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October 15, 2018


Technology Replaces Traditional Roles

More than half (53 percent) of institutional investors believe that technology will replace traditional investment roles. Yet, many expressed the continued importance of the human connection with the majority of those surveyed (60 per cent) believing that AI (artificial intelligence) will augment jobs rather than replace them, says the ‘Fidelity Global Institutional Investor Survey.’ Institutions will continue to value the expertise and insights their investment partners bring to the table, including non-investment perspectives on market psychology, emerging opportunities, strategy, and problem-solving. “When we arrive at the intersection of humans and machines, it’s important to remember what is irreplaceable, and that is relationships,” says Judy Marlinski, president of Fidelity Institutional Asset Management. “Asset managers who provide expertise and oversight will always be valuable to their clients, but they should also recognize that their expertise has to evolve toward leveraging new technologies that can help their clients effectively meet their needs and objectives.”

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SMBs Not Ready For Marijuana

Many small- and medium-sized businesses (SMBs) are not ready for the legalization of recreational marijuana, says a poll by Express Employment Professionals. With less than a week (October 17) until recreational marijuana use becomes legal, more than 80 per cent of businesses polled have not received any information from federal or provincial governments regarding marijuana use in the workplace. The survey of Canadian businesses also found two-thirds of those polled are concerned with potential recreational marijuana use by employees, with half responding that they think it will have an impact on workplace safety. More than a third of businesses are worried recreational marijuana use will also lead to new liabilities and costs. Only half of small- and medium-sized businesses indicated they have protocols or guidelines in place regarding recreational marijuana use in the workplace.

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TD Supports Behavioural Research

TD Bank Group (TD) and the University of Toronto’s Behavioural Economics in Action at Rotman (BEAR) centre have reached an agreement to bring additional behavioural finance resources and applications to TD Wealth clients. By harnessing BEAR’s research, TD will be able to further examine and research the underlying emotions and behaviours that drive financial decision making. Identified as the next paradigm shift in financial advice, behavioural finance is an area of study that looks at how behavioural factors influence financial decisions. More specifically, it explores why people sometimes make seemingly biased, unpredictable ,or irrational financial choices. In addition to becoming a founding member of BEAR, TD Wealth and Rotman have been working over the past three years to further the implementation of behavioural finance tools into wealth management. In 2017, TD Wealth launched the ‘Discovery Tool,’ a proprietary technology that uncovers an investor’s wealth personality, enabling advisors to identify and assess clients’ financial blind spots and provide a more meaningful and personalized financial plan.

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PSP Closes Forth Points Deal

The Public Sector Pension Investment Board has closed the Forth Ports Limited transaction. PSP Investments has sold minority stakes in Forth Ports Limited to long-term investment partners, including GLIL Infrastructure (GLIL), First State Super, and Construction and Building Unions Superannuation (Cbus). Forth Ports is a UK-based multimodal ports owner and operator, with ports serving as logistical gateways across the UK.

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Hedge Fund Performance Improves

Hedge fund industry performance was up nearly 1.5 per cent three-quarters of the way through the year, says data from Hedge Fund Research Inc. The ‘HFRI Fund Weighted Composite index’ returned 1.45 per cent in the nine months ended September 30, while the ‘HFRI Asset Weighted Composite index’ was up 1.68 per cent. By contrast, the fund-weighted composite index returned 5.7 per cent for the nine months ended September 30, 2017, while performance of the asset-weighted composite index was 4.34 per cent.

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Lacroix Has New Role

Yves Lacroix is a principal and vice-president, corporate partnerships, group benefits, at Cowan Insurance Group. He joined the firm in 2016 as practice lead and vice-president, client partnerships, from Manulife where he led the sales team for eastern Ontario for 4 years. He also spent eight years as corporate account executive for Manulife.

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Sears: What Happened?

‘Sears: What happened, How it happened, and Key Takeaways’ will be the focus of a CPBI Southern Alberta Region session. Amy Tang, an associate at Koskie Minsky, will discuss the history of the case, the legal background, the key arguments by the pensioners, and key takeaways for the pension industry. It takes place November 22 in Calgary, AB. For information, visit Sears

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October 12, 2018


Technology To Reshape Industry

Institutional investors worldwide expect the influences of technology, new entrants to the market, and consolidation will significantly reshape the investment industry landscape by 2025, says the ‘Fidelity Global Institutional Investor Survey.’ The survey also found marked differences between institutional investors in different regions and the types of organizations they represent. Institutional investors expect that by 2025, markets and decision-making will be much more rapid, accurate, and efficient with 62 per cent believing that trading algorithms and sophisticated quantitative models will make markets more efficient and 80 per cent believing that blockchain and similar technologies will fundamentally change the industry. The majority of respondents (75 per cent) also say it is likely that non-financial technology firms will enter the industry and those new entrants could cause some traditional firms to merge or be acquired as they compete with start-ups and fintech companies. They also recognize that the competitive landscape will likely also intensify as the investment industry continues to embrace AI. However, some institutions have not yet allocated resources to these technologies. Approximately one-third of institutions globally are not currently testing or considering how AI and advanced analytics may be useful to their investment process.

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Wait Continues For Higher Pay

Canadian employees hoping for larger pay raises next year will have to wait a little longer, says a survey by Willis Towers Watson. ‘The 2018 General Industry Salary Budget Survey’ reveals that Canadian employers expect to maintain the status quo on pay raises at 2.8 per cent in 2019. Only three per cent of companies plan to freeze salaries next year. Pay raises have hovered around three per cent for the past decade. It expects growth to slow somewhat in late 2018 and through 2019 due to slower than expected consumer spending and the aging population. As a result, the continued tightening in the Canadian labour market will mean that organizations will struggle to retain employees with limited salary increase budgets. Organizations are looking for more efficient ways to use their limited budgets and are rethinking how and when they give increases, it says. Sandra McLellan, North America rewards business leader at Willis Towers Watson, says, “Companies are relying more on variable pay such as annual incentives and discretionary bonuses to recognize and reward their best performers. At the same time, they are rewarding star performers with substantially larger increases while granting minimal increases, if any, to their weakest performers.”

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UN Day Of Girl Celebrated

Mackenzie Investments and BMO Financial Group both marked their support of the ‘UN International Day of the Girl’ on Thursday. Mackenzie celebrated its support of the advancement of gender equality through its corporate commitment to the UN Women’s Empowerment Principles, a new partnership with UNICEF Canada, and through the products it offers investors to affect change. “Diversity and inclusion is a strategic priority at Mackenzie Investments and across all IGM Financial companies,” says Barry McInerney, president and CEO of Mackenzie Investments. “We believe so strongly in the power of diversity to evolve and grow our business that we publicly committed to the United Nations Women’s Empowerment Principles.” BMO joined the worldwide celebrations by reinforcing its ongoing commitment to fostering female leaders of tomorrow. “Today and every day, BMO stands with all young women who dream of stepping up and stepping into a future that is fair and limitless,” said Catherine Roche, head of marketing and strategy at BMO Financial Group.

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ESG Incorporation Rises

Forty-three per cent of institutional investors incorporate environmental, social, and governance (ESG) factors into their investing, up from 22 per cent in 2013, says a report from Callan. Its ‘2018 ESG Survey’ shows the most modest increase in ESG adoption was among corporate funds, with 20 per cent of them using ESG in 2018, up from 14 per cent in 2013. Thirty-nine per cent of public funds incorporate ESG, up from 15 per cent in 2013. Fifty-six per cent of endowments incorporate ESG factors, up from 22 per cent in 2013. Seventy-two per cent of large funds, those with $20 billion or more in assets, incorporate ESG factors. Among the funds using ESG, 55 per cent use it for every investment/manager selection and 41 per cent are planning to broaden their use of it. Improving their risk profile, fiduciary responsibility, and fund goals besides maximizing risk-adjusted returns are the primary reasons for incorporating ESG into their investment decisions. For those not using ESG, 52 per cent say they only consider financial factors in their investment decision-making process and nearly half also say there is no research tying ESG to outperformance.

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Dual Lens Needed To Investigate Workplace Impairment

With the legalization of recreational cannabis use in Canada on October 17, employers need to investigate incidents of workplace impairment with a dual lens, says Carleen Kay, co-chair of the CPBI Alberta South program committee. Reporting on its recent event in the article ‘Preparing For Legal Cannabis’ at the Benefits and Pensions Monitor website, she said employers need to fully document the details and remove the employee safely from the workplace and ensure they arrive home. They then need to consider if a medical issue contributed to impairment or workplace incident as well as recognize past work experience and expertise of the employee, including accountability of behaviours.

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‘Mental Health In Box’ Beta Testing Complete

MHIB Global has completed beta testing of a product aimed at improving mental health in the workplace. ‘Mental Health in a Box’ is an online tool for small and mid-sized organizations that may have limited HR resources and for larger organizations that can use it as part of their mental health strategy. It includes a knowledge survey to measure employee awareness about mental health; an eLearning program for managers and frontline employees to improve awareness, reduce stigma, and support building a mentally healthy workplace; a mental health risk-assessment tool called ‘Check Up from the Neck Up’ to help identify symptoms of depression, anxiety, or bipolar disorder; and a virtual medical clinic to improve access to professional mental health and shorten the time frame for receiving primary care.

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Hedge Fund Start-ups Have Road Map

New research now offers a road map for all emerging and start-up hedge fund managers as they make their way to $1 billion in AUM (assets under management). This has been achieved by analyzing the path to growth and crucial insights of larger, more established managers who blazed a trail in building billion-dollar hedge fund businesses. Produced by the Alternative Investment Management Association (AIMA), alternative prime broker GPP, and Edgefolio, ‘Making it Big’ identifies some key factors for emerging managers to focus on when growing their businesses including deploying an effective marketing strategy, aligning investor and manager interests, and devising fee structures to grow healthy funds.

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Venture Capital Investment Remains Strong

Venture capital investment remained strong in the third quarter of this year with US$52 billion invested across 3,045 deals, says KPMG Enterprise. Total investment for the quarter is still well above historic norms despite a decline from the second quarter’s total of $73 billion, which included an outlier investment of $14 billion in Ant Financial. Overall, the $183.3 billion invested globally at the close of the third quarter has already surpassed 2017’s annual total of $171 billion. Canada and Latin America have seen stronger performance across fewer deals in 2018 to date ‒ $4 billion by the end of the quarter on 462 deals versus $3 billion in all of 2017 on 624 deals.

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GFL, Waste Industrial Merge

GFL Environmental Inc. and Waste Industries have entered into a merger agreement. Following its recapitalization completed in May with a consortium including affiliates of the Ontario Teachers’ Pension Plan and others, GFL and Waste Industries became the largest privately-owned environmental services company in North America with operations in all Canadian provinces except Prince Edward Island and in 10 states in the United States. The combined company will operate 98 collection operations, 59 transfer stations, 29 material recovery facilities, 10 organics facilities, and 47 landfills.

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Northleaf Invests In Lifemark

Northleaf Capital Partners has made a growth capital investment in Lifemark Health Group, a portfolio company of Audax Private Equity. Lifemark is a provider of physiotherapy, independent medical assessments, and homecare services across Canada. The investment will be used to support its acquisition-oriented growth strategy.

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Nashman Named Top CEO

Laura Nashman, leader of BC Pension Corporation, will be recognized by a Vancouver, BC, magazine with a 2018 BC CEO Award. This is the second time she has been honoured as she was previously named one of 2017’s ‘Influential Women in Business.’ Under her direction, the corporation is successfully delivering on a strategic plan of business transformation.

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Generic Pricing Examined

The Canadian Group Insurance Brokers and the Benefits Breakfast Club will look at the reduction in generic drug pricing that happened earlier this year and the biosimilar market as well as some of NAFTA 2.0 and how it will affect the biosimilar market. It is also releasing survey results on issues that affect group benefit brokers and their clients (employers) ‒ everything from G19 compensation disclosure and how brokers are disclosing to the effect of pharmacare and taxation on brokers business. It will also be unveiling a new group benefit standard scale commission that brokers and employers can use as a guide for setting direct compensation. It represent a rough median line of what brokers are charging. It takes place November 7 in Vaughan, ON. For information, visit Generic Pricing

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October 11, 2018


Happiness No Measure Of Retirement System Strength

The strength of retirement systems is not a reflection of plan participants’ happiness, says research by State Street Global Advisors. Its ‘Global Retirement Reality Report: The Happiness Formula’ shows the Netherlands had one of the strongest retirement systems in the world with 180 per cent retirement savings adequacy, followed by the U.S. and Australia, with 150 per cent and 131 per cent respectively. But the Netherlands scored the second lowest in terms of the level of satisfaction by plan participants in retirement. DC participants based in the U.S. were confident and optimistic about their prospects in retirement, despite comparatively low levels of saving and a low index ranking. Twenty-seven per cent said they were optimistic about their financial situation in retirement compared to five per cent in Italy and eight per cent in the Netherlands. “From these findings, we hope to have arrived at a blueprint for a successful retirement structure that combines effective practices with rewarding retirement experiences, gathered from around the world,” says Alistair Byrne, head of pensions and retirement strategy at SSGA.

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Medavie Pilots CBT

Medavie Blue Cross has launched a pilot project in partnership with Medaca Health Group to give plan members easier online access to expert mental healthcare. The project will deliver virtual cognitive behavioural therapy (CBT), allowing plan members diagnosed with anxiety or depression to receive therapy from an accredited professional from their phone or computer. Using their computer, smartphone, or tablet, plan members log on to the service’s digital platform to communicate with their CBT therapist via video. This is augmented with instant messaging and homework assignments that can be shared during the session. Internet-delivered psychotherapy offers a solution to costly and growing healthcare challenge and removes barriers that can prevent people from seeking professional help. The CBT treatment will be integrated with the psychiatric treatment service Medaca has offered to Medavie since 2012 which provides plan members with early access and effective treatment from psychiatrists working directly with family physicians.

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Disconnect Found Over Workplace Cannabis Use

There is a disconnect between employers and employees over when and how cannabis can be consumed at work, says a poll for ADP Canada on the changing legal status of recreational cannabis. It found only six per cent of employed Canadians believe their organizations will allow the use of cannabis (marijuana) for recreational purposes during work hours or before coming into work. However, managers (10 per cent) are much more likely to say it will be allowed than employees without managerial responsibilities (two per cent). In fact, nearly one in five managers (19 per cent) say they are at least somewhat likely to consume cannabis for recreational purposes before going to work and 14 per cent say it’s at least somewhat likely they will consume cannabis during work hours – vastly outnumbering non-managers, where only seven per cent said they will likely use cannabis before work and only four per cent say they will use during work. Changes in the workplace are always difficult to navigate, but it appears cannabis legalization for recreational purposes adds a particularly complex disconnect between the expectations and intentions of employers and their employees,” says Hendrik Steenkamp, director, HR advisory, at ADP Canada. “It’s particularly interesting to see that employees without managerial responsibilities are more reserved in their expectations of personal use during working hours than their managerial counterparts.” The legalization of the recreational use of cannabis takes place October 17.

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Employers Want Benefits To Compete For Talent

Employers want to create and implement benefits programs that will attract, retain, and compete for talent they need while managing costs, says Hub International Limited. Its first employee benefits Canada study ‒ ‘2018 Benefits Barometer Canada’ found, however, that the lack of consensus from top management is holding back progress. Additionally, many HR professionals are moving toward a longer-term approach on strategic benefits planning to win senior management support for new benefits initiatives, including wellness and flexible benefits plans. Mike Barone, president of employee benefits at HUB International, says, “Benefits are becoming the most important differentiator for organizations. HR leaders need advisors to help tailor benefits to offer their employees choice and flexibility and move their organizations toward greater success.” Survey respondents reported difficulty getting support from upper management to introduce flexible benefits (24 per cent), wellness programs (21 per cent), new cost management strategies (20 per cent), and changes to retirement plans (20 per cent). As well, managing both sides of the benefits cost equation is worrisome to HR professionals, with 36 per cent citing employee costs as a concern and 32 per cent employer costs. Still, 60 per cent believe they have done all they reasonably can to control rising medical costs. Health and wellness were cited by 38 per cent of respondents as the top priority, implemented as a means to boost employee morale (29 per cent) and productivity (23 percent) and reduce turnover (22 per cent). Flexible benefit plans are the most common strategy used to manage costs, with 19 per cent of companies leveraging the tactic in 2017. However, only 12 per cent who have implemented them have seen them measurably reduce benefits costs. This might be attributed to flawed design as some aspects of these plans can increase utilization, cost, and administrative complexity if not designed optimally.

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Nortel Trust Completes Buyout

Nortel Networks UK Pension Trust Ltd. has completed a $3.1 billion buyout with Legal & General Assurance Society Ltd. The buyout covers around 15,500 retirees and about 7,200 deferred participants. The pension fund had been in the UK Pension Protection Fund’s assessment period for entry into the fund after parent company Nortel Networks went into insolvency in 2009. The fund was in assessment while litigation and insolvency proceedings took place worldwide.

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ESG Disclosure Wanted

Institutional investors representing more than $5 trillion in assets are calling on the U.S. Securities and Exchange Commission (SEC) to require public companies to uniformly disclose environmental, social, and governance information. In a rule-making petition, a group of investors, state treasurers, public pension funds, unions, legal experts, and ESG advocates asked the SEC “to promptly initiate rule-making to develop mandatory rules for public companies to disclose high-quality, comparable, decision-useful environmental, social, and governance information.” Signers include the California Public Employees’ Retirement System, the UN Principles for Responsible Investment; and the U.S. SIF: The Forum for Sustainable and Responsible Investment. Signers of the petition argue that standardized disclosure is critical for evaluating companies’ long-term performance and risk management. While some companies provide it, disparate reporting methods make it difficult for investors to compare companies or rely on the information for their investment decisions.

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Automation Requires New Tools

Leaders need new tools to increase automation in their organizations, says Ravin Jesuthasan, a future of work expert and managing director at Willis Towers Watson. In a new book ‒ ‘Reinventing Jobs: a 4-step approach for applying automation to work,’ co-authored with John Boudreau, a human capital thought leader, a framework is presented to give leaders a systematic process for applying new automation to work. It argues that the proliferation of AI and automation options calls for a re-examination of the traditional notion of a ‘job,’ yet dispels the claim that humans will be replaced by machines. To solve the challenge of integrating automation into an organization, jobs need to be deconstructed into component work tasks which can be sorted in terms of their automation compatibility; relationships need to be assessed between performance and strategic value to clarify what is being solved and the optimum payoff to work automation; the options for automating work need to be identified with robotic process automation, cognitive automation, and social robotics and their relevance to different types of work understood; and the optimal combination of human and machine labour achieved to determine where automation will replace, augment, or create new work for humans. Organizations are falling short as they chase the latest and greatest in automation because they don’t fully understand how it will affect work and their company, says the book.

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Intact Selects Eagle

Eagle Investment Systems LLC, a BNY Mellon company and provider of financial services technology, has been selected by Intact Investment Management Inc. to meet its insurance accounting and regulatory reporting needs. Intact, a wholly-owned subsidiary of Intact Financial Corporation, actively manages US$15 billion of assets for institutional clients including the operating insurance subsidiaries of Intact Financial Corporation and its company pension plan. The firm is a longstanding client, utilizing the full suite of products – data management, performance measurement, and investment accounting.

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Caisse Invests In Sustainable Value Creation

La Caisse de dépôt et placement du Québec (CDPQ) and Generation Investment Management LLP have formed a partnership for sustainable investing over the long term. The partnership, which will combine the strengths of the two organizations, plans to invest an initial US$3 billion in investments with an eight- to 15-year duration. This is a much longer period than typical private equity investments and better suits the objectives of sustainable value creation to build successful long-term businesses. It will target businesses with outstanding management teams and solid long-term growth prospects. These investments will be net positive for the environment, benefit society, and, in many cases, will use technology as a key factor for driving change. The first investment of the partnership is in FNZ, a global FinTech firm. It partners with banks, insurers, and asset managers to help consumers better achieve their financial goals.

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Kim Joins Trez

Gordon Kim is vice-president at Trez Capital. He brings more than 20 years of industry experience to the position and will focus on business development and client services. He most recently served as director, client services, at Foresters Financial.

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Investment Forecast Offered

The CPBI Ontario ‘Investment Forecast’ will feature a global macroeconomic forecast and discussions on asset allocation trends, the U.S. mid-term elections, and upcoming fiduciary challenges. Speakers include Eric Lascelles, chief economist at RBC Global Asset Management; Marlene Puffer, president and chief executive officer at CN Investment Division; Davis Walmsey, managing director of Greenwich Associates; Terra L. Klinck, a partner at Brown Mills Klinck Prezioso LLP; and Julie Cays, chief investment officer at the CAAT Pension Plan. It takes January 7, 2019, in Toronto, ON. For information, visit Investment Forecast

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October 10, 2018


ETFs Provide Access To Factors

ETF structures give investors access to factors in a way they can understand, says Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. In the session ‘Shining A Light On Factor Investing: Truths, Half-truths And Little White Lies’ with Dan Hallett, vice-president and principal at Highview Financial Group, and Andrew Neatt, portfolio manager and ETF strategist at MD Private Investment Counsel, at S&P Dow Jones Indices’ ‘5th Annual Toronto ETF Masterclass,’ he described factors as a character or attribute which explains excess returns. All three agreed factor investing is not new. Lazzara said it may date back as far as 1938. Neatt said there is a level of persistency to factor investing as it is rules-based. However, over time these attributes can break down depending on the strategy, said Hallett. Some are more scalable than others, however, outperformance over time can diminish them so they can break down or even cease to exist. This makes it important to evaluate factor strategies and be able to articulate an economic rationale as to why they exist. The ETF industry has adopted all of the bad habits of mutual funds such as offering active management in the space, said Hallett. However, he warned they are going down that same path and it is not always in the best interests of the client.

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Amundi Increases Responsible Investment Commitment

Amundi has adopted a three-year action plan to increase its commitment to responsible investment. The plan will see ESG (environment, social, governance) analysis integrated across all of its funds within three years. As well, shareholder engagement and voting at company annual general meetings will systematically include ESG analysis. It will also develop ESG advisory services for its institutional clients and double the number of initiatives promoting investment in projects with an environmental or social impact and investments in the social and solidarity economy. Responsible investment has always been one of its founding principles. Its policy has been to integrate ESG criteria into its asset management and undertake specific initiatives to promote ESG investment, particularly in environmental investment. By the end of 2021, its ESG policy will apply to 100 per cent of its fund management and voting practices.

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Equal Weight Complements Momentum

Equal weight is a complement to a great momentum portfolio, says Tim Edwards, managing director, index investment strategy, at S&P Dow Jones Indices. Speaking on ‘There’s Nothing Equal About Equal-weight Performance’ at its ‘5th Annual Toronto ETF Masterclass,’ he said while investors may end up with more risk, this can be managed with a low vol strategy. While momentum in the U.S. has been doing well for last years, it has started to falter. This means investors may end up with portfolios that are unbalanced as with momentum or following trends, investors end up taking larger and larger positions in the best performing assets. It “sneaks up on you,” he said, and when it falters, it falters hard with greater drawdowns. Equal weighting lets investors maximize participation in the “heroes of equity markets in future.” If investors don’t know which of the two to three per cent of stocks will massively outperform, it provides the biggest holding in every stock and, as a result, captures some of the outperformance.

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CSA Brings Alternative Mutual Funds To Canada

AIMA Canada is enthused about the innovation and benefits the CSA (Canadian Securities Administrators) decision to bring alternative mutual funds to Canada. Historically, alternative investment products have been available only to institutional and accredited investors, but this will now change. Consistent with the anticipated retail demand for alternative mutual funds, it is expected that the big banks will step up to distribute these new funds. Canada’s hedge fund industry manages around $40 billion in assets, while some estimates put the alternative mutual fund market at $100 billion, as similar European Alternative UCITS and U.S. 40 ACT fund markets are valued at $350 billion and $250 billion respectively. Claire Van Wyk-Allan, AIMA’s head of Canada, says, “Canadian retail investors will benefit from greater access to these alternative investment strategies, which can diversify their portfolios and protect against downside risk while providing non-correlated returns, especially as the end of the current economic cycle draws closer.” However, there may be growing pains. “At the outset, retail distribution may treat all alternative mutual funds as high-risk, which is counter-intuitive given the asset allocation benefits these products will bring,” Van Wyk-Allan says. This is why AIMA has developed retail due diligence resources, risk rating advocacy guidelines, and educational presentation for advisors to help them navigate the influx of expected product.

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Canadians Need To Take Care Of Eyes

Canadians are now more engaged than ever when it comes to their personal health and wellness, except when it’s time to take care of their most used and abused feature ‒ their eyes. With World Sight Day tomorrow (Thursday), Essilor Canada is launching a nationwide public awareness campaign designed to promote the vital role of eyecare professionals and encourage the 1.8 million of Canadians living with uncorrected vision to visit their eye doctor over the next year. Its research shows that 72 per cent of Canadian adults spend seven or more hours in front of three different electronic devices per day and 90 per cent of them report at least one eye-related problem linked to digital devices last year. They report issues such as double vision; regular eye pain; blurred vision; watery, dry eyes; or headaches when looking at a screen. However, these are not motivation enough to take action as their vision is “not that bad.” While the campaign encourages people to see an eye doctor to deal with vision problems, it also targets the potential life-saving aspects of these visits. Regular comprehensive eye exams can lead to early detection of a number of conditions, health issues, and illnesses including diabetes, cancer, thyroid disease, and even high blood pressure. Given its aging population, Canada is facing a potential crisis in age-related eye disease and it is expected to cost more than $30 billion annually by 2032.

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MX Extends Trading Hours

The Montréal Exchange (MX), Canada’s derivatives exchange, has extended its trading hours in response to an increase in activity and demand from its global clients. Trading is now available between 2 a.m. to 4 p.m. ET (7 a.m. to 9:30 p.m. in London, UK, time) with a pre-open or order entry session beginning at 1:30 a.m. ET (6:30 a.m. London time). Designed as a trading and risk management solution for investors around the world, extended trading hours enable domestic and international clients to manage their exposure to Canadian markets and execute cross-market strategies during non-regular Canadian business hours.

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How Returns Generated Important

What worked in the past may no longer work in future when it comes to decumulation strategies, says Kevin Horan, director of fixed income indices at S&P Dow Jones Indices. He told the ‘Retirement Income from A to D: Planning Holistically From Accumulation To Decumulation’ session at its ‘5th Annual Toronto ETF Masterclass’ that a number of factors are driving this including living longer with more active lives, rising healthcare costs, and the low yield environment. Tyler Mordy, president and CIO of Forstrong Global Asset Management, said in the decumulation phase there is a lot of risk including inflation risk and sequence risk. This makes it more crucial to generate positive returns in the early years of retirement as a big loss then brings assets down. However, while risk is everywhere, so are opportunities. Different asset classes can be used to provide stability in retirement income and alternative asset classes can be used to generate a stable income. Investors do have to go further out on the risk curve from traditional investments like GICs, but there are bonds throughout the world which return more than they used to and credit quality in those parts of world is getting better which means less risk.

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Information Seen As Barrier To ESG

While the RBC Global Asset Management report ‘Responsible Investing: Charting a Sustainable Advantage’ affirms that responsible investing – and the integration of ESG principles in particular – continues to grow, it also reveals that the remaining barriers to adoption may be a question of adequate resources and access to quality information, as opposed to philosophical opposition to the idea. Institutional investors, boards of trustees, consultants, and other members of the investment ecosystem increasingly appear to understand the value of ESG integration and are demanding that it be incorporated into the investment process. “As industry acceptance of ESG integration has accelerated and become mainstream, there will be greater focus on ESG-related investment research and its application in the portfolio management process,” says Habib Subjally, senior portfolio manager and head of global equities at RBC Global Asset Management (UK) Limited. “And as the demand for responsible investment solutions grows, asset managers and consultants will increasingly be called upon to offer guidance to their clients about responsible investing options that support their long-term financial goals.”

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Workers Confident About Retirement

Sixty-four per cent of U.S. workers are very or somewhat confident they will have enough money to last throughout their retirement, says the Employee Benefit Research Institute (EBRI). Its ‘Retirement Confidence Survey’ shows, however, only 17 per cent are very confident. Among retirees, 75 per cent are very or somewhat confident their money will last throughout their retirement and 32 per cent are very confident. The median age at which people expect to retire is 65, but the actual age is 62. The reasons why are usually because of a health problem, a disability, or being laid off.

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Software Integrated With Human Risk Line

Crawford & Company (Canada) Inc. has integrated its EmployerWORKS software with its human risk service line. EmployerWORKS was designed to streamline and standardize the collection, communication, and analysis of physical, cognitive, and psychosocial demands tied to risk assessment and return to work efforts. It handles disability claims effectively and efficiently by ensuring a prompt and successful return to work and implementing proper measures to prevent workplace injuries.

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RBC Appointed Custodian

RBC Investor & Treasury Services has been appointed as custodian for Starlight Investments Capital LP providing custody, fund administration, and shareholder services. Based in Toronto, ON, Starlight is a newly-formed independent asset management firm. Its initial mandates focus on providing differentiated solutions around underrepresented sectors in Canadian investors’ portfolios, beginning with real assets through its global real estate and global infrastructure fund available both as mutual funds and ETFs.

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Berlin Residential Assets Acquired

Round Hill Capital, a real estate investment, development, and asset management firm, and Ivanhoé Cambridge have joined forces and acquired nine well-located residential assets comprising 362 units in Berlin, Germany, for a total purchase price of approximately €75 million. These are the first investments by the joint venture whose strategy is to acquire residential assets and portfolios with an initial focus on Berlin’s greater metropolitan area. The region exhibits positive investment fundamentals, favourable housing demand/supply dynamics, and robust economic performance. Ivanhoé Cambridge is a real estate subsidiary of the Caisse de dépôt et placement du Québec.

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Clifford Moves To Franklin Templeton

Shane Clifford is senior managing director, alternative strategies, at Franklin Templeton Investments. He will focus on the global growth strategy and business development for its alternatives business. He most recently served as senior managing director, global head of corporate strategy, at EnTrustPermal.

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Future Of Benefits Discussed

Jonathan Tafler, from Shoppers Drug Mart; Richard Heinzl, from WorldCare International Inc.; and Laura Pratt, from Great-West Life; will gaze into their crystal balls and share their thoughts on the future of benefit plans and managing soaring cost of drugs at the Benefits and Pensions Monitor ‘The Future of Benefits’ event. Tafler will discuss health coaching and chronic disease while Heinzl will examine better management of disability claims. Pratt will look at the need to go beyond the traditional approach to help people improve their financial, physical, and mental well-being. It takes place October 18 in Toronto, ON. For information, visit Future of Benefits

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October 9, 2018


Co-operation Needed Among Provinces

More co-operation is needed between the four provinces to fix Atlantic Canada for the next generation, says Graham Steele, a former NDP finance minister for Nova Scotia. He, along with Tom Marshall, former PC minister of finance for Newfoundland and Labrador, and Wes Sheridan, former Liberal finance minister for Prince Edward Island, took part in the discussion ‘A View From The Money Seat: 3 Former Finance Ministers’ at 2018 CPBI Atlantic Regional Conference. He said he was not talking about an Atlantic provinces union, “it will never happen.” However, he questioned why there are four pension regimes and four liquor commission. The region just doesn’t have the resources for separate entities. Sheridan agreed that co-operation is key and “we can do that right up to point of creating a union.” Procurement is one area where it could be done. “We all use the same things, yet we procure separately,” he said. At the top of this list is drug procurement, he said. Ontario is the largest procurer of drugs in Canada and it pays 68 per cent of what the Atlantic provinces pay simply due to ignorance and size. The region is losing out on an opportunity to save millions of dollars a year. He cited the Atlantic lottery as an example of co-operation which has worked for 40 years. Marshall, however, thought maybe regional government is the way to do. “When we got together, we got along,” he said. One of problems, for example, is the population of Newfoundland is declining. The province needs immigrants. “PEI doing a great job there, why not let them do it,” he asked. But there is no interest in that in Newfoundland which, like the other three provinces, wants to “hang on to everything” because each is protecting its own turf, he said.

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Survey Identifies Need For Pension Plans In For Non-profit And Charitable Sectors

A majority of employees in the non-profit or charitable organization sector have no retirement benefits at all. If they exist, the most commonly offered plan is based upon employer matching of employee retirement contributions, says a survey for the Common Good initiative to create a national, portable retirement income plan for Canada’s non-profit and charitable sector. These employers currently inhabit a challenging environment to offer retirement benefits. Financial barriers are huge issues for retirement benefits in the non-profit sector as 84 per cent say the lack of consistency/stability in their organization’s funding impedes their ability to offer retirement benefits to employees. The most common reason cited for employers not offering benefits is that they are too expensive (73 per cent). Larger employers are more likely to offer retirement benefits of some kind. Only 18 per cent of employers with small numbers of employees (less than 10 employees) have retirement benefits; this number increases to 52 per cent among medium employers (10 to 99 employees), and reaches a high of 75 per cent for large employers (100 or more employers). Among employers that do offer benefits, they are generally satisfied with their current plan, except for its applicability to all types of employees. Three-in-four (75 per cent) of the plans that are offered are totally (48 per cent) or partially (27 per cent) optional. Echoing earlier concerns, the main barrier to full plan participation is plans’ inability to be offered to part-time/contract workers. The survey also shows that at first blush, interest in Common Good is extremely high. Over nine-in-10 employers (92 per cent) and employees (94 per cent) are interested in the potential plan after first learning about it.

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Canada Lags In UNPRI Signatories

Canada has the lowest percentage of UNPRI signatories outside of Asia ex-Japan at 51.9 per cent, trailing the U.S. (55.5 per cent), the UK (77.8 per cent), and continental Europe (88.5 per cent), says Russell Investments ‘2018 ESG Survey.’ Similarly, the U.S. (59.4 per cent) and Canada (63 per cent) have the lowest number of firms with a Responsible Investment Policy outside of Asia ex-Japan. Australia and New Zealand (90 per cent), continental Europe (88.5 per cent), and the UK (86.7 per cent), have the highest. It also shows only 36 per cent of firms globally have dedicated ESG professionals who spend at least 90 per cent of their time on ESG-specific matters. However, AUM (assets under management) is a major factor as 92 per cent of firms with AUM greater than $500 billion have dedicated ESG professionals while 91 per cent of firms with AUM less than $10 billion do not.

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Research Incorporates Climate Change Into Analysis

Yale University professor William D. Nordhaus and New York University professor Paul M. Romer have been awarded the 2018 Nobel Memorial Prize in Economic Sciences “for integrating climate change into long-run macroeconomic analysis,” the Royal Swedish Academy of Sciences announced in a news release. They designed models that address the creation of long-term sustained and sustainable economic growth. Romer’s research revealed how economic factors dictate companies’ willingness to produce new ideas and innovations. It laid the foundation of the “endogenous growth theory,” which explains how ideas are different from other products and need specific conditions to thrive. Nordhaus’ work examines how society and nature interact. He was the first person to build a quantitative model to reveal the relationship between the economy and the climate. His model is used to simulate how these spheres co-evolve and impact one another.

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Blockchain Gathers Interest

Blockchain is gathering interest in financial communities who believe that this technology will create significant new revenues so it is worth the monetary investment, says Lucien Foster, head of fintech strategy and partnerships at the Bank of New York Mellon. Simply put, at its core, blockchain is a database, he told the ‘Blockchain and Cryptocurrency’ at the ‘2018 CPBI Atlantic Regional Conference.’ It is a data store holding a log or ledger of transactions or events. Distributed across public or private network, there are multiple copies on multiple computers so there is no single point of failure. New information, or blocks, are added to the chain, each with a unique fingerprint or tracking code so. All the parties involved have to agree on the order of the ledger so need for a third party to monitor is not necessary. Still in the early stages, some of its value for financial services include efficiency gains through operational simplification and automation, reduced clearing and settlement time, and liquidity and capital improvement. It also provides risk management as it reduces counterparty risk and fraud, improves resiliency, provides compliance with new regulations, and offers regulatory real-time monitoring between partners.

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Brokers Work Hard To Keep Up

Nearly half of institutional equity investors globally are expected to ask their brokers for customized algorithms next year ‒ a percentage that shows just how fast equity execution technology is evolving, and how hard brokers must work to keep pace, says Greenwich Associates. In ‘The Evolution of Sell-Side Execution Technology,’ it says until recently, there was a perception that trading algorithms were commoditized products. There was some truth to this belief, since algos were using similar logic, and because many brokers were “white labeling” the same algos from bigger brokers. To combat this complaint, brokers have increasingly focused on providing bespoke algorithms to their clients and more than 94 per cent of electronic trading executives say customization is an important part of their service model. “Today, armed with new insight and analysis, buyside traders have a much clearer view about the types and timing of strategies they want to use, the order types that work best, and the venues they want to access,” says Richard Johnson, vice-president of Greenwich Associates market structure and technology and author of the report. “All of this places an increasing demand on the broker to accommodate their clients’ order-handling requirements.”

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Trade Concessions Needed To Reach Agreement

Canada didn’t have much of a choice but to compromise and make concessions to get a new trade agreement with the U.S., says John Baird, former minister of foreign affairs and senior advisor at Eurasia Group. Speaking at the ‘2018 CPBI Atlantic Regional Conference’ on North American Integration ‒ Where Are We Going, he said, however, it is a huge win for Canada as it eliminates uncertainty to future economic growth. Even without the election of Donald Trump as president, there was growing sentiment in the U.S. against global trade. During the election, both Bernie Saunders and Hillary Clinton who were running for president came out in favour of some sort of change in direction, responding to a frustration with trade architecture which built up over three decades. Canadians, on the other hand, are more comfortable with globalization and had the free trade debate 10 years ago. Canada was warned that this would happen from day 1 and two years ago its government knew it had to make concessions, it was just a question of the size of these, he said. However, trade is an area Trump passionately cares about and he has been asking about the issues for “many, many years.” Now, the U.S. is questioning the value of groups like World Trade Organization, going so far as to threaten to pull out.

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IIAC Responds To CDIC Trust Disclosure

The IIAC (Investment Industry Association of Canada) has responded to the Canada Deposit Insurance Corporation’s (CDIC’s) consultation on proposed amendments to its joint and trust account disclosure by-law. CDIC’s proposal will have a material impact on IIAC members acting as nominee for their clients when placing deposits at CDIC’s member institutions. While the IIAC supports the policy rationale for CDIC’s proposed amendments, namely to ensure CDIC obtains the information it requires to reimburse insured depositors as quickly as possible in the event of a member institution failing, it will entail significant systems and procedural changes for IIAC member firms. The extent of these changes should be taken into consideration by CDIC when it decides on an effective implementation date. Further, there are areas of the proposed bylaw that require additional clarity to ensure IIAC members understand what is required to develop the necessary systems and procedures to ensure compliance.

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Parametric Registers As Portfolio Manager

Parametric Portfolio Associates LLC, a subsidiary of Eaton Vance Corp., has been registered as a portfolio manager with the securities regulatory authorities in certain provinces of Canada for specific products and strategies as well as a commodity trading manager in Ontario. The registrations became effective this summer. It is a systematic asset manager focused on delivering elevated, transparent, repeatable investment outcomes by bringing clarity and accessibility to investment science. Its solutions apply ingenuity and scientific rigour to manage risks and control costs across three main categories: better beta, non-traditional alpha, and efficient portfolio implementation. As of June 30, 2018, it managed $231.3 billion in assets on behalf of institutions, high-net-worth individuals, and fund investors in the U.S. and internationally.

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Connor, Clark & Lunn Acquires Hydropower Facilities

Connor, Clark & Lunn Infrastructure has entered into an agreement with Greengen Holdings Ltd. and Sts’ailes Energy Development Limited Partnership to acquire a majority interest in Bremner Trio Hydro Corp., which owns two construction-stage, run-of-river hydropower facilities aggregating approximately 50 megawatts (MW) located near Harrison Lake in British Columbia. The portfolio consists of the 27 MW Trio Creek and 23 MW Bremner Creek hydroelectric projects, with a combined expected energy output of approximately 150 gigawatt hours per year. With key construction and procurement milestones achieved, the Trio Creek project is underway and the Bremner Creek project is expected to commence construction in early 2019.

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Tutty Is Volunteer Of Year

Dave Tutty is the CPBI Atlantic region volunteer of the year. He has spent 13 years on regional council and has held every executive role. For last six years, he has served as sponsorship chair for the annual regional conference. He currently represents the Atlantic region on the CPBI national board.

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Persicone Manages Pension Policy

Enrico Persicone is manager, pension policy, at OMERS. Most recently, he was senior manager of the BMO Canada pension program. He joined the organization in 2014 as a senior pension advisor.

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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 more information, visit CFA Dinner

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