Brazil, Turkey, and Argentina. It expects that the impact of slower growth will increasingly push debates about globalization and inequality to the political forefront.

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Fixed Income ESG Demand Outstrips Supply

As environmental, social, and governance (ESG) investing becomes more prevalent in the fixed income space, demand is starting to outstrip supply, says Cerulli Associates. ESG criteria are most commonly applied to equities, but fixed income investors are increasingly interested in sustainability, it says. The key difference between the ESG needs of a fixed income investor and those of an equity investor is that the former is focused on managing downside default risk, whereas the latter’s priority is upside appreciation. However, the incorporation of ESG criteria into fixed income has been hampered by factors such as the role of ESG in credit ratings, the shortage of sustainability indices against which to benchmark performance, the scarcity of ESG-focused products, and the challenges of engaging with issuers, particularly sovereigns. It expects to see the launch of a variety of new ESG products over the coming years, including in areas less suited to ESG, such as high yield.

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Co-operators Continues MSO Research With Worldcare

The Co-operators has partnered with WorldCare International, Inc. to research medical second opinions (MSOs) for mental health. The first phase of the partnership’s study explored the service with participants who were on disability leave for mental health conditions and showed very promising results as 90 per cent of the participants received a new treatment recommendation, 30 per cent fully returned to work or are gradually returning to work, and 50 per cent experienced improvements in their daily lives. The results of the first phase suggest that MSOs offer improved treatment options and help people shift to a better quality of life and eventually return to work. Now, they will study volunteer plan members with diagnosed mental health conditions. The research will help define long-term viability and identify patterns in service needs.

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AIMCo Acquires Spanish Power Producer

The Alberta Investment Management Corporation (AIMCo) has entered into an agreement to acquire a majority stake in Eolia Renovables de Inversiones, S.C.R., S.A, an independent power producer in the Spanish renewable energy sector, from funds managed by Oaktree Capital Management, L.P. and other shareholders. Its investment in Eolia Renovables provides its clients exposure to a company that owns a large portfolio of renewable energy assets with long-term revenues contracted under the Spanish regulatory regime, as well as, a pipeline of potential development opportunities in Spain. Eolia Renovables will complement its existing portfolio of global investments in utilities, power generation, and transportation.

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Finkbeiner Has New Role

Paul Finkbeiner is executive vice-president, global head of real estate, for Great-West Lifeco. He was previously president of GWL Realty Advisors Inc. (GWLRA). In this role, he will work to establish a global real estate platform leveraging its existing regional capabilities to continue to accelerate its growth and maximize access to investments across the regions. He has over 30 years of real estate experience and joined the organization over 20 years ago.

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Public-Private Balance Examined

‘Public-Private in the Balance: The Impact on Plan Design and Costs’ will be examined at a Benefits Breakfast Club event. Aimee Sulliman, senior vice-president, public affairs, at the Neighbourhood Pharmacy Association; will provide an update on the progress and timelines of the National Council on the Implementation of Pharmacare and review the models that have been proposed and the challenges of provincial buy-in to a national model. Pinay Kainth, medical advisor, neuroscience, at Novartis; will discuss ‘New Therapies and Their Impact on Benefits: Migraine and Diabetes.’ He will address the burden of illness of migraine as a disease and the impact in the workplace, episodic versus chronic migraines, current treatments, and new solutions. Harpreet Singh Bajaj, an endocrinologist and epidemiologist, will address new developments in diabetes, the burden of illness, and the challenge of managing what is now one of the leading driver of costs in employee benefit plans. It takes place November 29 in Mississauga, ON. For information, visit BBC

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November 12, 2018


Management Needs To Know Why

Convincing management that benefits are important starts with explaining why, says Naomi Titleman, vice-president, talent, at Medcan. Speaking at its ‘LIVEWELL Toronto 2018’ on ‘Progressive benefits and the value of investment,’ she said escalating healthcare costs, chronic health conditions, rising absence costs, the aging population, and mental and stress problems are all examples of why they are important. However, the benefits most people signed up for are not the benefits needed today. Originally, benefits were structured for a family of four with two kids, good teeth, and who needed glasses. This no longer applies and maintaining this kind of coverage puts stress on the system and adds unnecessary cost, she said. Instead, well-being is becoming a business imperative and 61 per cent of companies are using this to improve productivity. These progressive companies are looking at VOI (value of investment) as well as ROI (return on investment) for benefits programs. Conventional ROI is measured through healthcare costs, sick days, and disability claims. VOI is measured through reduced healthcare costs, reduced sick days, and reduced disability claims, said Perry Hassen, director of analytics at Medcan. Every dollar spent on wellness saves $3.27 in healthcare costs and $2.73 in absentee costs, he said, and the average health cost for low risk employee is $3,490, whereas for high risk employees ‒ those with chronic conditions like diabetes ‒ that cost rises to $8,280. One way employers can find opportunities to improve employee well-being is by carrying out a thorough corporate health assessment.

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CPP Fund Assets Grow

The Canada Pension Plan (CPP) fund ended its second quarter of fiscal 2019 on September 30, with net assets of $368.3 billion, compared to $366.6 billion at the end of the previous quarter. The $1.7 billion increase in assets for the quarter consisted of $2.3 billion in net income after all CPP Investment Board (CPPIB) costs, less $0.6 billion in net CPP cash outflows. The fund routinely receives more contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months. On an annual basis, contributions to the fund continue to exceed outflows. The investment portfolio achieved 10-year and five-year annualized net nominal returns of 9.1 per cent and 12.1 per cent, respectively, and 0.6 per cent for the quarter. Mark Machin, president and chief executive officer of the CPPIB, says “Foreign currency exchange rate declines relative to the Canadian dollar were the fund’s main headwind during the quarter, offsetting strong local currency performance.” CPPIB also continued to advance its preparations to accept, invest, and manage the additional CPP contributions set to begin flowing into the fund January 1, 2019.

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Workplace Needs Activity

It is not just sitting, any prolonged static posture puts stress on the same tissues cumulatively and repetitively over time, says Dr. Andrew Miners, director of sports medicine, therapy and rehabilitation at Medcan. He talked about the importance of moving at its ‘LIVEWELL Toronto 2018.’ People sit a lot in the modern office, he said, but it’s not just sedentary work, it is also leisure where too much time is spent doing nothing. Sedentary behaviour has been linked to increased risks for chronic conditions such as diabetes and cardiovascular disease. And while the general guideline is that people need 150 minutes each week of moderate intensity, those with sedentary jobs and lifestyles actually need to do four to five times that so meeting targets for physical activity is not enough, people need to get more than minimum activity, he said. In this means environmental changes like adjustable, standing desks; organizational such as moving meetings; and individual such as the use of tracker apps are needed. Employers should urge employees to get up when they can and initiate walk and talk meetings. Exercise is medicine,” he said, and can be as simple as taking the stairs, walking or riding a bile to work, and parking further away from the building.

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Europe Increasingly Attractive

Europe is increasingly attractive as an investment destination for global investors, says a survey by Invest Europe. Its ‘Global Investment Decision Makers Survey 2018 shows that 91 per cent of U.S. and China investors cited Europe as more attractive than five years ago, compared with 71 per cent in the U.S. and 78 per cent of China investors in last year’s survey. Among all global investors, 78 per cent expect increased investment in the region over the next five years as they become more positive on allocating to both the European Union and the UK following Brexit. Europe ranked above the U.S. and China for its highly skilled workforce, transport infrastructure, and regulatory climate. Europe also beat the U.S. as the leader on innovation and entrepreneurship, taxation levels, and access to global markets.

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Overweight Medical Condition

Being overweight is a real medical condition and quite complex, says Dr. David Macklin, director of weight management at Medcan. Weight problems happen because humans are driven towards opportunities for dense calories which is really important in calorie deprived environments, he said at its ‘LIVEWELL Toronto 2018’ session on ‘Effective workplace behaviour change.’ There are incredible differences in individuals about weight gain. However, 60 per cent of weight is genetic. This explains why the same amount of calorie surplus creates more weight gain in some individuals. There is often evidence that some people are more sensitive to internal and external cues and less sensitive to cues they are satisfied when eating. It is an issue as excessive weight is associated with health risk factors including poor physical and mental health.

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Managers Deploy Advanced Analytics

Advanced analytics are now being deployed by 85 per cent of asset managers and a further 55 per cent are working with alternative data. Yet only 10 per cent are generating substantial and sustainable value from these programs, says a report from Element22. It found that the majority of firms (55 per cent) are in the early stages of their advanced analytics projects while 10 per cent have only just started. Most asset managers invest heavily in the early stages of these and these levels then decline as the focus switches to areas of success. Those that go on to develop business confidence from their programs will typically increase their investment with a fortunate few attaining a return on investment. The study, which was sponsored by UBS Asset Management, found that the firms most aggressively pursuing these projects are investing between two to three per cent of annual revenue while those in the middle of their projects plan to increase investment by 240 per cent over the next three years. The vast majority (95 per cent) are using advanced analytics for alpha generation compared to 75 per cent for business operations and 70 per cent for client acquisition. The most popular form of advanced analytics is machine learning which is used by 90 per cent.

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Corporations Changing From Bottom Up

Corporations are fed up and not waiting for top down changes from government, says Dr. James Aw, chief medical officer of Medcan. And they are going to start working from the bottom up to improve the health of their employees by engaging with health coaches and allying with other healthcare professionals to change behaviours, he told its ‘LIVEWELL Toronto 2018’ session on ‘The patient of the future: Can we deliver on the promise of precision prevention.’ This is due to big data and AI (artificial intelligence) which can revitalize primary care by determining what is relevant to patients. There is also a shift towards value based care ‒ increasing the value of healthcare by achieving better outcomes at lower cost.

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Median Return Rises

The median return of the BNY Mellon Canadian Master Trust Universe was 0.42 per cent for the third quarter of 2018, marking the 10th straight quarter of positive results. The one-year median return was 7.37 per cent, while the median 10-year annualized return was 8.22 per cent. Equity segment returns were mixed the quarter, displaying both negative and positive performance. Canadian equity posted a quarterly median loss of 0.14 per cent, ahead of the S&P/TSX Composite Index which was down 0.57 per cent. The U.S. equity median quarterly return was strong at 4.69 per cent, but trailed the S&P 500 Index result of 5.84 per cent. Emerging markets equity posted a negative median return for the quarter of 3.02 per cent, slightly trailing the MSCI Emerging Markets Index which was down 2.67 per cent.

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Sankey Becoming CEO

Robert Sankey will become CEO of Burgundy Asset Management, effective January 1. He has been with the firm for nearly 14 years. During this time, he has held positions in operations, performance measurement, and compliance. Previously, he worked at HSBC, CIBC Mellon, and Russell/Mellon Analytical Services.

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DB Comeback Examined

The CPBI Ontario Ottawa Chapter will explore ‘Are DB plans making a comeback?’ The event will feature a 2018 legal update to review the changes in the pension and benefits area, a look at why CMHC closed its DC plan and reopened its DB plan, and a presentation on CAAT’s DBplus program. It takes place November 21 in Ottawa, ON. For information, visit DB Comeback

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November 9, 2018


Effective Response Emerging Differentiator

Organizations with high levels of employee engagement create a strong and compelling employment brand, excel at fostering a high-performance culture, and have engaging leaders. However, this year’s ‘Aon Best Employers in Canada Study’ shows an emerging differentiator for best employers is their ability to effectively respond to increasing organizational disruption and to help employees manage through a rapidly changing work environment. Now in its 20th year, the study found overall employee engagement among Canada’s best employers was largely unchanged from last year. Yet, “the rapid advancement of technology is disrupting organizations and creating challenges that have the potential to stand in the way of realizing the full benefit of this technology on their business results and this year’s study demonstrates organizations that can effectively respond to those challenges also achieve high employee engagement,” says Todd Mathers, partner and culture and engagement consulting leader for Aon in Canada. Best employers score much higher in the survey in agility of decision-making, quickly and effectively implementing new innovations and other changes, while also excelling in the areas of employee learning and development, effective allocation of talent to get work done, and making employees feel valued. “It boils down to this: best employers help people understand where they need to focus, give them the support they need to perform at a high level in a changing work environment, and have engaging leaders who help employees feel valued and part of the organization’s success,” he says.

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Canada Needs Serious Look

It’s time for small- and mid-cap investors to look seriously at Canada, says Charles Nadim, co-head of equities and portfolio manager for Canadian equities at Jarislowsky Fraser Global Asset Management. Speaking at its ‘Analyst Insights Series’ on ‘Uncovering Small/Mid Cap Gems,’ he said this is not a market that can be invested in through indexes because the spreads in performance are so wide. However, the risk can be lower than with large caps with lower deviations despite wide tracking error depending on what is bought. He said that there are a number of reasons he expects Canada to do well in this area going forward. Canada is the fastest growing nation in OECD with immigration driving growth opportunities. However, he said the immigration is hand-picked and is making Canada a global “poacher” of talent with 65 per cent of immigrant highly talented. It is also the most highly educated country in the world which helps explain why, for example, Toronto, ON, has the highest concentration of AI (artificial intelligence) start-ups in the world. It meets the criteria the fund manager sets for investment. It has a strong balance sheet with the lowest percentage of government debt to GDP (around 30 per cent) among developed economies in the world which means there is more money to invest. Its deficit as a percentage of GDP (less than one per cent) ranks it just behind Germany. In terms of governance, it ranks sixth due to the role of law and openness of markets and it is at the forefront of having women on boards. He said they expect returns of 10 to 15 per cent over the next decade from their portfolio. And while it is excited about this potential for high growth, it wants this growth to be sustainable, he said.

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Canada Has Longest Wait Times

Despite spending more on healthcare than the majority of developed countries with universal coverage, Canada has a relatively short supply of doctors and hospital beds and the longest wait times, says a study by the Fraser Institute. “There is a clear imbalance between the high cost of Canada’s healthcare system and the value Canadians receive,” says Bacchus Barua, associate director of health policy studies at the Fraser Institute and co-author of ‘Comparing Performance of Universal Healthcare Countries, 2018.’ The study compares 28 universal healthcare systems in developed countries. In 2016, the most recent year of comparable data, Canada’s healthcare spending as a share of GDP (11 per cent) ranked fourth highest behind only Switzerland, France, and Norway. However, Canada ranks 26th for the number of doctors (2.7 per 1,000 people) and 25th (out of 26) for the number of hospital beds (2.1 per 1,000 people). For the number of magnetic resonance imaging (MRI) machines, it ranks 22nd (out of 27) with 9.9 MRI scanners per million people and 21st (out of 27) for CT scanners with 15.6 per million people. As for wait times, among the 10 comparable countries with universal healthcare for which data is available, Canada ranks last with the highest percentage of patients (30 per cent) who waited two months or longer to see a specialist and the highest percentage of patients (18 per cent) who waited four months or longer for elective surgery.

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More Assets Committed To Factor Investing

Asset managers globally are committing more resources to factor investing, says research from Invesco. Exactly half of institutional investors and a third (33 per cent) of wholesale investors surveyed have added factor expertise to their investment teams, it says, while 64 per cent intend to increase their factor allocations over the next three years. They cite better net performance, cost-effectiveness, and risk reduction as the three primary reasons for the increase in allocations. Funding for factor allocations is coming from a combination of new cash flow and existing active and passive allocations. The research also shows that there has been a falling away of barriers and growing investor confidence in factor investing, also known as systematic investing, smart beta, and active quant strategy. These barriers include belief in the factor theory, support from the executive and internal stakeholders, and internal capability. Style continues to be the most widely used factor, followed by low volatility.

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Pension Protection Proposed As Election Issue

Rank-and-file members of the United Steelworkers union (USW) from across Canada left Ottawa, ON, after a week of meetings hoping that protection for retired workers will be on the agenda of every political party in the 2019 election. “After experiencing the effects of current bankruptcy and bankruptcy protection laws that do not protect retirees’ pensions and benefits, our members are committed to campaigning for a more secure future,” says Ken Neumann, USW’s national director, citing cases such as Nortel, Stelco, and Sears. “They know how unsecure their pensions and benefits may be if a company enters restructuring under the Companies’ Creditors Arrangement Act (CCAA) or goes bankrupt,” he says. The meetings with MPs focused on a series of recent bills currently before the House of Commons and the Senate aimed at reforming the CCAA and the Bankruptcy and Insolvency Act (BIA) to give priority to claims by workers arising out of an underfunded pension plans and the elimination of benefits.

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CAAT Earns Innovation Award

The CAAT Pension Plan has earned the innovation in plan design and reform award at the ‘2018 WorldPensionSummit.’ It won for its introduction of DBplus, a defined benefit plan design that provides lifetime pensions at a fixed contribution rate and is open to organizations from any sector with any type of pension plan. The CAAT plan is open to discussions with interested organizations (including those outside of Ontario’s post-secondary education sector) about the possibility of joining the plan. (Julie Cays, from the CAAT Pension Plan, will discuss DBPlus at the Benefits and Pensions Monitor Meetings & Events session on ‘Pension Investment Trends,’ November 13 in Toronto, ON. For information, visit Investment Trends)

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Buck Connects HR Function

Buck has launched its next-generation BuckConnect platform for employers to manage their HR function and drive ideal employee behaviours. It has aggregated its health, wealth, and career programs and delivered them in a mobile and web experience, creating a one-stop-shop for both the individual and the organization. Meanwhile, the underlying administration services remain vendor agnostic. Using machine learning-enabled decision support tools, employees can use the platform to securely access, transact, and manage their full suite of benefits and HR programs. Employers can directly review custom dashboards and model scenarios to dynamically re-evaluate how well plans are working relative to their overall objectives.

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Two Join Starlight

Varun Anand is a portfolio manager and Michelle Wearing is an associate portfolio manager at Starlight Capital. Varun comes from CI Signature where he was a member of the infrastructure team. Prior to that, he was a senior research analyst at Sentry Investments. Wearing has over nine years of business and investment experience, primarily in real estate. She was with TD Securities Inc. as an equity research associate covering Canadian REITs and REOCs. Prior to that, she was a manager in valuations at KPMG LLP.

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First Conference Planned For West

The Private Capital Markets Association of Canada (PCMA) will hold its first ‘Western National Conference.’ Featuring panel presentations and discussions, attendees will expand their industry networks while obtaining insights into an ever-changing global capital market investment industry. It takes place November 22 in Calgary, AB. For information visit PMAC West

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