Insured LTD Could See Coverage Withdrawn
British Columbia wants employee long-term disability (LTD) plans to be insured, with exemptions for certain employers with low risk of insolvency, says a Morneau Shepell ‘News & Views.’ The preliminary recommendation for the review of the province’s ‘Financial Institutions Act and Credit Union Incorporation Act’ is, however, subject to further consultation. The proposal would potentially affect all employers with provincially regulated employees in British Columbia who currently offer self-funded LTD arrangements. Similar legislation has been introduced in the past few years by the Ontario and federal governments and other jurisdictions and provinces may be contemplating similar legislation. These developments were triggered by Nortel and other insolvency cases that resulted in losses for employees in unfunded LTD plans. In its submission to the ministry, it encourages consideration of introducing additional requirements for plan sponsors who choose to self-insure LTD plans, rather than requiring all LTD plans be insured with a third-party carrier. Plan sponsors self-insure LTD for a variety of reasons including cost, an inability to obtain insurance due to undesirable risk, and/or for greater control over plan design and claims management. If a requirement for LTD plans to be insured were to be introduced, some plan sponsors might withdraw coverage or terminate the LTD benefit altogether.
ESG Ratings Process Questioned
The ratings process used for ESG investments is being questioned by the American Council for Capital Formation. In a report, it argues individual companies “can carry vastly divergent (ESG) ratings from different (ESG rating) agencies simultaneously, due to differences in methodology, subjective interpretation, or an individual agency’s agenda.” There are also inherent biases, including from market-cap size, location, industry, and sector, each with a lack of uniform disclosure. Concerns include variances in scoring systems among the agencies and the agencies’ not fully disclosing the indicators they evaluate or the material impact of the indicators. It is also concerned with rating agencies using companies’ self-reported and unaudited sustainability reports to form their analyses. It calls on ESG rating agencies to adjust their rating methodologies to address different quantities of information from a geographic and industry-specific level.
Customizing Financial Wellness Essential
Customizing financial wellness benefits is essential for strategically aligning interests across demographics and driving business goals, says the second in MetLife’s ‘Financial Wellness: Creating a More Productive and Engaged Workforce’ white paper series. ‘Tailoring the Program’ says financial wellness is centered around four core principles: financial awareness, financial health, financial security, and financial inclusion. While a comprehensive financial wellness assessment can help employers determine which program elements take priority, an effective financial wellness program should strive to meet all four core principles. It says a successful financial wellness program helps employees achieve financial security by bridging short-term needs with long-term goals.
Investor Sentiment Bearish
The investor sentiment among most money managers is bearish as growth and profit expectations plunged to February 2016 lows, says the Bank of America Merrill Lynch’s monthly fund manager survey. Managers’ global equity allocations fell 14 percentage points to a net 19 per cent overweight, the lowest level since November 2016. Meanwhile, U.S. equity allocations rose eight percentage points to nine per cent overweight, the highest since February 2017, having been 28 per cent net underweight in September 2017. This month’s survey saw an eight-percentage-point drop in allocations to eurozone equities, leaving allocations to the asset class at a net 12 per cent overweight, the lowest level since December 2016. As well, the largest monthly drop in emerging market equities in two years brings that allocation down 23 percentage points to net one per cent underweight. A trade war remains the biggest tail risk cited by respondents (60 per cent), with investor conviction the highest since concerns surrounding European Union sovereign debt funding in July 2012.
SSQ Partners With Allianz Global
SSQ Insurance is partnering with Allianz Global Benefits, a provider of international employee benefits plans, which is a member of Allianz Group with 88 million clients world-wide. This exclusive agreement represents an important step in SSQ Insurance’s pan-Canadian development plan. “This type of collaboration is a first for SSQ Insurance,” says Geneviève Fortier, SSQ Insurance’s senior vice-president – distribution. “By adding the expertise and global reach of Allianz Global Benefits to our service offer, we will be giving our current and future clients the advantages of international risk pooling.” International risk pooling makes it possible for an employer who has operations in several countries to pool the financial results of its various regional group insurance plans. By putting risk management on an international scale, it contributes to mitigating cost fluctuations among plans in different countries and providing better overall cost control of group insurance plans.
Belton Boiselle Acquired
Arthur J. Gallagher & Co. has acquired Winnipeg, MB-based Belton Boisselle Ltd. Belton Boisselle is an employee benefits, group retirement, and individual insurance broker and consultant offering group benefit and retirement plans, individual life, and living benefits, as well as investment strategies, to clients across Western Canada, primarily in Manitoba and Saskatchewan.
Hedge Fund Performance Stumbles
Hedge fund performance stumbled in June with the ‘Preqin All Strategies Hedge Fund’ benchmark recording its third negative month of 2018 so far (-0.50 per cent). Both macro and event driven strategies fund benchmarks did witness a positive end to the quarter, up 0.6 per cent and 0.4 per cent respectively. Credit strategies also generated a return for their investors (0.17 per cent), the benchmark’s 28th consecutive positive monthly return. The all-strategies CTA benchmark slipped further into negative territory during the ﬁnal month of the quarter, recording a loss of 0.53 per cent to round oﬀ the benchmark’s worst in over 10 years.
Ambachtsheer Joins BNP
will join BNP Paribas Asset Management as global head of sustainability on August 27. She will be responsible for the firm’s overall approach to sustainability. Most recently, she was partner and chairwoman of responsible investment at Mercer. She was also a consultant in the development of the United Nations Principles for Responsible Investment and is involved in a number of industry initiatives, including as a member of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.
Credit Card Debt Top Challenge
According to employers, the number one financial challenge facing employees is credit card and other debt (reported by 70 per cent of employers), says a report from the International Foundation of Employee Benefit Plans. ‘Financial Education for Today’s Workforce: 2018 Survey Results’ shows employees are also worried about saving for retirement, paying for their children’s education expenses, and covering basic living expenses. And these factors are taking a toll on the workplace in the form of stress (79 per cent), the inability to focus on work (64 per cent), physical health concerns (36 per cent), and absenteeism (34 per cent). “An employee’s personal financial stress ‒ whether it’s long-term like saving for retirement or immediate like paying the rent ‒ can have a direct impact on their performance at work,” says Julie Stich, associate vice-president of content at the International Foundation of Employee Benefit Plans. “Employers are offering financial education to help employees manage their money, understand their workplace benefits, and improve their investment decisions.” To help combat these financial challenges, 63 per cent of employers currently provide financial education for their workforce and an additional 19 per cent are considering such education for the future. Among the employers that offer programs, 24 per cent have a financial education budget in 2018, which is significantly higher than the 14 per cent of employers that had such a budget in 2016. An additional 20 per cent of employers are considering adding a financial education budget with more than half planning to increase their budget in the next two years. Of employers with a financial education budget, 20 per cent are measuring the ROI of their initiatives and another 29 per cent are considering measuring ROI in the future. The most popular education methods used by employers offering financial education include voluntary classes or workshops (90 per cent), free personal consultation services (63 per cent), retirement income calculators (59 per cent), internet links to informational sites (58 per cent), and projected account balance statements and/or pension benefit statements (53 per cent).
Japanese Economy Coming Alive
The Japanese economy will come alive like a mighty sea monster awakened by radiation, says Four Seasons Asia Investment, a Singapore-based firm specializing in Japanese equities. It says factors such as improving productivity and rising wages will combine to create the effect. Shigeka Koda, its chief executive, says “profound changes are now underway in the Japanese economy and in the Japanese society, this translates to the awakening of the sleeping giant. We believe that this is a ‘Godzilla’ moment for Japan when all these mega-trends combine to create massive changes and major opportunities for experienced Japan investors.”
Interest In Fixed Income ETFs Growing
While ETFs were mainly used by retail investors in the early stages, there is a broadening range of institutional investors going to the product today, says the National Bank of Canada Financial Markets (NBCFM) in its ‘Fixed income Trading Desk Strategy’ report. Interestingly, it is estimated that institutional participation into the broad ETF space in Canada is at 15 per cent, whereas institutional participation in the fixed income ETF segment alone is closer to 35 per cent, testifying to an acute institutional interest in the sector. Among the primary uses would be the building of a liquidity sleeve around a portfolio to aid liquidity management in scenarios of quick changes of exposure style and managing cash inflows and outflows during a period of market stress.
Availability Slows Real Estate
The overall pace of Canadian commercial real estate transactions slowed in the second quarter of 2018, but the dip in volume has nothing to do with demand for assets, says a research report by Morguard Corporation. “A drop in transaction volume in the second quarter is very much a function of low product availability rather than a drop in demand,” says Keith Reading, director of research at Morguard. And, with quality office and industrial space at a premium, apartments are a crowd favourite as investors search for yield.” Multi-suite residential properties bucked the second quarter trend, with transaction volumes growing by 17.5 per cent year-over-year. Persistent rental growth, combined with a positive long-term sector forecast, has led to rising values for apartment properties in most of Canada’s major markets. This supply-demand imbalance has driven up prices in key markets and asset types to an extent, particularly for Class A, new-build assets. A shortfall of functional space has also been characteristic of the strong leasing activity in the office and industrial sectors, with cycle-low vacancy rates occurring in most regions. Newly-built speculative development, while still lower than the long-term average, also saw substantial pre-leasing activity.
Returns Mostly Positive
The year began with a more volatile backdrop as rising interest rates and the price investors are willing to pay for investments turned into a bit of a tug-o-war, says the ‘Mawer Q2/2018 Performance Overview.’ The second quarter can be characterized as mostly positive for investment returns ‒ perhaps surprisingly so, given the worries about escalating trade disputes and rising interest rates, it says. A contributing factor was strong global economic growth. The U.S. performed well and while regions such as Canada, Japan, UK, the Eurozone, and a number of emerging markets experienced a slower pace of growth, it was still positive.
Catchmark Completes Acquisition
CatchMark Timber Trust, Inc. has completed its previously announced acquisition of 1.1 million acres of prime East Texas timberlands for approximately $1.39 billion in a joint venture with a consortium of institutional investors, including the British Columbia Investment Management Corporation. The property was sold by Campbell Global, on behalf of the institutional owners of the property, in one of the largest U.S. timberlands transactions of the past decade. The joint venture ‒ operating as Triple T Timberlands ‒ is a CatchMark-managed affiliate. CatchMark Timber Trust, Inc. is a self-administered and self-managed, publicly-traded REIT. It began operations in 2007 and owns interests in approximately 1.6 million acres of timberlands located in Alabama, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, and Texas.
Duckworth Has New Role
Climate-action Initiative Boosts Target Companies
A growing group of institutional investors and money managers is stepping up engagement with greenhouse gas emitters, adding 61 companies to its focus list. ‘Climate Action 100 Plus’ is an investor-led initiative to engage with systemically important companies around the world that have the opportunity to drive clean energy transition and to help achieve the goals of the 2015 Paris Agreement, a global climate change pact. Signatories call on companies to improve governance on climate change, curb emissions, and strengthen climate-related financial disclosure. The added companies are seen as material to the group’s investment portfolios and have either a significant opportunity to drive clean energy transition at a global or regional level or may be exposed to climate-related financial risks.
Plan Sponsors Will Play Role In National Pharmacare
A national pharmacare program could be the solution to ensure that every Canadian has access to life-saving specialty drugs amidst increasing drug costs. However, any national pharmacare plan will need to include a substantial role for private group benefit plans, says a whitepaper by Mercer. ‘The Changing Promise Of Universal Healthcare’ says plan sponsors are key stakeholders in providing Canadians with the healthcare they need. The whitepaper points out four key areas of importance in the development of national pharmacare – it must be clear and simple in its design, easy to understand and use, financed in a fair way, and sustainable. The federal government must be clear with plan sponsors indicating who and what will be covered, who will be responsible for oversight, and who will pay, so that plan sponsors can ensure sustainability and a minimum of disruption. As for cost, paying for pharmacare with a tax on employers would place an undue burden on a critical part of the healthcare system and further challenge a group already contending with rising costs. Mercer says evidence must be gathered on the impact of pharmacare on the current healthcare model, so that investments can be made wisely and the promise of universal healthcare can be the right of all Canadians, now and in the future.
Information Request Dispute Resolved
Lawson Lundell LLP has successfully represented a group of British Columbia union pension plans in a long-standing dispute over the disclosure of sensitive information. The dispute lasted over six years with the pension plans objecting to several access to information requests received by the Financial Institutions Commission (FICOM) from the Independent Contractors and Business Association (ICBA). The Office of the Information and Privacy Commissioner (OIPC) was asked to review the dispute and April 2017 released a decision requiring FICOM to disclose the information. Lawson Lundell successfully petitioned that there was ample evidence that had been presented to prove that there was reasonable expectation of harm to the pension plans and that they were being held to too high a standard in terms of evidence required by the OIPC. Earlier this month, the Supreme Court of British Columbia released its judicial review on United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 170 v. British Columbia (Information and Privacy Commissioner), 2018 BCSC 1080. The court held that the OIPC’s decision was unreasonable and that the pension plans had provided sufficient evidence to satisfy the “reasonable expectation of probable harm” standard. The court sent the matter back to the OIPC to assign another adjudicator to consider the issue again in a way that is consistent with the court’s reasons.
Vestcor Meets Objectives
The overall investment return for total assets under active management for the year ended December 31, 2017 were 8.03 per cent, with a management expense ratio of approximately 0.12 per cent, says Vestcor Inc.’s ‘2017 Annual Report.’ This means its “investment activities have continued to meet both the specific long-term return and risk objectives of our clients with a management expense ratio that is lower than the previous year,” says John A. Sinclair, president and chief executive officer. Pension funds under active management specifically achieved an overall 2017 return of 8.05 per cent, exceeding client portfolio benchmarks by approximately 1.01 per cent during the year. The long-term annualized pension fund return, since the corporation was formed as the N.B. Investment Management Corporation in 1996, continues to exceed specific client funding requirements at 7.27 per cent. It has also finalized an investment management agreement with another new target benefit pension plan client. “Our extensive experience in managing a number of target benefit pension plans, along with our low-cost structure, continues to align well with our client needs,” says Sinclair. Vestcor was created by the province of New Brunswick legislation in July 2016 with the N.B. Investment Management Corporation continuing as Vestcor Investment Management Corporation (VIMC), while the operations of the pension and employees benefits division of the province of department of human resources were transferred to Vestcor Pension Services Corporation (VPSC). On January 1, 2018, both were subsequently amalgamated into one integrated entity ‒ Vestcor Inc. It provides global investment management services to nine different public-sector client groups representing approximately $16.6 billion in assets under management anddministration services to 11 public sector pension plans and five employee benefits plans.
UTAM Publishes Carbon Footprint Report
UTAM has committed to disclose the carbon footprints of the investments it manages on behalf of the University of Toronto. It says it underlined that commitment in September 2017 by signing the Montréal Carbon Pledge, joining more than 120 global investors that are collectively responsible for over US$10 trillion in assets under management. Now, it has published our first ‘Carbon Footprint Report,’ which calculates greenhouse gas emissions from companies in the university’s pension and endowment investment portfolios as of September 30, 2017. The report describes how it defined and measured the carbon footprint of both portfolios. The analysis includes an in-depth review of carbon emissions by sector, country, asset class, investment manager, and individual company for both their absolute contribution to the carbon footprint and relative contribution compared to the reference portfolio that is the benchmark for all of its investment activities. “The intensive analysis behind our ‘Carbon Footprint Report’ equips us to have more focused conversations with investment managers on how they consider carbon emissions in their investment decision-making,” says Daren Smith, UTAM’s president and chief investment officer. “We now take into account carbon emissions, where relevant, in evaluating potential managers and monitoring the performance of existing managers.”
RBC Solution Creates Healthier Habits
RBC Insurance has launched a new digital solution that aims to improve employee wellness by motivating them to create healthier habits through personalized experiences that can encourage a healthier workforce. The digital wellness program is free for RBC Insurance group benefit solutions clients with health coverage. It integrates multiple data sources such as claims data, reported preferences, and health risks to deliver a tailored experience to the user. This approach encourages employees to change unhealthy habits, such as getting too little sleep or making poor food choices, into healthier ones such as participating in daily physical activity or mindfulness exercises. Through a personalized content feed, personal and corporate challenges, peer-to-peer recognition and progress-based incentives, employees will be supported to engage in healthier behaviours and are rewarded to keep up with these habits through a tiered points system that offers cashback and discounts.
Private Equity Fees Changing
To encourage investors to allocate capital to their funds, private equity firms are resorting to tried and true sales tactics ‒ changing up their fees. A survey report by asset management advisor MJ Hudson says, for example, the two per cent management fee is “no longer the gold standard.” Instead, companies are offering early bird discounts or waterfall structures that prioritize certain groups of limited partners based on their involvement with the general partners. This shift comes as capital continues to pile into private equity. As managers search for ways to sustain inflows amid rising competition, bringing down fees and offering special terms help them stand out to potential investors. In addition to edging down their management fees, some firms are offering incentives to spur LP activity. The survey found 24 per cent of respondents would offer discounts on headline fees for allocators who invest early or commit a large amount of capital.
Financial Markets More Volatile
Investors experienced a more volatile ‒ and perhaps a more normal ‒ phase in financial markets in the second quarter, says HSBC Global Asset Management’s ‘Canada Outlook.’ But the picture was obscured by what analysts label as “noise” primarily from trade tensions and geopolitical news. However, while these factors are important, they need to be kept in perspective, it says. Canada’s current economic performance and growth prospects rank it near the top-performing countries like the U.S. resulting in a view that the Bank of Canada will raise rates once or twice before the end of 2018. As well, after lagging other markets, Canadian equities are now offering good valuations supported by solid earnings. However, the good news seen in Canada isn’t uniformly the case. After the in-sync global growth experienced in 2017, the economic situation in 2018 is more diverse. Some economies, such as Europe and Japan, are experiencing weaker growth and low inflation. Conversely, the U.S. is seeing good growth, rising inflation, and the prospect of interest rate rises in the near term.
CPPIB Expands Relationship
The Canada Pension Plan Investment Board (CPPIB) and Longfor Group Holdings Limited are expanding their relationship to launch a new investment co-operation that will focus on rental housing programs in China with an initial targeted investment of approximately US$817 million. It will invest in China across Tier I and core Tier II cities via developments, acquisition, and master-lease of commercial assets to be converted into rental housing. They launched their collaboration in 2014 and have built a portfolio of Paradise Walk branded retail assets beginning with their first investment in a mixed-use real estate project in Suzhou and extended that co-operation with further investments in Chongqing, Shanghai, and Chengdu. Longfor Group is a well-established residential and retail mall developer and operator in China.
CIBC Mellon Opens London Office
CIBC Mellon has opened its recently-relocated London, ON, office at 255 Queens Avenue, situated in the core of the city. This move follows on the heels of the relocation of the company’s Toronto, ON, office and its office expansion into Mississauga, ON. The new open-concept, energy-efficient office space in London is designed to support collaboration and employee wellbeing. With this move, CIBC Mellon has relocated all of its nearly 100 London-based employees where they will continue to support the company’s delivery of pension benefit services, relationship management, and institutional and pension accounting.
Werbowecki Joins NFP/CBA
Dinner Looks At Future-proofing
‘Future-proofing the Investment Management Industry’ is the focus of the CFA Society Toronto’s ‘2018 Annual Investment Dinner.’ This year’s featured speakers ‒ Mark Wiseman, senior managing director and global head of active equities at BlackRock, and Shelley O’Connor, managing director and co-head of wealth at Morgan Stanley ‒ will speak about the future of wealth management and active management in the current rising interest rates environment and describe the ways in which the industry can be future-proofed. It takes place November 1 in Toronto, ON. For information, visit Future-proofing
Cannabis Warning Shot Fired
Health Canada has fired a warning shot across the bow of licensed producers of cannabis, warning against engaging in unacceptable promotion of cannabis in the run-up to the Cannabis Act coming into effect. This may well be a signal to the industry that Health Canada intends to actively enforce the act when it does come into force, says a Norton Rose Fulbright Canada ‘Legal Update.’ Last Friday, Health Canada has signaled that it expects producers and others within the cannabis space to act responsibly in full compliance with applicable laws. The department is particularly concerned by the sponsorship of events, such as music festivals, and other promotional activities being undertaken by licensed producers of cannabis for medical purposes, obviously in anticipation of the legalization of cannabis for recreational purposes scheduled for October 17. As well, when the act comes into force, sponsorships, and many other promotional activities will be strictly prohibited. This statement may be a warning that Health Canada intends to actively enforce the provisions dealing with promotion out of the starting gate and that producers should not take advantage of the period prior to the act coming into force to promote their products in ways that will soon become illegal, says the update.
Neutral Stance Most Appropriate For Investors
GLC Asset Management Group Ltd. (GLC) recommends a neutral stance as most appropriate for today’s investors and that now is not the time to overreach with aggressive growth cycle positioning. Its ‘2018 Mid-Year Capital Market Outlook’ also says the outlook for fixed income total returns remains modest, but their attraction as a risk-mitigation tool has increased. “We expect yields to move higher and continue to pressure overall bond returns. We see investment grade corporate bonds as most attractive,” says the report. For equities, a neutral stance provides exposure to participate in equity market growth without stretching one’s risk tolerance. As for currencies, GLC says the Canadian dollar will likely remain weak. “We believe that trade frictions between the U.S. and Canada represent a fear discount of about US$0.03-US$0.05. Should those fears dissipate, we would expect the loonie to make up that ground. We forecast mild strength for the U.S. dollar.” It also says Canada is better with NAFTA than without. However, it does not see a scenario where it spells the end for Canada’s premier companies. Many have profitable operations outside of Canada, including on U.S. soil. These foreign operations flow earnings back to Canadian shareholders, which would receive a currency boost under a weaker loonie.
Financial Wellness Programs May Not Be Right Fit
While they are growing in popularity, financial wellness programs may not be the right fit for all companies, says a survey by Strategic Benefit Services. There may be a moral imperative that drives commitment for some, while others require a business imperative to justify the investment. Regardless of the rationale, a logical starting point would be for an organization to survey its employees and assess the need. Among employers that do not offer a financial wellness program, reasons cited were having not thought about it, needing more resources to execute, needing to focus on other organization priorities, not perceiving any financial benefits, and not wanting to get involved in employees’ personal finances. Asked what financial concerns they think their workforce has, companies say managing monthly expenses, paying down debt, saving for retirement, saving for an emergency, and having money for education expenses. Employers with a financial wellness program say it covers topics such as retirement planning, debt management, budgeting, savings, investing, mental wellness, voluntary benefits, and physical wellness.
Global Economy To Grow
Recent data have been consistent with the view that softer first-quarter growth in many countries doesn’t portend a slowdown in the global economy, says AB’s ‘Global Economic Outlook.’ U.S. second-quarter data have been very strong, thanks in part to fiscal stimulus, while even Europe is showing signs of resilience, it says. It still thinks the global economy will grow over the coming quarters at close to its long-term trend rate around three per cent. This should lead to higher inflation, a gradual withdrawal of monetary stimulus, and higher bond yields. The risks, however, have shifted to the downside and the main concern revolves around escalating trade tensions. But confusion over China’s exchange rate policy has added an element of uncertainty to the mix. This all suggests that this phase of the cycle will be challenging for risk assets, particularly now that central banks can no longer be counted on to provide a backstop should markets run into trouble, it says.
Northern Trust Sets Up Alternative Fund Services
Northern Trust has launched North America Alternative Fund Services. This new group combines established private equity and hedge fund services businesses to deliver capabilities that address the complex operational and strategic needs of an evolving alternative asset management industry. It provides fund administration, accounting, and data solutions to hedge funds, private equity managers, and managed account platforms. It offers specialized expertise in complex valuations, cash, collateral, and liquidity management, as well as analytics and transparency into portfolios that increasingly combine hedge fund strategies with fund structures traditionally used by private equity firms.
Johnson Has Brand Ambassador
Johnson the Dog, a loyal, friendly, dependable, and endearing pooch, is the new brand ambassador for Johnson Insurance. He will be used to break through industry jargon in a fully integrated marketing campaign. Louisa Leonard, chief operating officer at Johnson Insurance & Lifestyle, says to “we are introducing a trusting companion who helps us bring to life the core beliefs of our business and how we treat our customers, which aligns so naturally with the Newfoundland breed – and our roots in Newfoundland.” This is the first time Johnson Insurance, part of the RSA Insurance Group, is leveraging a brand ambassador as part of its marketing campaigns.
Caisse Invests In Avison Young
The Caisse de dépôt et placement du Québec (CDPQ) has made a $250-million preferred equity investment to accelerate Avison Young’s strategic growth plan. The global commercial real estate services firm will use the proceeds to invest in acquisitions and the recruitment of key professionals, fueling the company’s ongoing growth of its global footprint and service line capabilities. In addition, a portion of the proceeds will be used to repurchase the shares held by the firm’s current private equity partner, Parallel49 Equity (formerly known as Tricor Pacific Capital Inc.), as well as shares of certain other non-management founders and former principals of Avison Young.
Robust Global Growth, Sustained Inflation Key Themes
Robust global growth, sustained inflation, trade tensions, higher interest rates around the world, markets adapt to the post quantitative easing (QE) world, and expected end of the ultra-low volatility era are the key themes identified by Aviva Investors in its ‘Q3 House View.’ It says economic activity in first quarter was stronger than the Bank of Canada (BoC) forecast and the economy continues to operate close to capacity. The BoC has increased rates by 25bp year-to-date, and Aviva expects another two hikes before year-end. A higher rate environment will alter composition of growth, with a declining contribution from household spending and more from investment and exports on the back of higher oil prices. As well, trade concerns, including tariffs and NAFTA negotiations, remain a significant risk to global growth. “Given our central scenario, we remain constructive on global risk assets, but recognize the increased market risk,” says the report. “We have adjusted down our expectations for equity returns, in particular for those with more trade and U.S. dollar sensitivity, including Eurozone, Japanese, and emerging market equities, while we have adjusted up our U.S. equity expectations. We continue to expect risk-free assets to under-perform, with short duration views across the major developed markets. With tighter global dollar funding conditions and less attractive valuations, we have reduced our expectation for emerging market local debt and currencies. More broadly we see continued upside in the U.S. dollar over the near-term, although have a more neutral view over a longer horizon.”
Foreign Exchange Trading Enters New Phase
The electronification of foreign exchange trading has entered a new phase, says a Greenwich Associates report. After growing 72 per cent between 2007 and 2014, the share of global FX trading volume executed electronically has been flat for the past four years. However, the report speculates that this plateau of FX eTrading might represent a new equilibrium level for the market and signal a move into the next phase of innovation. “Though the data show that the level of eTrading in FX may have reached an equilibrium, innovation and competition among venues has most certainly not,” says Ken Monahan, senior analyst in Greenwich Associates market structure and technology practice and author of ‘As FX eTrading Growth Cools, Competition Among Venues Heats Up.’ In fact, it suggests stagnant growth for eTrading volumes relative to voice trading has intensified competition among electronic trading venues. FX traders continue shifting significant volumes between and among venues, depending on style and region. “On many trades, the most important question for traders now is not whether to trade electronically or to call a dealer, but rather, which electronic venue to use for execution,” says Monahan.
GroupHEALTH Launches Direct Billing Service
The GroupHEALTH Family of Companies has launched an electronic claims submission option for select healthcare providers called the TELUS Health eClaims direct billing service. Plan sponsors at GroupHEALTH, Manion Wilkins & Associates, and GroupSource can now allow their members to have their claims filed electronically from their participating healthcare provider’s point of service. Healthcare professionals can offer to bill patients directly as well as submit and manage their claims submission through the TELUS Health eClaims service. As a result, patients will pay only the portion of a claim not covered by their insurance when they get the service, thus eliminating insurance paperwork and reimbursement delays. The new option is available for a wide variety of health practitioners including physiotherapists, chiropractors, and vision care specialists, as well as acupuncturists, massage therapists, naturopathic doctors, psychologists, and podiatrists regulated by the appropriate provincial or federal organizations.
CC&L Financial Group Form Emerging Market Investment Firm
Connor, Clark & Lunn Financial Group Ltd. (CC&L Financial Group) has formed Vergent Asset Management LLP, an investment manager that will focus on frontier and new emerging markets. The investment team is led by co-founder Ali Al Nasser, who has 15 years of investment and research experience across frontier markets and has a strong track record managing institutional capital in Vergent’s target markets. “Our markets are expected to contribute strongly to global growth and comprise an increasing portion of the world’s equity market capitalization as a result of favourable demographics; improved access to technology; reforms in the areas of education, healthcare, and finance; and increased political stability,” says Nasser. Frontier markets include early stage growth countries not classified as major emerging markets due to the nascent state of their economies and capital markets. Vergent seeks investments in listed companies that possess a unique set of competitive advantages that allow them to capitalize on the tremendous growth opportunity available in frontier and new emerging markets, and compound strong returns to their shareholders.
La Caisse Supports Solar Power Acquisition
La Caisse de dépôt et placement du Québec (CDPQ) has provided $150 million in financing to support the acquisition by ContourGlobal Mirror 2 S.à.r.l. of a portfolio of concentrated solar power (CSP) assets in Spain. ContourGlobal is a growth platform for acquiring and developing energy assets with long-term contracts across many geographies. In February, ContourGlobal successfully reached an agreement to acquire the CSP assets from Acciona, a Spanish conglomerate group that develops and manages infrastructure and renewable energy assets. The portfolio consists of five CSP assets in the south-west region of Spain whose operation commencement dates range from 2009 to 2012. In the last two years, CDPQ participated in several investments related to solar energy. CDPQ provided $50.4 million in financing to Sunrun, a U.S. residential solar company, and acquired a significant minority stake in Azure, a large solar company in India. It also plans to implement the largest private multi-family residential rooftop solar project at New York City’s Stuyvesant Town-Peter Cooper Village.
Chan To Lead Asia Pacific Investments
Datuk Ben Chan is regional managing director, Asia Pacific, with Ontario Teachers’ Pension Plan. He has almost three decades of international experience in public and private equity, investment banking, and accounting. Previously, he was co-head of investments with Khazanah Nasional Berhad.