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September 8, 2017


Sun Life Global Acquires Excel

Sun Life Global Investments (Canada) Inc. will purchase all of the outstanding shares of both Excel Funds Management Inc. and Excel Investment Counsel Inc. Excel specializes in emerging markets funds with approximately $700 million in assets under management. The acquisition will help accelerate the growth of Sun Life Global Investments through new emerging markets offerings and add Excel’s exchange-traded funds to its capabilities.

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Investors Call For More Women On Boards

Canada’s largest institutional investors are calling for 30 per cent representation of women on the boards and executive management teams of S&P/TSX composite index companies by 2022, says the 30% Club Canada. A total of 16 investors, managing a combined $2.1 trillion in net assets, say swifter and more decisive action is needed to bridge the diversity gap. In a joint investor statement, they are calling on institutions and business leaders to use their collective voice as public company investors to help drive meaningful progress on gender diversity across the country’s offices and boardrooms. While evidence suggests more diverse boards lead to stronger results, the pace of change has been slow in Canada. In a sample of issuers, only 12 per cent of board seats were occupied by women, rising to 18 per cent for the 215 largest issuers with over $1 billion in market capitalization, says a September 2016 review by the Canadian Securities Administrators. The investor statement commits its supporters to playing a proactive role and engaging with investee companies on corporate governance issues. This includes, but is not limited to, the process boards use to identify suitable candidates for board and senior management roles.

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Solvency Ratio Of Plans Declines

Amid rising global political instability and subdued equity market returns, Aon’s median solvency ratio for Canadian defined benefit pension plans declined to 96.5 per cent in August, down 1.6 percentage points from the post-recession record set in July. “On the one hand, August demonstrated how susceptible pensions can be to global market disruptions, which came last month in the form of escalating U.S.-North Korea tensions and Hurricane Harvey in Texas,” says Ian Struthers, a partner and investment consulting practice director at Aon Hewitt. “Not only did those developments depress market returns, but they also suppressed yields as investors flew to the relative safety of bonds despite the Bank of Canada’s recent rate increase.” On the other hand, pension solvency remains near post-recession record levels, and plan sponsors remain in a strong position to take steps now to mitigate risk, whether that’s through hedging, portfolio diversification or other de-risking strategies. Of surveyed plans, 38 per cent were more than fully funded as of September 1, down 4.8 percentage points from August 1.

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Employers Consider Investment In Top Performers

Improving economic conditions, adjustments for salary freezes in previous years, and a change in base salary strategy or competitive positioning to market are all driving some Canadian employers to consider making strategic investments in top talent, says Mercer’s ‘2017/2018 Compensation Planning Survey.’ When organizations who have implemented a salary freeze are taken into account, Mercer projects that Canadian salaries will rise by an average of 2.4 per cent in 2018 – up slightly from 2.3 per cent in 2017. When organizations implementing a salary freeze are excluded, the projection is 2.5 per cent. Although salary increases are holding steady for average performers, they are higher for top performers who are slated to receive a salary increase 1.8 times higher than average performers in the coming year. “As economic conditions improve across much of Canada, employers are looking to make strategic investments in top talent,” says Allison Griffiths, principal and leader of workforce rewards at Mercer Canada. “But it’s important to get the investment right. This means looking at compensation in a holistic way and with an eye towards the trends transforming the global workplace.”

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Interest In Risk Transfer Heats Up

As it becomes increasingly difficult for companies to manage pension liabilities in the current market and regulatory environment, it appears that defined benefit plan sponsors’ interest in pension risk transfer (PRT) is heating up. MetLife’s ‘2017 Pension Risk Transfer Poll’ found that nearly nine in 10 plan sponsors (87 per cent) believe the level of 2017 PRT activity will be at least as, or even more, robust than 2016. This insight may come from their own intentions as 61 per cent have taken preparatory steps for an eventual PRT transaction, up from 45 per cent in 2015. It shows over half of plan sponsors (57 per cent) say they will use an annuity buyout to de-risk, including 43 per cent who plan to use a combination of a lump sum and an annuity buyout.

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NAFTA Ranks At Geopolitical Risk

The discussion over NAFTA (the North American Free Trade Agreement) is one of the biggest geopolitical risks facing Canada’s economy, says Pedro Antunes, deputy chief economist at the Conference Board of Canada. He told ‘The New People Equation: Mercer’s 2017 Talent Outlook and Compensation Planning Event’ that U.S. President Donald Trump is basing his objections to NAFTA on the grounds that Canada exports more to the U.S. than it exports here. But that is partly unfounded because Canada’s trade surplus with the U.S. is due to energy exports. Once these are removed, trade between the two countries is fairly balanced, he said. As well, U.S. consumers overconsume, consuming more than it can produce. In terms of manufacturing jobs lost, Canada has lost just as many manufacturing jobs since 2000 as the U.S., but most of the lost jobs are due to automation of manufacturing and they can’t be brought back. These won’t be fixed with a new NAFTA, he said.

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Exchanges Contribute To Growth

Stock exchanges contribute to sustainable economic growth and development by both facilitating the allocation of capital and encouraging good corporate governance, says a report from the World Federation of Exchanges (WFE). The report examines the role of stock exchanges in promoting economic growth and sustainable development. It highlights some primary mechanisms that enable exchanges to contribute to development, including mobilizing domestic and foreign portfolio flows and promoting good governance in business practices. A number of exchanges offer products and services, such as sustainable indices and funds and green bonds, the report says, and they also help promote companies that are particularly conscious of sustainability issues. Additionally, exchanges promote enhanced corporate disclosure about sustainability issues.

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Age Of Disruption Here Now

Winning in this age of disruption requires attracting and retaining tomorrow’s talent; building for an unknown future; and cultivating a thriving workforce, says Ilana Hechter, partner and leader of talent strategy and transformation at Mercer Canada. Speaking at ‘The New People Equation: Mercer’s 2017 Talent Outlook and Compensation Planning Event,’ she said, however, employers need to focus on tomorrow because if they don’t, they won’t be able to succeed today. Disruptions in the workplace are here already, she said. Longevity is one example as people are working longer for a variety of reasons including financial if they are not getting the pension they expected, but also because they are healthier and living longer and are not ready to leave the workplace. However, this can create succession planning problems for employers who need to accommodate these older workers now, but cannot plan for them leaving especially because the decision often comes at the last minute. As well, advances in fertility are allowing older women to have children and to have children later. This can cause disruption especially if the women are slated for leadership roles, but leave to have their children.

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Novus Releases Digital Hub

Novus Health has released its core product offering, the health and wellness navigation platform. This digital hub guides members in navigating the healthcare system and provides reliable resources to assist them in proactively managing their health and achieving their wellness goals. All content offered on the portal is localized and medically reviewed by clinical staff. Enhancements include a faster and more effective omni-channel experience, an improved navigation platform with interactive search tools and personal decision-making guides, and digital products to increase member engagement.

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Solar Project In Chile Acquired

Connor, Clark & Lunn Infrastructure will acquire 15 construction-stage, ground mount solar projects in Chile aggregating approximately 65 MWs of capacity. It has closed on the investment to acquire the first two projects in the portfolio and expects to complete the acquisition of the balance of the portfolio in late 2017 and early 2018. This marks its first investment outside Canada. Construction of the portfolio is scheduled for completion in late 2018 or early 2019. Once completed, the facilities will have approximately 200,000 solar modules and be capable of producing 130,000 megawatt hours of clean electricity annually. The power generated is expected to be sold at a stabilized price under the Pequeños Medios de Generación Distribuidos (PMGD) program in Chile and will be transmitted to the grid through feeder lines owned by local distribution companies.

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Russell Launches ESG Fund

Russell Investments Canada Limited is enhancing its outsourced CIO solution with the launch of an ESG global equity fund. This actively managed multi-manager fund is designed to reduce a client’s total exposure to carbon footprint and fossil fuel reserves and invest more in climate resilient and renewable energy opportunities. A company’s stock also is excluded from the portfolio if its primary business is directly involved in the production and sale of alcohol, tobacco, or firearms. The rules-based solution allows clients to align their investments with their core ESG values without sacrificing outcome-oriented equity exposure and the potential for growth.

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Matte Joins Hexavest

Emmanuel Matte is managing director at Hexavest. Previously, he was head of global investment solutions at Manulife Asset Management, a firm he joined in February of 2015 from Standard Life Investments where he served as senior vice-president, investment solutions.

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Funding Reform Examined

The implications of Ontario’s funding reform and what should be done now to prepare for the changes being contemplated will be examined at an ‘ACPM Information & Networking Session on Ontario Funding Reform.’ Kathy Bush, a partner at Blake, Cassels & Graydon LLP, and Jeff Kissack, a senior consulting actuary at Willis Towers Watson, will discuss some of the implications for plan sponsors and ACPM’s perspective on the issues. This will include how plan financing may change, de-risking implications, and the impact of the reform on plan governance. It takes place October 11 in Toronto, ON. For information, visit Ontario Reform

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September 7, 2017


Interest Rates Up Again

The Bank of Canada raised its benchmark interest rate by a quarter-percentage point to one per cent. This is the second time this year that it has raised the rate, after increasing it for the first time in seven years in July. The rate will impact lending rates from banks on mortgages, lines of credit, savings accounts, and other financial vehicles. The Bank of Canada says the hike was warranted given unexpectedly strong economic growth in the second quarter, but future moves are not predetermined and would be guided by data and market developments.

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Teachers’ Net Assets Increase

Net assets for the Ontario Teachers’ Pension Plan (Ontario Teachers’) reached $180.5 billion as of June 30, 2017, a $4.9 billion increase from December 31, 2016. The total-fund gross return was 3.7 per cent (3.6 per cent net of investment administrative expenses), reflecting $6.4 billion of income generated by investments. It continued to execute on its long-term strategy based on three pillars: total-fund returns, value-add (above benchmark) returns, and risk management. Key initiatives in this area include the launch of a department responsible for developing global investment relationships and the centralization of trade and treasury functions to improve efficiency, support innovation, and decrease execution costs. It also involved the implementation of its previously-announced asset class realignment to better reflect the behaviour and risk-profile of its investments. “Returns in the first half of 2017 were driven by strong performance from global public equities, infrastructure, private equity, and government bonds. Overall returns were offset by the impact of currency and declining commodity and natural resource prices,” says Bjarne Graven Larsen, its chief investment officer.

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Concerns On Geopolitical Events Grows

Global institutional investors are growing more concerned about geopolitical events as a risk to portfolio performance in North America, says Allianz Global Investors’ annual ‘RiskMonitor’ survey. Eighty-eight per cent of survey respondents deemed event risk as a threat to performance in 2017 in North America, ranking second overall, compared to 68 per cent of respondents in 2016, when it ranked sixth among threats to performance. Equity market risk ranked first in both 2017 and 2016 at 93 per cent and 81 per cent, respectively. Ranked third at 86 per cent is interest rate risk, up from 75 per cent in 2016. As well, globally, 45 per cent of survey respondents believe a tail risk event is likely in 2017, up from 37 per cent in 2016. In North America, 44 per cent of respondents believe a tail-risk event is likely, compared to 41 per cent in 2016.

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Canadians Delaying Retirement

Even though there have been some signs of economic improvement over the past year, most employed Canadians are no better off when it comes to their retirement prospects, says the Canadian Payroll Association’s ninth annual survey. It found 24 per cent of Canadian employees say that their savings have delayed them from setting a target retirement age. As well, almost half of working Canadians (46 per cent) say they will now have to work longer than they planned five years ago and the top reason cited is they are “not saving enough.” In fact, 74 per cent say they have saved only a quarter or less of what they feel they will need to retire. And even among Canadians closer to retirement (50 and older), 47 per cent are still less than a quarter of the way to their retirement savings goal. The average Canadian’s target retirement age is now about 61 and half (46 per cent) think they will need a retirement nest-egg of at least $1 million.

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Benefits Of ICBT Studied

The Co-operators together with the University of Regina will study the benefits of Internet-delivered Cognitive Behavioural Therapy (ICBT). The therapy is designed to support stay-at-work and early return-to-work situations for employees facing a mental health condition. This new online therapy option provides simple, barrier-free access to cognitive behavioural therapy. A relatively new approach to treatment, it provides patients access to care in a convenient way. It is highly standardized and involves therapists guiding patients through an online program that provides strategies for dealing with depression and anxiety. Past research shows that 75 per cent of patients who complete ICBT programs report significant symptom improvements.

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Compensation Drives Education Spending

Education spending on public schools in Canada increased by $17.5 billion (37.7 per cent) between 2005/06 and 2014/15 and compensation was the main driver, says the Fraser Institute. Its ‘Education Spending and Public School Enrolment in Canada, 2017’ report shows compensation (salaries and wages, fringe benefits, and pensions) grew from $33.5 billion in 2005/06 to $47.2 billion in 2014/15. Teacher pension costs increased 77.8 per cent from $2.4 billion in 2005/06 to $4.3 billion in 2014/15. Pension costs increased as a share of total education spending on public schools from 5.2 per cent in 2005/06 to 6.7 percent in 2014/15. Salaries and wages increased by 36.1 per cent, from $27.6 billion in 2005/06 to $37.5 billion in 2014/15. Fringe benefits increased 53.6 per cent from $3.6 billion to $5.5 billion over the period.

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Investors Eye European Commercial Property

Institutional investors plan to increase their investment in European commercial property, but diverge on the opportunities created by the UK’s departure from the EU, says a survey by BrickVest. It found 40 per cent of investors surveyed plan to allocate more money to the asset class in the next 12 months. Sixty per cent felt Brexit was the biggest challenge, though 39 per cent felt the UK’s exit from the EU would increase the number of investment opportunities in Europe. Other challenges that featured strongly in the survey were political uncertainty, low economic growth, rising interest rates, and rising inflation.

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Inputs Determine Quality Of Scheme

It is the ‘inputs’ that determine the quality of scheme governance, says the UK’s Pensions and Lifetime Savings Association (PLSA) in its ‘Good Governance – how to get there: A PLSA discussion paper.’ The paper sets out its definition of good pension fund governance. These inputs are chiefly concerned with the qualities of scheme governance bodies and the support they are able to draw upon. Key characteristics of effective boards or committees include collective knowledge of the technical areas relevant to pension fund administration on issues including investment, legal, and actuarial matters; more general skills such as an ability to communicate effectively and commercial acumen when dealing with external advisers; and cognitive diversity through board or committee members with a range of different backgrounds and perspectives. Governance bodies with these characteristics will make good decisions, increasing the likelihood of good outcomes for scheme members, it says.

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MacDonald Collaborates With Eckler

Dr. Bonnie-Jeanne MacDonald, who through her research aims to advance the financial security of Canadians, is collaborating with Eckler. In 2014, her research created the concept of the Living Standard Replacement Rate (LSRR) which earned the ‘2014 Pension, Benefits and Social Security Scientific Committee Award Prize for Best Paper’ at the ‘30th International Congress of Actuaries.’ Eckler used this research to create its ‘Guided Outcomes’ retirement plan management tool. MacDonald is an academic researcher in the department of economics at Dalhousie University.

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Birks Locating In Ivanhoé Cambridge Shopping Centres

Birks Group Inc. has agreed to open five stores at Ivanhoé Cambridge shopping centres in Canada. Two stores will open in October in Oshawa, ON, and Surrey, BC. Three other stores in Ottawa, ON; Edmonton, AB; and Quebec City, QC, have had their leases renewed for the long term. All three will also be relocated to new, entirely renovated spaces. The size of the new stores, at about 1,100 square feet, will enable Birks to offer a selection of its most popular collections, including silver, gold, and diamond jewelry, along with diamond engagement rings and wedding bands. Ivanhoé Cambridge is a real estate subsidiary of the Caisse de dépôt et placement du Québec. 

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Duhamel Heads Fiera

Vincent Duhamel is global president and chief operating officer (COO) at Fiera Capital Corporation, effective November 14. He has headed large global investment management organizations in Asia and Canada. From 2011, he held the role of capital partner and chief executive Asia at Lombard Odier & Co. From 1997 to 2011, he was the CEO of SAIL Advisors Ltd., a privately owned hedge fund sponsor; managing director at Goldman Sachs in Hong Kong; and CEO of State Street Global Advisors, also in Hong Kong, where he moved in 1997 after setting up the asset management division of State Street in Canada.

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Speakers Added To Technology Session

Dr. Syed Haider, a senior consultant and orthopaedic surgeon from Markham Stouffville Hospital; and Karen Voin, assistant vice-president, group benefits and anti-fraud, from the Canadian Life and Health Insurance Association Inc.; have been added to the speakers at the Benefits and Pensions Monitor Meetings & Events ‘Technology and Healthcare Plan Innovation’ session. Haider will discuss the alarming increase globally of osteoarthritis of the knee. Voin will explain how legislative changes, technology advances, and new drug treatments can create opportunities for innovation and change to benefit plans. They join Tim Clarke, owner of tc Health Consulting, who will provide an overview of the companies eyeing the industry as one ready for disruption and what this might mean for how employers deliver health, benefits, and insurance programs to their employees in the near future; and Paul Clark, chief technology officer from WorldCare International Inc.; who will examine new healthcare technology developments, such as telepathology, which are providing more effective and efficient ways to improve outcomes. It takes place September 14 in Toronto, ON. For information, visit Healthcare Technology

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September 6, 2017


Largest Pension Funds In ‘Super Growth’

Assets under management (AUM) at the world’s largest pension funds have soared back into “super growth,” the ‘Global 300’ list by Willis Towers Watson. The research also shows Canada has overtaken the UK as the fifth largest country by share of pension fund assets, accounting for 5.4 per cent (5.3 per cent in 2015). The UK now accounts for 4.8 per cent, falling from 5.4 per cent of total assets in 2015. The U.S. continues to hold its position as the country with the largest share of pension assets across the top 300 funds, representing 38.6 per cent spread across 134 funds. AUM for the largest funds rose by 6.1 per cent in 2016, or a total of $15.7 trillion. The return to growth follows a 3.4 per cent decline in 2015, whilst cumulative growth in assets since 2011 now stands at 23.4 per cent. The top 20 funds by asset size in the research saw a higher increase than the overall ranking, growing assets by 7.1 per cent over the period. The world’s top 300 pension funds together now represent 43.2 per cent of global pension assets, rising from 42.5 per cent in 2015.

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Retirement System Facing Major Shifts

The retirement system in America and capital markets could go through some major shifts as the Baby Boomer generation nears retirement and draws down the assets they built in their working years, says the Center for Retirement Research at Boston College (CRR). It says economic theory suggests that retirees draw down the assets they accumulated in their working lives, so a higher retiree-worker ratio reduces the supply of savings, thereby increasing investment returns. However, retirees also draw down savings at a slower rate than expected, especially the wealthy, who hold the majority of assets. So as retirees retain much of their wealth, a higher retiree-worker ratio instead leads to a greater supply of savings and a decrease in investment returns, it says. Still, it notes that the extent of this potential decrease is uncertain. If investment returns decrease, workers would need to save more to maintain their standard of living.

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Managers Not Ready For MiFID II

Ninety-four per cent of money manager clients of institutional trading network Liquidnet are not ready to meet best execution standards to be imposed by the European Union’s Markets in Financial Instruments Directive II (MiFID II) starting in January. Its survey results, part of a study titled ‘Re-Engineering Best Execution,’ showed only six per cent were ready to meet the best-execution requirements of MiFID II, which goes into effect January 3. Among the changes needed to prepare for MiFID II, respondents said they need to add asset classes to their best-execution policy; enhance their trading functions and strategies; invest more in technology; must improve communication and governance; and refine their transaction cost analysis model. However, 13 per cent weren’t sure what they needed to do.

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Consolidation Among U.S. Markets Likely

Intensifying competition, longer-term performance pressures, and regulatory developments suggest more consolidation among U.S. traditional investment managers is likely, says a report by Fitch Ratings. Although the investment management business has recently enjoyed an easing of some of the pressure facing the industry with asset outflows slowing and investment performance improving, the report expects the motivation for consolidation to persist. “Intensifying competition, longer-term performance pressures, and regulatory developments likely mean that the M&A wave among U.S. traditional investment managers is not ending anytime soon,” it says. As well, the ongoing shift from active to passive assets is leading many active managers to consolidate to increase scale and defend competitive positioning.

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Caisse Provides Loans To Carestream

The Caisse de dépôt et placement du Québec (CDPQ) has provided US$113 million of loans to Carestream Dental, a developer, manufacturer, and marketer of imaging systems and practice management software for general and specialist dental offices globally. CDPQ is collaborating in the financing with Carestream Dental’s majority owners ‒ Clayton, Dubilier & Rice, a private investment firm, it has been partnered with since 2004. Carestream Dental’s products are used by seven out of 10 practitioners in the dental health sector and deliver more precise diagnoses, improved workflows, and superior patient care.

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Fund Indices Up In August

Thirty-five of the 44 Morningstar Canada Fund Indices increased during August, though only five indices increased by more than two per cent. Meanwhile, eight of the nine fund indices with negative results were down by one per cent or less. The best-performing fund index for the month was the one that tracks the precious metals equity category, which increased 7.7 per cent. This comes on the heels of four consecutive months of negative performance for that fund index, during which time it lost 7.2 per cent. The Greater China Equity Fund Index was the second-best performer with a 3.9 per cent increase, reflecting strong gains on the Hong Kong and Shanghai stock exchanges as well as a 2.5 per cent appreciation of the Chinese currency relative to the Canadian dollar. Domestic equity funds posted flat results in August, as the Canadian energy sector detracted from the overall stock market’s results. The worst-performing fund category in August was energy equity, whose fund index decreased 4.5 per cent. Most fixed income fund categories ended the month in positive territory.

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Banyan Acquires Rack Attack Interest

Banyan Capital Partners (Banyan), a Canadian private equity group, has acquired a majority interest in Rack Attack, a North American retailer of vehicle rack solutions. Since its founding in 1996, Rack Attack has been focused exclusively on the sale, installation, and servicing of automotive racks and hitches. Seeking to grow the company across North America, this investment will facilitate Rack Attack’s penetration into new markets as well as the retirement of the majority owner, Chris Sandy.

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Hydro One Acquires Avista

U.S. utility company Avista has been acquired by Hydro One. Avista has been paying dividends since 1899. In each of the last 13 years, the utility has raised its dividend for shareholders and in the last 10 years, its dividend has compounded at 9.25 per cent annually. It has over 600,000 electric and natural gas customers in an area covering around 30,000 square miles of the Northwest U.S. It also owns Alaska Electric Light and Power.

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Guindon Rejoins Koskie Minsky

Anthony Guindon has rejoined the pensions and benefits practice at Koskie Minsky LLP. From 2013 to 2015, he was at the pension policy branch of the Ontario ministry of finance, where he advised the government on pension policy matters, particularly with respect to distressed pension plans, and assisted in the development of regulations under the Pensions Benefits Act, including those required to implement reforms under Bills 236 and 120. Afterwards, he spent two years at an actuarial consulting firm advising pension plan sponsors and administrators on statutory compliance, tax, and governance matters.

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September 5, 2017


Canada Now On T+2

Canada and the U.S. have now moved to a T+2 settlement cycle for equities, debt, exchange-traded funds (ETFs), hedge funds, segregated funds, principal-protected notes, and mutual funds, says Louis Lesnika, assistant vice-president, trade settlements, CIBC Mellon. In its ‘Straight Talk Digest,’ he says the migration to a T+2 settlement cycle will produce immediate results. These include the mitigation of counterparty risk, decreased clearing capital requirements, a reduction in margin requirements, and an increase in global settlement harmonization. Markets, including Europe and Australia, have already transitioned and many other countries are working to implement transition plans.

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LTD Termination Not Automatically Discriminatory

The British Columbia Labour Relations Board has ruled the termination of employees on LTD (long-term disability) is not automatically discriminatory, says an Eckler ‘Group News’. The township of Langley terminated three employees who had been on LTD since June 2013 on the basis of non-culpable absenteeism. While on LTD, the employees had been receiving drug, extended health and dental, and group life insurance benefits with 75 per cent of the cost of these benefits paid by the township, with the balance paid by the employee. While the termination did not affect the employees’ entitlement to LTD, they were no longer entitled to the benefits. An arbitrator for a union grievance originally classified the terminations as random and arbitrary, which rendered them discriminatory. On appeal, the board set aside and ordered a reconsideration of the arbitrator’s decision. It said considering the township reviewed 12 employees on LTD and had terminated those who had been away the longest, its decision was neither arbitrary nor was it made in bad faith. In addition, it found that the desire to control costs also did not constitute evidence of bad faith. As far as the employees’ entitlement to benefits, the board noted that, unless a contract specifically states otherwise, “the right to receive such benefits depends not on past service, but on an employee’s present ability (or reasonably foreseeable future ability) to fulfil the essential employment relationship bargain of work for pay.”

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Healthy Workplace Makes Good Sense

Keeping a workforce healthy makes good business sense, says Shaun Francis, CEO of Medcan and chair of True Patriot Love Foundation. In the article ‘Five Strategies For A Healthy Workforce at the Benefits and Pensions Monitor website, he outlines five strategies employers can use to support the prevention and treatment of ailments to ensure their employees are active and healthy and in good mental and physical health.

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BMO Adds Responsible Investment Fund

With environmental, social, and governance (ESG) investing garnering more attention in Canada and around the world in recent years, BMO Global Asset Management has launched a new pooled fund available to Canadian institutional investors ‒ the BMO Asset Management Responsible Global Equity ESG Fund. The biggest driver of this acceleration has been the realization that ESG issues such as corporate governance, labour, and environmental standards are not simply about moral or ethical values. ESG considerations can actually support – and enhance – long-term returns from both a risk management and opportunity standpoint, it says. BMO’s RI/ESG policy statement can be found at ESG Policy

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Potvin Succeeds Chabot

Jacques Potvin, vice president and chief risk officer at Industrial Alliance Insurance and Financial Services Inc., will succeed René Chabot as chief actuary starting February 16, 2018. Potvin is a 27-year veteran with the company and has occupied a variety of functions including corporate actuarial services, individual insurance sales and marketing, internal audit, and capital management. Chabot ‒ who joined IA in 1983 ‒ will retire on February 15, 2018. He became chief actuary in 2010.

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Top Canadian & Alternative Strategies Funds

Global Manager Research has identified the top one-year and four-year Canadian Hedge & Alternative Strategy performers as of July 31 using the ‘GMR Institutional Performance Report.’ On a one-year annualized return basis, the 1832 Asset Management Alternative Canadian Growth Equity fund and the Rosseau Limited Partnership fund both finished in the top five per cent of the group with returns of 26.66 per cent and 25.1 per cent respectively. On a four-year annualized basis, the TD Emerald Long Bond Overlay Pooled Fund Trust takes the top spot with a 14.67 per cent return followed closely by the JC Clark Adaly Trust at 12.97 per cent. The median return for that group was 6.51 per cent. The ‘Institutional Performance Report’ includes data on over 300 money managers in 19 distinct universes providing up to 10 years of historical performance results and key risk metrics. For a free copy of the full report, visit GMR.ca

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September 1, 2017


Stewardship Pillars Outlined

Vanguard CEO Bill McNabb has affirmed the key elements of the firm’s approach to investment stewardship. A letter to public companies outlined its pillars of corporate governance evaluation: board composition, governance structures, appropriate compensation, and risk oversight. It also emphasized the importance of gender diversity on boards, climate risk disclosure, and ongoing engagement and dialogue with companies. McNabb said “When a company has a great board of directors, good results are more likely to follow. And a strong board comprises diverse, experienced directors that serve as our eyes and ears on risk.” 

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Factors Influencing Rates Contradictory

Factors influencing interest rates are somewhat contradictory making it difficult to take a position, says Federated Investors. However, its fixed income duration committee continues to recommend a moderate short position on the view interest rates are more likely to rise than fall in the months ahead. Getting to this decision, however, isn’t easy, says R.J. Gallo, senior portfolio manager, head of the municipal bond investment group, and head of the duration committee. For instance, even though U.S. economic growth is on a favourable path of about 2.5 per cent (well above potential growth of around 1.7 per cent to 1.8 per cent) with an unemployment rate in the low four per cent area, inflation keeps disappointing. Both core and headline indicators are stuck below the Fed’s two per cent target and actually have been trending lower of late. This gives the Fed grounds to be patient and persistently gradual as it moves toward policy normalization, with a very slow pullback on reinvestments likely to be announced in September. The inflation shortfall also affirms the market’s persistent underpricing of the Fed’s dots trajectory, fueling speculation those projections will move even lower in upcoming meetings. At the same time, with commodity prices rallying and unemployment on track to fall further amid the ongoing jobs and economic expansion, it seems inflation eventually will rebound.

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Millennials Responsible For Retirement

Nearly seven out of 10 Millennials (69 per cent) believe individuals have primary responsibility for taking steps to ensure they have a secure retirement, says a survey from Capital Group. However, a number of Millennials believe employers (13 per cent) or the government (14 per cent) have the most responsibility for ensuring people have a secure retirement, says ‘New Workforce Natives: Millennials’ Attitudes on Work, Retirement and Investing.’ Millennials see access to a retirement savings plan as a basic expectation from employers as 80 per cent of Millennials believe all employers should be expected to provide a retirement savings option. Saving for retirement ranks second only to paying the rent or mortgage on Millennials’ financial priorities list. One in five Millennials (22 per cent) rank retirement saving as their number one financial priority.

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Hedge Fund Inflows Positive

Hedge funds recorded positive net asset inflows totaling $5 billion in the second quarter, bringing total 2017 asset flows to $24.7 billion, says Preqin. This marks a distinct contrast with 2016, which saw net industry outflows of $110 billion across the year. However, second quarter inflows do not approach the $19.7 billion seen in the first quarter. With performance remaining robust in the second quarter, hedge fund industry assets under management grew to a record $3.38 trillion, a 4.1 per cent increase from the beginning of 2017. CTAs saw the greatest net inflows of $10.4 billion while equity strategies funds recorded their sixth consecutive quarter of outflows, totaling $12.4 billion.

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de Bever Discusses Challenges

Leo de Bever, former chief executive officer and president of the Alberta Investment Management Corporation, will discuss the challenges and opportunities the current geo-political environment presents for pension plan investments at the CPBI Southern Alberta ‘Professional Development Day 2017 (Investments).’ The session also features sessions on the future of renewable energy and reducing carbon emissions; emerging issues in fiduciary responsibility with respect to group retirement plan investments; and investment strategies for defined benefit and defined contribution plans in a low interest rate environment. It takes place October 19 in Calgary, AB. To register, visit Professional Development

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