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September 20, 2019


Governments Slow To Act On Telemedicine

The technologies behind telemedicine are available and more Canadians could receive remote care, at home or at work, thereby saving themselves trips and avoiding long waits. Unfortunately, Canadian governments are slow to remove obstacles that prevent patients from benefiting from virtual consultations and doctors from providing this care, says an MEI study. As a result, only one per cent of Canadians use virtual care. “We communicate with our loved ones or with strangers on the other side of the planet. We carry out secure banking transactions online with a few clicks. But virtual consultations with a doctor or a nurse are non-existent for the very large majority of Canadians,” says Patrick Déry, senior associate analyst at the MEI and author of ‘Health Care Entrepreneurship – How to Encourage the Deployment of Telemedicine in Canada.’ “For most of us, a medical visit still represents long hours of waiting and a workday lost.” An example of an obstacle is a doctor who provides care to people located in a certain province must hold a licence to practice in that province, even if they already hold a licence from another province. Yet more and more Canadian companies are offering their employees access to virtual consultations through their group insurance plans. A doctor who provides such a consultation could easily renew a prescription for an Alberta patient, follow up with another from Manitoba suffering from a chronic illness, and direct a Quebec patient to a consultation with a specialist, all without leaving his or her office. “The anatomy of Canadians does not vary a lot from province to province! If doctors are available elsewhere to give us a hand, even just temporarily, why not welcome them with open arms? We are currently depriving ourselves of an additional contribution that would help both patients and our overcrowded public systems,” he says. Provincial governments have also set out several conditions that restrict access to telemedicine within the public systems, which is often reserved for patients who live in remote regions or who suffer from particular conditions and the fee-for-service payments, which represent around three-quarters of Canadian doctors’ incomes, do not encourage them to carry out actions for which there will be no payment. Numerous studies have shown that telemedicine is reliable, practical, and effective and that it could be useful for a large share of daily health concerns.

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Hedge Funds Offer Market Downturn Asset Protection

Hedge fund investors are looking to the asset class to offer asset protection as they anticipate an equity market downturn, says the ‘Preqin Investor Update: Alternative Assets H2 2019.’ Almost half of them think the asset class fell short of performance expectations over the past 12 months, but a notable 42 per cent of respondents believe the industry’s performance will improve in the year to come. Almost three-quarters of investors now believe equity markets are at a peak and many are looking to hedge funds to help provide diversity and downside protection. In the next 12 months, 77 per cent of investors are seeking to maintain or increase their exposure to the industry and more than a half of respondents plan to rebalance their portfolios more defensively. In this regard, relative value and macro strategies are sought by the greatest proportion of investors.

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Fixed Income Managers Beat Benchmarks

The majority of institutional fixed income managers outperformed their benchmarks in 2018, while institutional equity managers fared less well, says a report by S&P Dow Jones Indices. Its ‘SPIVA Institutional Scorecard’ for year-end 2018 shows that among its 18 fixed income categories, 11 featured outperformance by more than 50 per cent of active managers in 2018 against their benchmarks. Active municipal bond managers fared best, with 90.1 per cent of institutional funds outperforming the S&P National AMT-Free Municipal Bond index. Among the 21 institutional equity fund categories listed by S&P 500, only three featured a majority of funds outperforming their benchmarks. Active domestic midcap growth funds had by far the best showing in 2018, with 81.6 per cent outperforming the S&P MidCap 400 Growth index.

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Thermal Coal Exposure At Same Level

More than 100 climate-themed funds listed on global exchanges have approximately the same level of thermal coal exposure as the World MSCI Index of large cap equities, says research from InfluenceMap. These findings highlight the need for greater attention and supervision of climate-themed and broader environment, social, and governance (ESG) investment in terms of advertising, marketing, and portfolio construction. A particularly extreme example highlighted in the study comes from Asia where two funds contained thermal coal intensity 50 times higher than funds on the MSCI World Index of global large cap companies, it says. Both funds have more than $100 million in assets under management and hold Chinese mining companies. Given the IPCC (Intergovernmental Panel on Climate Change) ‘Global Warming of 1.5C’ report which says the role for thermal coal in economies is strictly limited, it is surprising that several asset management groups think thermal coal companies have a place in any fund marketed to climate-concerned investors, it says.

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CPPIB Makes Indonesian Infrastructure Investment

The Canada Pension Plan Investment Board (CPPIB) will make its first infrastructure investment in Indonesia with the acquisition of a 45 per cent interest in PT Lintas Marga Sedaya (LMS), the concession holder and operator of the Cikopo-Palimanan (Cipali) toll road. The investment will be made in partnership with PT Baskhara Utama Sedaya (BUS), a wholly-owned subsidiary of PT Astra Tol Nusantara (Astra Infra). CPPIB and BUS will jointly acquire the 55 per cent stake currently held by PLUS Expressways International Berhad. BUS is an existing owner of 45 per cent of LMS and will increase its stake to 55 per cent. CPPIB will acquire the remaining 45 per cent stake in LMS. At 117 kilometres, the Cipali toll road is one of the longest operational toll roads in Indonesia and a critical link in the transportation network of the island of Java as part of the Trans Java Toll Road network. It serves as a thoroughfare within West Java, which is Java’s most populous and fastest growing province, and it also connects West Java and suburbs of Jakarta with the rest of Java.

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Jia Heads UBC Trust

Dawn Jia is president and CEO of the UBC Investment Management Trust. In this role, she is responsible for the overall investment management of UBC IMANT’s portfolios including the selection and oversight of institutional investment fund managers and ensuring that its strategic and operating objectives are achieved. Most recently, she was a senior portfolio manager at the Canada Pension Plan Investment Board (CPPIB). Prior to that, she was vice-president and head of active equity for North America at State Street Global Advisors, following on her experience as an equity portfolio manager at Barclays Global Investors and a quantitative strategist at CIBC World Markets.

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Perspectives On Decumulation Provided

The ACPM Ontario region will present ‘Decumulate or Bust? Fresh Perspectives on Retirement Income.’ Joe Nunes, co-founder and executive chairman of Actuarial Solutions Inc., and Louise Koza, director, HR digital and operations, at Western University, will discuss the recent Canadian Institute of Actuaries public statement on retirement age and offer perspectives on decumulation, including views on the new variable payment life annuity and advanced life deferred annuity products announced in the 2019 federal budget, and on variable DC benefits. It takes place October 16 in Toronto, ON. For information, visit Decumulation Perspectives

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September 19, 2019


Recession Talk Grows

Recession coming up in dialogue and print is at its highest rate since 2011/2012 when Europe was in recession. And while it is being mentioned more and more in context of the U.S., the data does not support an imminent U.S. recession, says Beata Caranci, senior vice-president and chief economist at TD Bank Group. During the ‘Tarrified: Global Macroeconomics in the Age of Protectionism’ session at the TD Asset Management Institutional Investment Symposium, she said the manufacturing side is suffering, but it is also suffering in Europe and China. However, consumers are moving at light speed and how do you get a recession out of that, she said. All the risk is on business side, but not on households and in the U.S. consumers account for 70 per cent of GDP. So unless they start to scale back because of recession fears, all that may happen is that some sectors contract as happened in 2016/2016 which was a period of slow growth, but not a recession in the U.S. Concerns about China are also unfounded because its growth will be slowing for the next decade due to its terrible demographics. They are trying to keep things in balance and depend on consumers for more growth, but that is part of their plan, she said. The most likely outcome from the U.S./China trade war is something similar to the Japan/U.S. deal. The U.S. will likely avoid a full comprehensive trade deal that has to be ratified in Congress. Instead, it will be something like an executive order, she said.

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ETF Allocations On Course To Increase Significantly

Allocations to exchange-traded funds (ETFs) are on course to increase significantly over the next two to three years, says JP Morgan Asset Management (JPMAM). ETFs made up just over a fifth of client portfolios worldwide as recently as 2016. This figure is set to increase to 39 per cent by 2022. Over 80 per cent of global fund selectors surveyed said fees and costs were a main driver for ETF allocations, while 65 per cent elected them for trading flexibility. Investors want simplicity, transparency, and diversification which isn’t always possible when investing in global bond markets directly. Latin America was also found to be way ahead of Europe and Asia Pacific in terms of ETF usage. ETFs currently make up 35 per cent of portfolio allocations in Latin America, compared to 25 per cent in Europe, Middle East, and Africa, and 23 per cent in Asia Pacific.

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Unicorn Prospects Troubling

Only a dislocative event is missing from the bubble checklist when it comes to ‘unicorns,’ privately held tech startup companies valued at over $1 billion, says William Priest, chief executive officer, co-chief investment officer, and portfolio manager at Epoch Investment Partners. He told the ‘Unicorns and IPOs: Where Private Meets Public’ session at the ‘TD Asset Management Institutional Investment Symposium’ that there is plenty of liquidity and stretched valuations, the other requirements for an eCommerce bubble. And while he doesn’t liken the current situation to the dot.com bubble at the turn of the century, the prospects for IPOs for these companies is troubling. In the U.S., IPOs (initial public offerings) are on a pace to surpass 1999. However, the proportion of IPOs with negative EPS (earnings per share) is double the historic average and 81 per cent of recent IPOs are for unprofitable firms. In some cases, the pathway to profitability is anything but clear, he said. With venture capital investors backing 80 per cent of the tech IPOs, their multiple fundraising activity often produce “stratospheric valuations” which are difficult to reconcile with FCF (free cash flow) fundamentals. As well, while the net supply of equity in the tech sector increased 69 per cent between 1996 and 2001, it contracted by nine per cent between 2014 and 2019, so the equity supply for the U.S. tech sector is on a declining trend. On a positive note, during the late 1990s, many firms came to market prematurely. The median age was four years, but IPOs in the tech sector now are 12 years old on average.

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ESG Influences Active Decisions

Environmental, social, and governance (ESG) factors are increasingly influencing the investment decisions of active managers, says a report by Russell Investments. More than half of active managers allow ESG criteria to drive investment decisions compared to 30 per cent who were surveyed last year. Also, over a third said they were initially motivated to integrate ESG considerations into their investment process based on the opportunity for superior risk-adjusted returns. The survey also found that governance was the most important ESG component, with over 80 per cent of respondents saying they thought engagement with portfolio companies was crucial.

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Due Diligence Ensures Best Returns

Good due diligence processes ensure the best returns for clients when it comes to infrastructure, says Louis Bélanger, vice-president and director, private debt, at TD Asset Management. He and Matt Press, vice-president, infrastructure investments, at TD Greystone Asset Management, discussed ‘Infrastructure: Anatomy of a Deal’ at the ‘TD Asset Management Institutional Investment Symposium.’ Press said infrastructure is getting a lot of interest in this low interest rate environment because of its stable cash flow and income generation. It also offers a significant market opportunity, whether equity or debt, with $80 trillion needed for these projects over next 20 years. While a relatively new asset, typically, it is things like physical assets ‒ airports, toll roads, wind projects. It offers opportunities to enhance returns, reduce risk, and add diversification given its low correlation to public assets. The challenge, said Bélanger, is to make sure investors are paid for the risks they take. This requires due diligence to assess the risks, their impact, and the possibilities of mitigating these risks, said Press. Bélanger added that with private debt, a pre-assessment is also necessary as they don’t rely on public ratings agency, they do their own. Analysis is done around key pillars ‒ credit themes, ESG (environment, social, and governance), covenant quality assessment, and business and financial risk assessment. Ultimately, he said it takes a lot of time and work to assess the trade-offs, with Press saying a disciplined active approach to private asset classes can yield better results.

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CFA Seeks Diversity Ideas

Dozens of firms with combined assets under management of more than US$17 trillion are responding to the challenge to make the investment industry more inclusive by implementing ideas in the CFA Institute guide ‘Driving Change: Diversity & Inclusion in Investment Management,’ says bcIMC. The guide, which inspired the ‘CFA Institute Diversity & Inclusion Experimental Partners Program,’ includes 20 ideas generated in concert with the industry through a series of roundtables with more than 300 participants. In this program, each firm was asked to focus on up to three of the ideas from the list and have developed action plans to be implemented over 18 to 24 months. Some began as early as January 2019 and the program will conclude in December 2020. Along the way, the participants provide confidential quarterly updates to the CFA Institute about what has worked and what has not and they can work with other participating firms to learn from each other. At the end of the program, the CFA Institute will update the original report findings, describe success stories, and outline challenges from which other investment industry firms can learn. The most commonly selected ideas relate to finding ways to better understand and manage biases including in hiring and advancement. Other priorities focus on improved communication, including the use of personal stories to build connections.

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DC Sponsors Need To Look At Big Issues

Defined contribution pension plan sponsors need to focus on the big issues first, say Jafer Naqvi, vice-president and director, fixed income and multi-asset, and Nicole Lomax, associate fixed income and multi-asset, at TD Asset Management. In ‘DC Decisions ‒ What Matters Most for your Plan Members’ at the ‘TD Asset Management Institutional Investment Symposium,’ they said sponsors need to quantify the decisions based on their impact on the value of the accounts and the capital longevity. Plan design, contribution rates, and investment structure all have varying impacts on results. For example, members contributing an extra one per cent can double their account value and extend the period of time their benefits will cover. It is one of the first decisions sponsors make, but it has a big impact, said Lomax. When it comes to investment strategy, they need to get the multi-asset default option right. Naqvi said customization is another decision, but Lomax said it isn’t that important in most cases because they is little difference in the results of generic or custom approaches. One area that does have an impact is adding alternatives to the asset mix. Navqi said the rise of alternatives in large pension plans has seen them become the biggest asset class, ahead of equities and fixed income. While difficult to add to a DC plan, they add the most value in terms of account values and longevity capital.

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OMERS Leads TouchBistro Funding

OMERS Growth Equity has led a C$158 million Series E funding for TouchBistro, a global restaurant technology solution provider, with an $85 million investment. The funding includes participation from Barclays Bank, RBC Ventures, and BMO Capital Partners. Existing investors, including OMERS Ventures, Kensington Capital Partners, BDC IT Venture Fund, Napier Park Financial Partners, Recruit Holdings, and JPMorgan Chase, also participated. In 2018, OMERS Ventures made an initial investment in TouchBistro. Founded in 2010, TouchBistro pioneered the transformation of the restaurant industry through its award-winning iPad point of sale (POS) system.

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Walch-Watson Earns Award

Patrice Walch-Watson, senior managing director, general counsel, and corporate secretary of the Canada Pension Plan Investment Board (CPPIB), has been named a recipient of the ‘Chambers Canada GC Influencer Award’ by global law-ranking firm Chambers & Partners. The award celebrates excellence within the legal profession and recognizes influential in-house counsel leaders around the world. This year was the inaugural launch of the Canada list, which highlights general counsel lawyers in Canada for their pioneering in-house work, effective team leadership, diversity, and CSR champions.

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Pension Trends Examined

Darren Ulmer, an elite partner advisor at Sun Life Financial, a global professional speaker, and author, will share his extensive experience and insights into ‘Pension Trends’ at a CPBI Saskatchewan session. He will discuss pension trends, markets, and what employers are doing with their pension plans. It takes place October 16 in Saskatoon, SK, and October 17 in Regina SK. Information on the Saskatoon session is at Saskatoon Pension Trends and Regina Pension Trends in Regina.

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September 18, 2019


Standard Builds On Solvency Momentum

British Columbia’s introduction of an 85 per cent solvency standard and a ‘going concern plus’ standard for defined benefit pension plans is a critical change which further builds on national momentum in this direction and will improve sustainability of defined benefit plans going forward, while maintaining a strong level of benefit security, says the Pension Investment Association of Canada (PIAC) in its comments on the BC government report on the ‘Solvency Funding Framework.’ However, it believes that the PfAD (Provisions for Adverse Deviations) determination should have a tighter link to plan asset allocation as is done in Ontario and Quebec. While it appreciates the committee’s desire to have the PfAD adjust with interest rates as a stabilizing mechanism, it does not believe that the regulatory funding requirements should be neutral to asset allocation. A standardized PfAD based mainly on long-term bond yields at the valuation date may prove be too conservative for substantially de-risked plans in some scenarios (e.g. in higher interest rate environments) and conversely less conservative for plans with a higher allocation to ‘risky assets’ in other scenarios (e.g. very low interest rate environments). While the proposed PfAD determination may work well for the average plan in a normal rate environment, a tighter link to asset allocation will make the regime more robust to plans with a broader range of asset allocations and may make it more robust to extremely low interest rate scenarios, which have developed in a number of advanced economies in recent years. This approach would moreover be consistent with the general approach to regulatory capital in the broader financial sector which typically discriminates based on overall balance sheet risk.

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Active Managers Recognize Importance Of Benchmark Data

Active managers recognize the importance of benchmark data to their business, but asset management executives think they can and should be deriving even more value from index providers’ vast databases and analytic expertise, says a study from Greenwich Associates. It says that benchmark index data plays an essential role in the investment process, helping asset managers to understand market trends, develop forecasts, and compare performance across different funds, asset classes, geographic regions, styles, and other dimensions. Indexes also enable investors to understand their return attribution and communicate performance. And they are used increasingly in other functions such as enterprise risk management, alpha generation, and marketing. As such, more than 80 per cent of the active managers participating in the study rate index benchmark data as important part to their businesses.

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Unco-ordinated Effort Coming On Climate Change

Investors should be braced for governments to act forcefully, but in an unco-ordinated fashion on climate change within the next five years, says the Principles for Responsible Investment (PRI). It has released major research papers related to modelling the financial impact of what it has called the ‘Investable Policy Response’ (IPR). A collaboration between the PRI, Vivid Economics, and Energy Transition Advisors, with contributions from 2°Investing Initiative, Carbon Tracker, and the Grantham Research Institute on Climate Change and the Environment, one of the main parts of the IPR work is a ‘Forecast Policy Scenario,’ which is primarily aimed at demonstrating latent risk in investor portfolios. It is said to differ from climate scenarios in that it does not work back from a pre-defined target temperature, but works up from probable policy and technology developments. According to this scenario, there will be an acceleration of policy announcements related to climate change in 2023 to 2025. Other developments it forecasts include a ban on internal combustion engine cars in ‘first mover countries’ by 2035 and carbon pricing of $40 to 60 per tonne of carbon dioxide by 2030, also for first movers.

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Hedge Funds Rely On Third-party Tools

Hedge funds across the spectrum are becoming increasingly reliant on third-party tools to stand out and defeat their competition, says a study from law firm Lowenstein Sandler. Its report found 82 per cent of hedge funds are using alternative data to reach performance targets. Fund managers that are using alternative data are using it to better capture trends in the market – a practice that some call “alpha through information.” As well, managers said alternative data helps to confirm existing assumptions and reinforce fundamental research. Overall fund size also impacted how managers use data. Smaller funds – those with $500 million or less in assets under management – rely on alternative data to understand competitive markets. For funds between $500 and $5 billion in AUM (assets under management), alternative data is used to provide additional insights into sectors, industries, or issues. For funds $5 billion or above, alternative data plays a role in developing unique investment strategies.

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Scale Of Assets Creates Barrier

The scale of assets required to launch a new target date fund priced low enough to compete with the largest managers is an increasingly powerful barrier to new entrants, says Cerulli Associates. It finds that in the face of fee compression, target date managers and retirement plan consultants are exploring new avenues for customization such as blending active and passive strategies, creating white-labeled, open-architecture products, and incorporating a transition to managed accounts. In 2018, total active target date fund assets remained higher than passive, but their market share lead over passive target date funds fell to 12 per cent from 18.1 per cent in 2017. New product development, such as hybrid target date funds which use a combination of active and passive management, are changing this dynamic. “Assets invested in hybrid target date funds are growing and nearly half of target date managers surveyed believe that hybrid target date products will gather meaningful defined contribution plan assets during the next one to three years,” says Daniel Uquillas, a senior analyst at Cerulli. Contrary to the intuitive expectation that most interest in hybrid products would come from fully active sponsors looking to pay lower fees, equal interest has come from fully passive sponsors, which may view the active component as a means of providing downside protection in the event of a market downturn.

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Morneau Shepell Adds U.S. Firm

Morneau Shepell Inc. has acquired MorningStar Health. This acquisition allows Morneau Shepell to enhance its absence management (leaves, disability, absence reporting, and accommodation) presence in the United States.

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Session Dives Deeper On Retirement Plans

The CPBI Southern Alberta Region’s ‘Retirement Plans 201 ‒ a Deeper dive into Group Retirement Plans’ will look at the risks, decisions, and challenges faced by retirement plan sponsors in Canada. Attendees will learn the essential elements that defined benefit pension plan sponsors should know, considerations for cross-border plans, effective tricks and tips for effective decision-making, and insights about the future of retirement plans. It takes place October 24 in Calgary, AB. For information, visit Retirement Plans 201

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September 17, 2019


Blue Cross Alliance Formed

Blue Cross Life Insurance Company of Canada and Pacific Blue Cross will form an alliance, effective January 2, 2020, to bring together local service and insight, with national expertise and scale, to provide products and services to British Columbians. This nationally aligned Blue Cross alliance brings several new benefits that will help Pacific Blue Cross grow with advisors, plan sponsors, and members. Enhancing its capabilities in underwriting, pricing, reserving, actuarial, and medical underwriting allows Pacific Blue Cross to invest in more work and wellness solutions to improve health and wellbeing for British Columbians. Pacific Blue Cross will remain the primary contact for all sales, service, and claims.

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ESG Improves Performance

Implementing environmental, social, and governance (ESG) criteria can improve the performance of both active and passive risk-factor portfolios, says research by Lyxor Asset Management. However, it also found a policy of exclusion based on companies’ ESG scores did not impact portfolio performance negatively. In most cases, using an ESG filter improved the performance, even on a risk-adjusted basis. Excluding 50 per cent of companies with the lowest ESG ratings from a European equity size portfolio added 2.3 per cent per year of return over 10 years, while removing 1.6 per cent of volatility.

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Real Estate Outlook Challenging

The outlook for real estate over the coming year is more challenging, says ‘The Preqin Investor Update: Alternative Assets H2 2019.’ It finds investors are largely satisfied with the asset class’s performance over the past 12 months, with 83 per cent saying that returns have met or exceeded their expectations. But future prospects are less certain and 23 per cent of investors believe that returns in the coming 12 months will decline – the highest proportion of any asset class. This is likely due to high asset valuations putting pressure on pricing as 29 per cent of investors say that assets are overvalued and expect a pricing correction in 2020. Four out of five investors ranked asset valuations as the biggest challenge to future returns, followed by high competition for assets. In response to this, more than a quarter of investors expect to place less capital in the asset class than they did in the previous 12 months.

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NEST Wants To Invest

One of the UK’s leading defined contribution pension providers is to set up its own regulated investment subsidiary in anticipation of rapid asset growth in the next few years. NEST has applied for permission from UK regulator the Financial Conduct Authority (FCA) to become regulated as an occupational pension scheme. Under the UK’s investment rulebook, this would allow the £8 billion scheme to set up a wholly owned subsidiary – dubbed ‘NEST Invest’ – to run its investments. If granted, it would allow NEST greater flexibility in its investment strategy, including the ability to make co-investments in private markets. As well as co-investments, FCA authorization would allow NEST to direct fund managers to use derivatives to efficiently manage cashflows and risk.

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ETF Assets Decrease

ETFs and ETPs listed globally gathered net inflows of US$3.43 billion in August, bringing year-to-date net inflows to US$273.04 billion, says ETFGI. Assets invested in the global ETF/ETP industry have decreased by 1.6 per cent, from US$5.74 trillion at the end of July to US$5.65 trillion at the end of August.

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ACPM Honours Volunteers

Pierre Lavigne, Stephanie Kalinowski, Julien Ranger, and Derek Dobson have earned awards from the Association of Canadian Pension Management (ACPM). Lavigne was named the winner of the Don Ireland Award for Exceptional Volunteerism. The award recognizes the exceptional effort and achievements of an individual over a significant period of time on behalf of ACPM. Lavigne is the longest standing ACPM volunteer, starting as a member of the Quebec council in 1998 and is still on the council after 21 years. He has served on three national committees ‒ strategic initiatives, national policy, and national conference planning. He has also served as a board director and chair of the audit and finance committee. Dobson, CEO of the CAAT Pension Plan, was awarded the ACPM Industry Award. He manages and promotes a fixed cost plan design (DBplus) which won the 2018 World Pension Summit Innovation Award for Plan Design and Reform. He has been a member of the ACPM board of directors since 2016, serving on the human resources committee, the national policy committee, and the strategic initiative committee. Kalinowski and Ranger shared the ACPM Council Award which recognizes the efforts an individual who has significantly contributed to the work, growth, and development of their council. Kalinowski has served at the chair of the Ontario council since 2017. The chair of the pension, benefits, and executive compensation group at Hicks Morley is ACPM liaison to the Financial Services Regulatory Agency of Ontario and the government of Ontario. A member of the national policy committee, she has been involved with various council activities including event planning, papers development, and membership initiatives. Ranger was honoured for his work with the Quebec region. A partner, pensions and benefits, at Osler LLP, he is currently an ACPM board director and a former member of the national policy committee. An active member of the Quebec council, he served as chair from 2016 to 2018 and is a significant contributor to consultations and responses for Retraite Québec. He has also been instrumental in helping to organize regional events.

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Complexity Can Be Navigated

Navigating complexity with an outsourced chief investment officer, public market investment solutions to the private market conundrum, pension consolidations and mergers as de-risking solutions, and the rise of ESG will be addressed the Benefits and Pensions Monitor ‘Pension Risk Strategies’ Meetings & Events session. Featured speakers are Eric Menzer, of Manulife Investment Management; Dino Bourdos, of Guardian Capital; Jeff Kissack of the CAAT Pension Plan; and Cynthia Shaw-Pereira, of BNY Mellon Global Risk Solutions Canada. It takes place September 26 in Toronto, ON. For information, visit Risk Strategies

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September 16, 2019


Employees Want Financial Education In Workplace

A large majority of employees (80 per cent) want some type of financial education at work, says Eckler’s national survey on financial wellness in the workplace. It says more than half (54 per cent) of employees feel some degree of stress about their finances and close to one-third (32 per cent) would describe it as a high degree of stress. “The amount of stress Canadians face today is unprecedented. Lack of focus at work, increasing amounts of time spent managing personal finances, and increased use of employee benefit plans to manage stress-related illnesses is now commonplace,” says Janice Holman, a principal at Eckler Ltd. “As employers continue to look to financial wellness programs as the prescription for mitigating both the personal and workplace impacts of financial stress, designing a program that fits the symptoms and is offered with the right treatment plan is critical to improving outcomes.” Survey respondents had strong opinions about who should deliver the financial education. A large majority (84 per cent of employers and 90 per cent of employees) want their third-party educator to be unbiased, and 85 per cent of companies and 84 per cent of employees want their education programs to be provided by a third party that is experienced. An equally large majority (more than 80 per cent of employers and 74 per cent of employees) say third-party accreditation is important. While a good number of employers are offering financial education programs, progress can be made by making connections between organizational objectives and the impact of employee financial stress.

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Shifts Driving Down Fees

A worldwide shift of portfolio assets to passive management strategies and a new, intense focus on fund pricing by institutions globally are driving down fees for asset managers, says Greenwich Associates’Pricing in Asset Management: From Art to Science.’ This, in turn, is putting pressure on asset management revenue growth and profit margins. However, asset managers can use sophisticated benchmarking to minimize the impact of eroding fees and even turn pricing into a competitive advantage. It all starts with good data. Without reliable benchmark data on fees, managers are operating in the dark and in this era of tough negotiations, even average industry benchmarks are of limited use, it says. To compete effectively, managers need insights that allow them to provide customized pricing and fee structures based on the size of mandate, asset class, strategy, geography, and a host of other factors.

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Yield Curve Predicts More Than Recession

The yield curve has predictive power that goes beyond the chances of a recession, says research from AQR. The yield curve charts the difference between the rate of a bond with a long life compared to one that matures in a short period of time. It generally slopes up as investors are paid higher rates to hold bonds that mature far into the future and lower rates for short duration paper. An inverted curve occurs when short-term rates are higher than long-term ones. The factor investing firm argues that there is plenty of research to support the yield curve’s predictive value when it comes to macroeconomic factors such as inflation and interest rates. Nonetheless, ‘Inversion Anxiety: Yield Curves, Economic Growth, and Asset Prices’ says it has come to be defined as a signal for a coming recession as the media loves a good sound bite and the curve inverting is a good one.

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Mental Health Impact Examined

The Rotman School of Management is bringing together hundreds of senior business leaders, mental health advocates, medical professionals, students, academics, and industry representatives to raise awareness and discuss the impact of mental health on the Canadian economy. The conference will highlight the resources and supports currently available, focus on solutions that are working at home and abroad, identify challenges and opportunities for improvements, and find new ways to design innovative policies and workplace best practices in order to manage the growing burden of mental health. It takes place November 26 in Toronto, ON. For information, visit Mental Health Impact

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