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January 17, 2020


Sticking To Strategy Best Advice

Stick with the strategy and don’t be tempted by forecasts, says Duncan Burrill, managing director and CFO of the CBC Pension Plan. He told the CPBI Ontario ‘Pension Investment Forecast’ this was one of lessons his fund learned as its moved to a liability driven investment strategy in 2005. As a very mature plan for a business, it was paying out $2.85 in benefits for every dollar contributed. As well, the business is declining so the plan was getting more mature. Currently, it has 38 per cent of its members active and 52 per cent are pensioners with 10 per cent deferred. During its journey since 2005, it ran into several issues. First was the belief that interest rates would rise. When it was planning the shift to LDI, it thought interest rates would rebound from the four per cent level. As it learned, he said, it is hard to predict interest rates and it has learned this lesson over and over. He said the current situation defies economic sense. The other challenge was the 2008 financial crisis. It took 10 years to dig out from that, said Burrill. While there may be other opportunities and forecasts that seem very appealing, he advised funds to stick to their strategy. If a plan is going to adjust to take advantage of these opportunities, it should keep these changes small. And while the plan did follow this, it would have been further ahead if it had just stuck to its strategy, he said.

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Never Too Late To Plan For Retirement

“Perhaps the biggest myth of all is the fear that you’ve missed the chance to plan for your retirement,” says Rick Lowes, vice-president, retirement strategy, at RBC. “That’s just not the case. Canadians are redefining retirement and there is a wide range of financial options to explore right up until the day you stop working.” Retired Canadians advise those approaching retirement not to expect it to be as advertised, says the ‘RBC Retirement Myths & Realities’ poll. Retired Canadians called out three key misconceptions about retirement. While more than half (55 per cent) of pre-retirees aged 50+ expect to know their retirement date more than one year in advance, this was true for only 39 per cent of retirees aged 50+ and 16 per cent had no advance notice at all. Close to one-third (29 per cent) of pre-retirees expect to be snowbirds, but only 18 per cent of retirees are actually flocking south in the winter. And while half (50 per cent) of pre-retirees plan to work in retirement, only 11 per cent of retirees responded they actually had returned to full-time or part-time work. The main reasons why pre-retirees say they plan to go back to work are to stay active mentally (64 per cent) and physically (48 per cent); to stave off boredom (44 per cent); and to generate income (43 per cent).

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ESG Part Of Fiduciary Duty

The fiduciary duty of pension plans has not changed in 150 years, says Randy Bauslaugh, a partner at McCarthy Tetrault. What has changed, he told the CPBI Ontario ‘Pension Investment Forecast’ session on ESG, is the perception of ESG (environment, social, and governance). For the most part, these were seen as moral and ethical issues, not financial. However, if ESG does encompass financial considerations and is relevant to financial risk and reward, pension plans must take it into account, he said. Its importance to the Canadian investors is such that in recent years the country’s security regulators have issued staff notices on questions that need to be addressed about ESG and, more recently, climate change. “I have one message ‒ if your fiduciary duty allows you to do this and if it is material, you must take it into account,” said Bauslaugh. Margaret Childe, director of ESG research and integration at Manulife Investment Management, said while climate risk is typically considered in ESG, many investors are now considering it separately. This is due partly because of its complexity. They are trying incorporate opportunities from the physical and transition risks of climate change into financial models. However, there is a lot around it that is unknown. One problem is that the emissions from individual industries can be identified, but what is not considered is the emission by the end users. For example, in oil and gas, product emissions account for 80 per cent of emissions. Walter Viguiliouk, principal, responsible investing, strategy and risk, Ontario Teachers’ Pension Plan, said most pension funds in the world are far along in their conversations about ESG integration. The space is evolving quickly and anyone who thinks they have it down. “probably doesn’t.”

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CSA Offers Crypto Guidance

The Canadian Securities Administrators (CSA) has published a guidance on where securities legislation may or may not apply to the trading of crypto assets. ‘Staff Notice 21-327 ‒ Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets’ describes situations where securities legislation will and will not apply. For example, securities legislation may apply to platforms that facilitate the buying and selling of crypto assets that are commodities because the user’s contractual right to the crypto asset may itself constitute a derivative, a security, or both. The relevant determination will depend on the facts and circumstances, including the obligations and intention to provide immediate delivery of the crypto asset.

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Sector Approach Relevant To Global Investing

There always has been geopolitical risk, says Andrew Greene, director of investments for the Toronto Transit Commission. Speaking at the ‘Going Global’ session at the CPBI Ontario ‘Pension Investment Forecast,’ he said, for example, fighting has taken place in the Middle East for thousands of years and will likely never end. What is different, however, is it is being seen in places where has not been seen before such as the U.S. and the UK. Still, when it comes to global investing, there are other concerns. It is safe to say there will be increased volatility, but there are places you can de-risk, he said. While taking a sector approach over a regional one has been broadly successful, in some areas, like real estate, a regional approach is better. Michael L. De Juan, director of portfolio strategy ‒ global asset allocation, Northern Trust, said in this environment, sector diversification is probably a little bit more important. However, the jury still it on whether taking an individual regional approach is better than a global one. Greene, however, said by diversifying globally, managers get to see different approaches as people from different parts of the world view things differently thereby providing different perspectives.

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Buy-In Annuity Covers 3,700 Retirees

Morneau Shepell has advised Iron Ore Company of Canada, a majority owned subsidiary of Rio Tinto, on the execution of a buy-in group annuity purchase with Sun Life. The deal, valued at more than C$560 million, covers more than 3,700 retirees and beneficiaries, helps reduce risks associated with the pension plan, and secures the plan’s financial position. There will be no change for members, who will continue to be paid from the plan as before the transaction.  

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VC Crosses Billion Threshold Again

Canada’s venture capital (VC) market crossed the US$1-billion threshold in the fourth quarter for the second time in a row to finish 2019 at an all-time record of US$4.6 billion, says KPMG Private Enterprise’s quarterly ‘Venture Pulse’ report. Canadian VC investment totalled US$1.17 billion in the fourth quarter, up 30 per cent from the year-earlier period and down 34 per cent from a record high of US$1.77 billion in the third quarter. The number of closed deals were lower at 109, compared to 151 in the previous quarter, but were bigger in size. The U.S. remains the epicenter of VC activity, accounting for more than half of global VC investment in 2019, the report says. As 2020 unfolds, deal activity is expected to remain relatively steady, with areas like artificial intelligence, biotech, and fintech remaining very hot.

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Elia Has New Role

Jennifer Elia is assistant vice-president, mental health strategy, at Sun Life. She joined the firm in 2009 and prior to that was with RBC Insurance as manager, strategic initiatives, business markets.

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Lalonde Joins WGAM

Julie Lalonde is a managing partner at Walter Global Asset Management (WGAM). She has spent two decades in the industry in roles including executive vice-president leading business development and client service and vice-president, client service, marketing, and investment strategies, institutional markets. Earlier in her career, she management roles with pension funds of multi-national corporations.

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Climate Change Action Outlined

Michael Azlen, founder and CEO of Carbon Cap Management LLP, will show just how decision-makers can take action to lower climate change risk in equity and debt portfolios and generate attractive returns in the move to a decarbonized economy at the ‘20th Edition Canadian Alternative Investments for Pensions (CAiP) East Forum.’ It takes place April 20 to 22 in Niagara-on-the-Lake, ON. For information, visit https://www.event.insightinfo.com/caipeast

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January 16, 2020


Water Real Climate Change Issue

A lot of people think the issue is climate change and carbon, says Toby Messier, CEO of Aquantix. It is a technology company that leverages AI and satellite and geographic data to predict water, climate change, and other material corporate risks and their financial impacts to institutional investors. He told the Reuters ‘Breakingviews Predictions 2020’ session that the real issue is water ‒ melting ice caps, flooding, drought, dryness, and water quality. And the focus has to shift to this repercussion of rising global temperatures. Canada is not ready for it, he said, because no-one is looking at it. Barb Zvan, chief risk and strategy officer for the Ontario Teachers’ Pension Plan, said the transition to a low carbon society is hampered by a lack of data. While there are loads of people to talk to about it and a lot of creativity around solutions, the scale is lacking to make these mainstream. Another impediment is that climate change seems far away so people have difficulty assessing the risk. Compounded with confusion around fiduciary duty and how to incorporate climate change risk into this, she said a strong signal is needed that this is something that needs attention. However, managers can cope with a lack of data and information, said Margaret Eve Childe, director of ESG research and integration at Manulife Investment Management. While she would prefer more data, the lack of data or quality of data should not hold the industry back. Struggling with data doesn’t mean managers can’t look at the physical and transition risks and identify the opportunities. And while a lot of work is needed to improve data, it “doesn’t mean we should stop looking at this,” she said.

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Orphan And Cancer Medicines Account For Sizeable Share Of Landscape

Coupled with high treatment costs, specialty orphan and cancer medicines now account for a sizeable share of the new drug landscape, says PMPRB’s ‘Meds Entry Watch’ report. It shows a continued rise in the number of new specialized treatments entering international markets. The number of new medicines that were approved annually in recent years is higher than the longer term average. Although fewer new medicines were authorized for market in Canada than in the U.S. and Europe in 2017, those that were approved for sale here accounted for close to 90 per cent of all new medicine sales across the OECD by the end of 2018, which suggests that the higher-impact new medicines are available to Canadian patients. The increasingly high cost of new medicines poses access and affordability challenges and is the driving force behind a host of recent and pending reforms in pricing and reimbursement policy, both domestically and internationally. In Canada, the PMPRB protects consumers by regulating the ceiling prices of patented medicines sold here and keeps them informed on trends in the pharmaceutical market through its reporting function.

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Infrastructure Spending Starts Too Late To End Recessions

Infrastructure spending is not an effective policy for stimulating the economy during a recession, says the Fraser Institute. “Infrastructure projects have very long timelines and by the time shovels hit the ground on a new bridge, highway, or subway tunnel, the recession is usually over and the economic recovery has already begun,” says Finn Poschmann, resident scholar at the Fraser Institute and author of ‘Fiscal Policy and Recessions: The Role of Public Infrastructure Spending.’ When the next recession hits, it’s likely that both the federal and provincial governments will consider infrastructure spending to stimulate the economy as successive governments have done in the past. It’s important, however, to recognize the practical limitations of such spending to combat recessions. First, the government must write and pass stimulus legislation. Then it must work with the provinces and municipalities to identify projects which require permit and zoning approvals. And, depending on the size of the infrastructure project, it may also require an environmental assessment before contractors are selected and materials sourced. Crucially, by the time actual construction starts, the recession will be over and the economic recovery will likely be underway. This means the infrastructure meant to stimulate the economy will now compete with private sector investment and potentially slow the recovery.

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Supremex Purchases Buy-In Annuity

Supremex Inc., a North American manufacturer and marketer of envelopes and paper-based packaging solutions, has purchased a C$46 million group annuity buy-in with RBC Life Insurance Company to transfer longevity and investment risks related to the pensioners and deferred vested members of its largest defined benefit plan. The transaction covers 361 pensioners, beneficiaries, and deferred vested members. A similar transaction of nearly C$7 million was performed in June 2018 for a smaller group of pensioners in another defined benefit pension plan of the company. As a group annuity buy-in it does not require additional company funding nor does it have any impact on its 2019 financial results.

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Partnerships Combines Traditional Benefits With PPN

ClaimSecure has formed a strategic partnership with Rexall Drugstores and Sobeys Inc. to develop a comprehensive national health program that combines traditional health benefits with a pharmacy closed preferred provider network (PPN) solution. This offering pools the expertise of claims management, mail, retail pharmacy, specialty drug delivery, and patient counselling capabilities under a single program, managed through a single point of contact. The program is available in both administrative services only (ASO) and fully insured funding models and is accessible through ClaimSecure’s network of insurer, third-party administrator, and broker partners.

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Fixed Income ESG Indexes Launched

MSCI has launched fixed income ESG (environment, social, and governance) and factor indexes. The fixed income factor indexes leverage research backed by four decades of factor data such as carry, quality, value, size, and low risk. The fixed income ESG universal and ESG leaders indexes are designed to help benchmark ESG investment performance, as well as manage, measure, and report on ESG mandates.

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Ramirez Joins Mitchell Sandham

Cristina Ramirez is a partner and vice-president, group retirement services, at Mitchell Sandham Inc. Most recently, she was a group consultant for RBC Group Advantage, a position she assumed in 2018 after leaving Penmore Benefits where she was director of business development, retirement.

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‘All Stars’ Showcased In Saskatchewan

‘All-Stars 2020: Showcasing the Best’ is the theme of the ‘10th Annual CPBI Saskatchewan Regional Conference.’ The conference sessions include keynote presentations that will explore leadership and retirement, along with breakout sessions for pension and benefits topics. Featured speakers include Bruce Sellery, a financial journalist and author of ‘Moolala,’ and Hal Johnson and Joanne McLeod, healthy living experts and hosts of ‘BodyBreak.’ It takes place April 21 to 23 in Regina, SK. For information, visit Saskatchewan 10th

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January 15, 2020


Climate Change Central To BlackRock Decisions

BlackRock will make climate change central to its investment decisions, says Laurence Fink, its founder and CEO. In his annual letter to CEOs, he says he believes we are “on the edge of a fundamental reshaping of finance” because of a warming planet. Climate change has become the top issue raised by clients, he says, and it will affect everything from municipal bonds to long-term mortgages for homes. The firm is taking immediate action, exiting investments in coal used to generate power and it will begin asking clients to disclose their climate-related risks. “Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself,” Fink says. “In the near future ‒ and sooner than most anticipate ‒ there will be a significant reallocation of capital.” He says over time, companies and countries that do not respond to stakeholders and address sustainability risks will encounter growing skepticism from the markets and, in turn, a higher cost of capital. “Companies and countries that champion transparency and demonstrate their responsiveness to stakeholders, by contrast, will attract investment more effectively, including higher-quality, more patient capital.”

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CDIPC Makes High Cost Drugs Affordable

The catastrophic expense of high cost drugs have been made affordable for a record number of Canadians, their employers, and life and health insurance companies through the industry’s drug cost sharing mechanism. The Canadian Drug Insurance Pooling Corporation (CDIPC) says that between 2012 and 2018, its 23-member health insurance companies and EP3 cost-sharing framework provided to employers has helped over 45,500 Canadians and their 24,000 employers to afford high cost specialty drugs. This includes over 23,000 Canadians whose treatment required drugs cost in excess of $10,000 per year in 2018. Growing by three to five per cent annually, Canadians in need of high cost drugs now represent over 39 per cent of the total drug claims paid being for by CDIPC’s member insurance companies. “At a time when national pharmacare is being debated as a way to ensure Canadians have access to high cost drugs, the industry’s drug cost sharing mechanism is very much contributing to maintaining the viability and affordability of drug insurance plans for many Canadian employers,” says Dan Berty, CDIPC’s executive director. “This means employees and their family members needing high cost drugs will usually find the drugs covered through their employer’s drug insurance plan. Without the industry’s EP3 cost sharing framework, this would be a much darker picture for many employers and, sadly, their employees.”

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ESG Linked To Performance

A link exists between a company’s ESG performance and its financial performance, says a study from ISS ESG, the responsible investment arm of Institutional Shareholder Services. Firms with high or favourable ISS ESG corporate ratings tend to be more profitable through an economic value-added lens. “While one can argue that the relationship between ESG and financial performance is perhaps due to the fact that more profitable firms have the resources to invest in areas that positively influence ESG, it could also be that profitability rises as a result of a company better managing its material ESG risks, or it could be a little bit of both,” the study says. “If it is a little bit of both, then this means that good-ESG initiatives drive up financial performance, which then provides the monetary resources to invest to be an even better ESG firm, which then drives up performance again, and so on. Investors may choose not to invest in a firm that has poor ESG, “thereby limiting its access to capital and raising its cost of capital,” the study says. “Firms that get in trouble on the environment may be distracted by the regulatory headache (higher costs) and customers may avoid the firm (lowering revenue). If one does not treat employees right, this could lower morale, increase turnover and therefore lower productivity.”

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Book On Friedman Available

The Fraser Institute is making the book ‘Essential Milton Friedman’ accessible to the general public. A new book about Milton Friedman, one of the most influential economists of the 20th century, it spotlights his extraordinary contributions to economic theory, measurement and policy, and his unique ability to make these concepts. “Friedman revolutionized the way economists think about so many issues including consumption, money, and unemployment and he developed and taught new ways of interpreting data that have been widely emulated to this day,” says Steven Landsburg, the book’s author and a professor of economics at the University of Rochester. His influence extended beyond economists. In the 20th century, he was the world’s foremost advocate for economic and personal freedom. Through his writings and media appearances, he educated millions about how markets work (and how governments often fail). At www.essentialfriedman.org, the complete book and individual chapters can be downloaded for free.

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Teladoc Acquires Telehealth Solution

Teladoc Health, Inc. has entered into a definitive agreement to acquire InTouch Health, a provider of enterprise telehealth solutions for hospitals and health systems. This acquisition positions Teladoc Health as a partner of choice for health systems seeking a single solution for their entire virtual care strategy. The company covers the full range of acuity from critical to chronic to everyday care through a single solution across all sites of care worldwide. Virtual care will increasingly be adopted to improve patient outcomes as the need for care is expected to increase, driven by aging populations and the increasing prevalence of chronic diseases.

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Waite Joins Manitoba Blue Cross

Julie-Ann Waite is account manager, group client development, at Manitoba Blue Cross. Mostly recently, she was manager, client services, at People Corporation. Prior to that, she was a senior account manager at Great-West Life.

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Program Offers Pension Certificate

In partnership with the HRPA, the Canadian Pension and Benefits Institute will offer a certificate program in pensions this spring. The ‘HRPA Canadian Pension Certificate Program’ will provide tips on best practices in plan administration and governance and strategies to reduce risk and liability in plan administration. It takes place April 2 to 4 in Toronto. For information, visit http://www.cpbi-icra.ca/Events/Details/Ontario/2020/04-15-CPBI-Ontario-Canadian-Pension-Certificate

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January 14, 2020


Active/Passive Debate Becoming Redundant

The long-running debate over active versus passive funds is destined to become redundant as new approaches that combine both styles of investing continue to emerge, says Cerulli Associates. “An investment model ‒ structured around service provision and its high level of value rather than sales of yet another active equity fund ‒ looks set to provide an alternative to active management fees,” says Justina Deveikyte, associate director, European institutional research at Cerulli Associates. In the institutional market, the trend was evident in the search by National Employment Savings Trust (NEST) for private credit managers. Only external managers able to offer innovative fund structures had a chance of securing a mandate from the UK defined contribution workplace pension scheme. Investors typically access private markets via closed-end funds with a limited life. Yet, NEST wanted evergreen, scalable fund structures in one of the unique features of the mandates that involved creating the right structure to balance the liquidity and legal needs of DC savers. Active management has been chipped away at by demand for strategies that offer similar exposures but without the fees, such as smart beta and ‘active’ exchange-traded funds (ETFs). The latter, now established in fixed income, allow investors to tap products with, for example, higher or lower allocations to certain issuers to access the market in a “smarter” way, deviating from the benchmark, but still within a rules-based, systematic approach. It is a passive-active combination that will increasingly manifest in equity strategies, says Cerulli.

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Climate Change Innovation Emerging Trend

ESG themes are long-term, but some can emerge with sudden force, says MSCI. Its report, ’20 ESG Trends To Watch’ says five trends will unfold in 2020 to catapult ESG investing into the new decade. The first is climate change innovators will start spotting the sleeping giants. Solving the climate crisis is likely to take innovative technology, scalable deployment, and a bit of luck. Many envision climate saviours coming in the form of plucky startups. But alternative data is hinting instead at big, established players, biding their time and quietly assembling an arsenal of climate solutions. In 2020, investors will turbocharge their use of alternative data to spot the companies plotting to take a lead in pushing society toward a carbon-free economy. As well, ESG banks have stepped away from some gun makers and investors have been keen to channel money toward green energy projects. But for the average, middle-of-the-road company, ESG has mostly been tossed to the corporate social responsibility office or used to prettify annual reports. In 2020, it says ESG storms the CFO’s office, elbowing its way onto the bottom line as financiers get creative with ways to bind ESG criteria to their terms of capital, introducing a plethora of corporate borrowers into the wide world of ESG. Other trends include re-valuing real estate. Just as real estate investors and managers begin to grapple with what climate change might do to their assets physically, now they may also have to contend with accelerating regulation. To green the property portfolio, they will move from a nice-to-have reputation booster to an imperative in the face of a looming ‘brown discount’ if real estate investors don’t kickstart their journey to zero carbon.

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Headband Measures Mindfulness

Morneau Shepell and Interaxon, the maker of the Muse meditation headband, have partnered to test Muse technology in workplace well-being programming. Employers are recognizing the potential benefits of mindfulness and meditation in improving workplace productivity and reducing costs. The Muse headband is a research grade electroencephalography (EEG) device that provides visual and auditory feedback on brain activity. It is the first such device meant for ongoing, at home, personal use. The feedback is used to shape the mental behaviours that define effective meditation, which is an intentional clearing and calming of the mind, and mindfulness, which is the ability to focus on a single thing in a calm state. “In today’s society, meditation and mindfulness are becoming essential skills and we have seen evidence that they are effective in helping to support many key components of well-being, including reducing stress and improving sleep,” says Paula Allen, senior vice president, research, analytics and innovation, at Morneau Shepell.

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Vertex One Fund Acquisition Completed

Picton Mahoney Asset Management has completed its previously announced acquisition of the investment fund management contracts of four hedge funds and alternative mutual funds from Vertex One Asset Management Inc. The acquisition increases Picton Mahoney’s total assets under management by $400 million.

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Richardson Joins George & Bell

Michelle Richardson (CFA) is a consultant with George & Bell. Prior to joining the firm, she worked for eight years for a global consultant. She started as a pension administrator, then worked in the investment consulting department as an analyst and was promoted twice to the position of investment consultant. She was also a member of the firm’s Canadian defined contribution committee.

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Portfolio Managers Share Insights

CFA Society Toronto’s ‘Annual Equity Symposium’ brings together a series of portfolio managers who will share unique insights into their investment process, market outlooks, and top investment ideas. It takes place February 5 in Toronto, ON. For information, visit Equity Symposium

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January 13, 2020


DC Moving To Pension Plans

Defined contribution plans will start looking more like pension plans as they borrow concepts such as funded ratios and create lineups with real estate, hedge funds, and private equity, says Russell Investments. In a blog post, it says by 2025, plan sponsors will as a matter of best practice conduct periodic retirement readiness studies of their plans “to better understand the collective ‘funded status’ of their participants.” They also anticipate that by 2025 more plan sponsors will use managed accounts as the qualified default investment alternative in their plans, with annual cash flow potentially surpassing the level of assets directed at target-date funds. They also foresee plan sponsors adding a retirement tier to their lineups with both guaranteed and non-guaranteed investment options. In addition, it sees more plan sponsors incorporating alternative strategies ‒ such as real estate, hedge funds, and private equity ‒ into their lineups, “similar to the approach used by large, well-run pension plan portfolios.” Broadening the investment lineup to include alternatives strategies may be accomplished in “a white-label structure for the core investment menu or in custom target-date funds.”

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‘S’ Offers Returns As Well

Bonnie-Lyn de Bartok, founder and CEO of the S Factor Co., believes there is no shortage of information about the ‘S’ ‒ social ‒ in the use of ESG (environment, social, and governance) factors in investment decision-making. Speaking on ‘The ‘S’ in ESG’ at the ‘MMF Symposium 2020,’ she said while ESG is a huge trend in the market, the social factor is overlooked because traditionally it is dismissed because of a lack on information to measure social factors. However, she said anything can be measured in terms of economic and social impact. While governance is having an impact and driving returns and climate change is drawing more interest in the environmental aspect, the social return is flat and there is a huge gap because everything needed to value information on the social side is unstructured. However, there are number of things companies are doing on the social which can be measured. These range from the treatment of indigenous people, health and safety records, labour law violations, and the number of accidents or incidents they are involved. She said anyone who looked at BP prior to the 2019 in the Gulf of Mexico would have seen that another incident was bound to happen. Companies which spend on social elements see outstanding outperformance, she said, which validates management styles which factor in social elements.

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Fresh Opportunities For Investors Ahead

The new decade offers investors exciting opportunities in emerging market bonds, healthcare, and inflation, says Terence Moll, head of investment strategy at Seven Investment Management (7IM). Despite a slowing world economy, he believes there are fresh opportunities for investors during the so-called ‘20s.’ “Every decade deserves a name. Some of us remember the Swinging ’60s, the ’90s ushered in political change across the world, and the Noughties sounded deliciously saucy (although it ended with the global financial crisis), he says. “But the decade just ending has been a no-name era. The ‘Teens’ label was taken and ‘Tweenies’ never caught on, so the world spent 10 whole years with no identity, just a grey association with slow growth, populism, and melting glaciers. “While investors face similar challenges in 2020 as they did in 2019, there are ample opportunities out there for those willing to look for them.” Themes investors should consider in the coming decade include emerging market bonds. The main sources of global growth, in terms of both people and economics, are emerging markets. One of their advantages is that they can gain from a less developed starting point, by borrowing advanced technology from abroad and leapfrogging costly stages of economic development. With the whole world steadily getting older, particularly in major economies such as Japan, more will be spent on healthcare. And while central bankers don’t anticipate much in the way of higher inflation in the near future, there is tolerance for some increases and this creates opportunities for investors. Moll says “central bankers are saying that they will tolerate inflation above their targets for a while to balance out the lows of the past few years.”

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ESG Area Of Innovation

ESG (environment, social, and governance) is truly an area of innovation for markets always looking for a competitive edge. Speaking at the ‘MMF Symposium 2020’ on ‘Investment Product Innovation: The Role of ESG,’ Aaron Bennett, director and senior research analyst, North American equities, at Jarislowsky Fraser, said broadly speaking, ESG is about non-financial elements and which is most material depends on each investor. In fact, it likely dates back to Quakers in 1800s as it was important to them that their investments were aligned with their values. Today, there is a conflict between wanting to do the right thing, but also wanting enough money to retire. One challenge is there is no standard framework for measuring ESG. He called this data “inherently dirty” and difficult to analyze. This means the data must be scrubbed and quantified. Still there is emerging evidence that it can be used for alpha generation as better companies will do things better and have better performance.

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Plan Consolidates With OMERS

OMERS has consolidated the Metropolitan Toronto Pension Plan (Metro Plan). The Metro Plan is one of the pension plans managed by the city of Toronto. This is the fourth plan managed by the city of Toronto to do so. Throughout 2019, the Corporation of the City of York Employee Pension Plan, the Toronto Civic Employees’ Pension Plan, and the Metropolitan Toronto Police Benefit Fund were consolidated into OMERS.

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Machine Learning Use Growing

Machine learning is being used for a number of applications in finance today, says Marcos López de Prado, founder and CIO at True Positive Technologies. He told the ‘Ten Financial Applications for Machine Learning’ session at the ‘MMF Symposium 2020’ that machine learning is an algorithm which learns patterns in high dimensional spaces without being specifically directed. Ten years ago, no-one could have predicted where machine learning would be today. These machine learning algorithms can even predict things that have never been seen before ‒ so-called “black swans” ‒ because extreme examples of phenomena happen all the time unseen by humans and algorithms can detect these activities. Another current application is price prediction. Algorithms can model six or seven of the widely accepted factors to see their relationships to predict future prices. Hedging to mitigate risk is another application. Traditionally, hedging uses derivatives and requires very complex math. Yet with machine learning, this can be done in minutes. Other uses today include portfolio construction/risk analysis, outlier detection, beta sizing/alpha capture, credit ratings/analyst recommendations, sentiment analysis/recommendation systems, execution, and detection of false strategies.

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Accompass Becomes Gallagher

Accompass is now operating as Arthur J. Gallagher & Co. There will be no changes to the team, the ways that it services its clients, or the level of insights about their benefits and health, investment and retirement, and broad-based and executive compensation programs. Gallagher acquired Accompass in 2018.

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Quarry Joins Equitable

Rachelle Quarry (CHS, GBA) is account executive, group business, at Pacific Blue Cross. Most recently, she was a group account executive at Equitable Life of Canada. Prior to that she was an account manager, group solutions, at Empire Life.

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Boyle Speaks At Forecast

Ryan James Boyle, vice-president and senior economist with Northern Trust Bank, is the featured speaker at the ‘2020 CPBI Atlantic Economic Forecast.’ He will share his outlook on growth prospects and risks for markets around the world. It takes place February 19 in Halifax, NS, and February 20 in Fredericton, NB. Information on the Halifax session is at Halifax Forecast while details of the Fredericton session can be found at Fredericton Forecast

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