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August 23, 2019


Merit Budgets Increase Slightly

Merit increase budgets have increased slightly in 2019 to a level of 2.6 per cent, excluding those organizations which have implemented salary freezes, says Mercer’s ‘2019/2020 Canadian Compensation Planning Survey.’ Merit increase budgets are projected to remain at this level in 2020. Prior to 2019, merit increase budgets had held steady at 2.5 per cent for the preceding three years. However, this year’s topline numbers belie considerable variation sector-by-sector with ‘hot’ sectors, like technology, choosing to allocate half a percentage point more (3.2 per cent) to merit increases, reflecting a more robust competition for talent. The survey also found 41 per cent of organizations budget separately for promotional increases, consistent with last year. The average promotional budget represented 1.1 per cent of payroll in 2019. As well, in 2019, high performers received 1.85 times the salary increase of average performers and the vast majority of organizations are continuing to invest in salary increases, with only six per cent reporting a salary freeze for executives in 2019 (down from 6.6 per cent in 2018) and only 4.8 per cent reporting a 2019 salary freeze for non-executives (up from 4.6 per cent in 2018). Nearly six in 10 (57 per cent) of participating organizations plan to continue with the same salary increase budget in 2020.

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RFPs Increasingly Complex

Request for proposal (RFP) teams are being tasked with handling an increasing number of RFPs, requests for information (RFIs), and due diligence questionnaires (DDQs) with increasing complexity, which is taxing on teams that are often already pressed for time, says Cerulli Associates. “The volume and complexity of requests received have increased over time due mostly to an increase in due diligence efforts by investment consultants and other institutions, as well as a shift in asset allocation decisions,” says Laura Levesque, senior analyst at Cerulli. Volumes from 2017 to 2018 for all request types have increased approximately two per cent for RFIs. RFPs and DDQs have seen a more significant increase in volume, jumping approximately 13 per cent and 20 per cent, respectively. This makes RFP and database teams challenged to meet turnaround times necessary to complete documents, with about 91 per cent of respondents saying it is at least a moderate challenge. The realized turnaround times for requests will increase in the absence of additional head count or technological support, but there is an opportunity to improve these metrics going forward. One option is to lengthen the expected turnaround on the requests to the extent that it does not interfere with the asset manager’s ability to meet deadlines for submitting proposals. However, given current and expected volumes for RFP requests, teams will need to focus on a combination of adding headcount, further leveraging existing or new technology, or creating other operational efficiencies.

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Global Investors Shun UK

Global investors shunned UK assets in July as the possibility of a hard Brexit increased following the rise to power of Boris Johnson as the UK’s prime minister. The exodus from UK equity funds gained pace, with net outflows hitting £1.6 billion throughout the month – the highest since April – as investor sentiment for the market deteriorated further, says data from Morningstar. Alternatives funds saw their 21st consecutive month of outflows as investors drew out nearly £1 billion from the asset class. Property funds, especially those invested in UK assets, saw investors withdrawing £417 million – the highest amount since January this year. Fixed income funds, on the other hand, saw net inflows for the fifth consecutive month as investors continued to seek lower-risk assets. Net positive flows into the asset type reached £428 million during July.

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Manulife Releases RI Report

Manulife Investment Management’s public markets group released its inaugural ‘Sustainable and Responsible Investing Report.’  The report provides clients and stakeholders with an overview of the philosophy and guiding principles driving its public markets group’s approach to sustainable investing, as well as concrete steps taken across the firm to integrate sustainability considerations into investment decision-making. It outlines its sustainability plan, key focus areas, and metrics of success. These focus areas include strong governance from senior executives, ESG integration, active and responsible stewardship, using a dynamic approach in innovating for the future, and increased transparency about sustainable investment practices. By using this framework of core tenets, it naturally integrates ESG as a complement to its strength as an active investment manager. “ESG analysis has become integral for investors to understand the true value of an investment and it’s now being looked to for its ability to help map opportunities for sustainable growth,” says Emily Chew, global head of environmental, social, and governance research and integration at Manulife Investment Management.

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Law Firm Marks Second Anniversary

Today marks the second anniversary of Brown Mills Klinck Prezioso LLP. The pension, benefits, and executive compensation boutique law firm was founded in 2017 by partners Elizabeth M. Brown, Lisa J. Mills, Terra L. Klinck, and John Prezioso. Associates Jason R. Paquette and Nicolas J. Guadagnolo and Cary K. Wong as counsel have since joined the firm. On September 3, it will welcome its eighth lawyer, Jennifer Agnew, as counsel. Recently, all four partners, as well as associate Jason R. Paquette, were recognized in the 2020 edition of ‘The Best Lawyers in Canada’ in the field of employee benefits law.

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Lindley Heads OPTrust

Peter Lindley is president and CEO of OPTrust, effective September 16. A financial services industry veteran with over 30 years of experience in strategy, investments, and leading high performance teams, he was most recently president and head of investments for State Street Global Advisors Ltd. (SSGA Canada). He was with SSGA for the last 14 years. Prior to that, he held senior roles at Deutsche Bank and CIBC World Markets.

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Digital Risk Management Examined

While many plan sponsors are in the process of moving their eMail and human resource applications into the cloud to benefit from agility, reduce costs, and increase efficiencies, it introduces major risks on several crucial fronts that need to be governed and managed by user plan sponsors. The CPBI Southern Alberta Region’s ‘Digital Risk Management in a Cloud Based Era’ will feature Adrienne Wong, an associate at ROSE LLP; and Harm Cassam, associate partner, forensic and integrity services, at EY Forensics. They will look at key business trends for cloud security; top threats for data privacy, leakage, and loss in a cloud-based environment; and fundamental considerations for plan sponsors adopting the cloud to better understand and mitigate their risks. It takes place September 17 in Calgary, AB. For information, visit Digital Risk

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August 22, 2019


Fixed Income Leads Ontario Teachers’ Gains

The Ontario Teachers’ Pension Plan (Ontario Teachers’) had net assets of $201.4 billion as of June 30, 2019, a $10.3 billion increase from December 31, 2018. The total fund net return was 6.3 per cent for the first six months of the year. “In the first half of the year, we had positive performance across every asset class in our portfolio, led by fixed income” says Ziad Hindo, its chief investment officer. “Over the last few years, we have been transitioning the asset mix to a more balanced approach from a risk perspective and as part of this transition, we increased our allocation to the fixed income asset class.” Mid-year results provide a snapshot of the plan performance over a six-month period, while historical returns underscore the long-term sustainability of our investment strategy. As at December 31, 2018, the last date for which there are full year figures, the plan has had an annualized total fund net return of 9.7 per cent since inception. The five- and 10-year net returns, also as at December 31, 2018, were eight per cent and 10.1 per cent, respectively. Ron Mock, president and chief executive officer says the plan is in a very good position from a liability perspective because it is in a surplus and has a very low discount rate. “Last year, we dropped the contribution rate in our defined contribution plan; not something you see very often. We’re in a very strong position on the liability side and on the return side and asset side.”

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Employees Fail To Engage On Health Benefits

There is a disconnect between companies’ investment in health benefits and the impact on employee health, says research from Harvard Business Review Analytic Services sponsored by League Inc. The research found low engagement levels with health benefit programs as just 28 per cent of respondents say employees actively engage with all of the health benefit programs they are offered and only 27 per cent of organizations say employees use the full range of their health benefits. Low awareness, knowledge, and engagement often result in higher overall healthcare costs, poorer employee health, employee absenteeism, and lower productivity, League says. One problem the survey identifies is employees are often required to access multiple disparate systems to learn about and access their full range of health benefits. Only 10 per cent of organizations enable employees to learn about and leverage the full range of available benefits through a single system. At 13 per cent of organizations, employees use more than five systems to access their benefits. In North America, employers are spending an estimated $15,000 per employee to provide healthcare benefits to their teams and these costs are continuing to rise, says League. The survey found 90 per cent of respondents view employee health benefits as an important way to demonstrate their organization’s understanding and concern for the needs of their workers. More than half (51 per cent) of organizations expect such benefits will become an even higher strategic priority over the next three years.

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Focus On Holistic Wellbeing Strengthens Workforce

To stay competitive in this tight labour environment, high-performing organizations must shift the focus to holistic employee wellbeing programs that address the interconnected nature of their teams’ health, financial security, engagement and culture, says Gallagher Benefit Services (Canada) Group Inc.’s ‘2019 Organizational Wellbeing & Talent Insights Report.’ Success in integrating these efforts, driven by a focus on the employee experience, can result in an improved workplace culture that strengthens workforce engagement and reduces turnover. This includes CEOs creating an employee experience that serves as a competitive advantage, CFOs balancing financial and talent risks, and HR leaders making total rewards the cornerstone of attracting and retaining talent. “The unique challenges facing Canada’s labour market can represent a burden or an opportunity to employers,” says Melanie Jeannotte, national president of Gallagher. “Business leaders who look beyond short-term results and are willing to fundamentally rethink their entire workplace experience will generate significant long-term advantages in the battle to recruit and retain top talent.”

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Disapproval With CEO Pay Falls

The number of FTSE100 companies in which shareholders disapprove of CEO pay fell in the last year by about half to seven per cent, says Deloitte’s annual UK CEO remuneration report. It found that UK top executives’ total pay packages declined, but salaries remained the same compared to the previous year. The median total remuneration for a FTSE 100 CEOs was about £3.4 million in 2018, down 15 per cent from the previous year. Almost a third of FTSE 100 top executives also received median salary increases of about two per cent in 2018, with bonus payouts similar to the previous year. FTSE 100 companies are also moving to reduce executive pensions and implement requirements for executives to hold shares when they have left the company under the new UK Corporate Governance Code. Stephen Cahill, vice-chairman at Deloitte, says, “In the coming year, we expect to see a further shift in reduced pensions and requirements for executives to hold shares post-leaving (the company). The number of companies offering incentive plans to CEOs has also been declining. Some 85 per cent of FTSE 100 share programs stipulate that executives will receive no shares until at least five years since leaving the company. That compares with 45 per cent of programs five years ago.

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Colter, Milligan Have New Roles

Grier Colter is chief financial officer and executive vice-president, effective October 1, at Morneau Shepell Inc. 2019. He will oversee its financial activities, corporate accounting and reporting, investor relations, corporate strategy, and mergers and acquisitions. With this appointment, Scott Milligan becomes chief corporate officer and executive vice-president. In this new role, he will be responsible for leading the company’s transformation efforts, as well as support its global growth including implementation of new finance, HR, and professional services systems. 

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CAP Program Offered

The CPBI Saskatchewan Region will offer ‘Administration of Capital Accumulation Plans (ACAP) 1’ in partnership with Humber College. This one-week course includes an introduction to capital accumulation plans (CAPs); a detailed look at the structure and design of CAPs; an examination of how CAPs are regulated; and how to assess the key elements of an effective CAP governance system through the use of case studies. It takes place February 24 to 28. For information, visit CAP Program

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August 21, 2019


Canadians Miss Out On TFSA Tax Benefits

Canadians continue to largely use their TFSAs (tax-free savings accounts) for savings storage rather than benefiting from tax-free returns by investing those funds to help them grow, says the ‘2019 RBC Financial Independence in Retirement Poll.’ For the first time, it found more Canadians have TFSAs than RRSPs (registered retirement savings plans), by 57 per cent compared to 52 per cent. TFSAs are now the preferred option of Canadians aged 55+, who in the past have primarily focused on RRSPs. When asked which plan they would choose if they could only contribute to one, a resounding two-thirds (64 per cent) selected TFSAs over RRSPs. The top holdings within their plans include savings accounts and cash (42 per cent), mutual funds (28 per cent), stocks (19 per cent), GICs/term deposits (15 per cent), and exchange-traded funds (seven per cent). Stuart Gray, director of the, Financial Planning Centre of Expertise at RBC, says the name “tax-free savings account” has misled many Canadians into overlooking investments they can hold within these accounts and in addition they have been overlooking the tax-free benefit. The poll shows while the majority of Canadians (74 per cent) understand TFSAs can contain cash or investments, four-in-10 (43 per cent) are misinformed and believe TFSAs are for savings and not for growing money. In line with this savings focus, two out of three TFSA holders (65 per cent) reported they have not withdrawn money from within their account.

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Default Outcomes Can Vary

There are “huge” variations in outcomes between the default funds offered by leading UK defined contribution providers, says workplace savings company Punter Southall Aspire. As a result, it urges employers to monitor the performance of their pension funds more closely as default doesn’t mean standard and not all funds are created equally. For example, in the growth phase, the analysis showed that allocations to equities, bonds, and other asset classes varied “dramatically” between the default funds, depending mainly on the targeted risk levels and the range of investment tools used. “Therefore, providers need to ensure consistent performance and efficient protection from market volatility to create value for money and justify the higher fees,” it says.

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Markets See Sharp Spike In Volatility

After another (relatively) quiet period, markets have seen a sharp spike in volatility thanks to a series of key political and economic issues that made headlines, says Michael Greenberg, a vice-president and portfolio manager at Franklin Templeton. The ongoing trade war between the U.S. and China continues to produce flashpoints that can quickly send markets reeling. In the recent salvos, when the U.S. labelled China a currency manipulator due to the falling value of the renminbi, it quickly sent global equity markets into the red. Likewise, the Federal Reserve’s 25 bps rate cut slightly underwhelmed market expectations. As well, the accompanying message wasn’t strong enough for the market as the initial reaction was a sell off in risk assets. The market is now demanding further cuts and fears the Fed has fallen behind the curve as the risk to growth has increased. There are also more idiosyncratic risks popping up, he says, such as Argentina where the current President Mauricio Macri losing a primary election that many expected him to win. A political shake up in the country could derail the economic progress that the country has been making over the last few years. Ongoing protests in Hong Kong run the risk of turning more severe, adding another dimension of geopolitical risk in the region. Unfortunately, these headlines are on top of the already fragile backdrop of slowing global trade. Volatility has increased, he says, and if this continues it will impact corporate sentiment, putting more business investment and capital expenditures at risk. It could eat into corporate profits and profitability and eventually this will impact the labour market and hurt consumer confidence.

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Dividends Reach New High

Global dividends reached a new high in the second quarter despite a slower rate of growth caused by a stronger dollar and a decelerating world economy, says data from Janus Henderson. Total dividends on equities reached $513.8 billion over the period, up just 1.1 per cent in headline terms from last year, as the deceleration in the world economy began to make an impact on dividends. The rate of increase in pay-outs was the slowest for more than two years, with underlying growth of 4.6 per cent. The dividend index shows the impact of the global economic slowdown is greater in some parts of the world than others. Japan, Canada, France, and Indonesia were the only countries to set record pay-outs in the second quarter. Emerging markets saw the fastest growth, driven higher by Russia and Colombia, while Japan registered the best performance among the developed regions. Dividends from financials and energy stocks saw the fastest increases, but technology and consumer basics lagged.

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Canadian ETFs Reach New Record

Assets invested in the Canadian ETFs and ETPs industry reached a new record of US$139.10 billion at the end of July, says ETFGI. ETFs and ETPs listed in Canada saw net inflows of US$1.43 million in July, bringing year-to-date net inflows to US$9 billion. Assets invested in the Canadian ETF/ETP industry have increased by 0.7 per cent, from US$138.12 billion at the end of June.

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Normandeau Joins Seaspan

Sylvie Normandeau is vice-president, human resources, at Seaspan ULC. Most recently, she was director, human resources, at Bombardier and then vice-president, human resources for the avionics systems division, at Esterline Technologies.

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State Of Disability Examined

The state of disability claims across Canada and the opportunities machine learning and artificial intelligence present for plan sponsors will be areas examined at the Benefits and Pensions Monitor ‘Benefit Trends and Insights’ Meetings & Events session. Dr. Richard Heinzl, global medical director of WorldCare International, Inc., will share his insights on disability claims and outline some interventions that positively impact people on disability. Scott Campbell, a clinical pharmacist with Cubic Health, will review how leading plans are using machine learning to complete predictive analytics on plan costs based on the disease state and demographic profile of their plan population and current plan design. The event will also feature Terry Power, chief executive officer of the Medisys Health Group, discusses how connecting patients through technology can support the health and interests of individuals as well as their employers; and Chris Anderson, president of Medaca Health Group, who will debunk myths about workplace mental health and how they affect an organization. It takes place September 12 in Toronto, ON. For information, visit Benefit Trends

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August 20, 2019


Class Action Over Comma Dismissed

A class action brought against Bell Canada by the company’s retired employees over number rounding and comma placement has been dismissed by an Ontario court. The claim for $150 million in damages concerned how the pensioners’ indexing increase was to be calculated. In 2017, the company calculated a one per cent increase, whereas the plaintiff group argued it should have been two per cent. Both sides agreed that the percentage increase over the previous year was 1.49371 per cent and how it was calculated. However, the plaintiffs said that figure should have been rounded to one decimal place, or 1.5 per cent; the company said it should have been two places, or 1.49 per cent. The rounding mattered because the figure was then rounded to the nearest whole number which would have been one per cent using the company’s approach, but two per cent using the pensioners’. In deciding which approach was correct, the Ontario Superior Court of Justice noted that the issue rested on the interpretation of a pension provision stating that the increase is to be determined by “the Consumer Price Index, as determined by Statistics Canada.” Both sets of counsel said the proper interpretation of this provision depended on the importance of the comma after the words ‘Consumer Price Index.’ Ultimately, the court concluded the offending comma was placed needlessly and did not imply that StatsCan’s approach to rounding must be used. As a result, the court found that the company was correct in using its own approach to rounding and that it did not breach its duties to its pensioners.

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Report Recommends Pension Age of 75

The UK’s state pension age should be increased to 75, says a report from the Centre for Social Justice (CSJ). The proposed increase to the state pension age is a significant change from current UK government policy, adopted in 2014. From December 2018, the state pension age for men and women has been rising from 65 and is scheduled to reach 66 in October 2020. It will then rise to 67 by 2028 and to 68 by 2046, although the latter is subject to review. The CSJ proposes accelerating these increases with the state pension age reaching 70 in 2028 and 75 by 2035 in order to keep the country’s old-age dependency ratio down and make its fiscal position more manageable. Its ‘Ageing Confidently’ report warns that the UK is “not responding to the needs and potential of an ageing workforce.” As the population ages, it says working longer has the potential to preserve mental and physical health, to contribute to the economy, and to significantly relieve fiscal pressures. “The state pension scheme still operates within the age thresholds set for the pioneer pension schemes over 100 years ago, revealing a disconnect between contemporary life expectancies and the state pension age. This raises the question of whether the state pension age is fit for the 21st century.”

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Recession Risk Concerns Economists

A strong majority, 74 per cent, of U.S. business economists appear sufficiently concerned about the risks of some of President Donald Trump’s economic policies that they expect a recession in the U.S. by the end of 2021. The survey by the National Association for Business Economics mostly doesn’t share Trump’s optimistic outlook for the economy, though they generally saw recession coming later than they did in a survey taken in February. Thirty-four per cent of the economists surveyed believe a slowing economy will tip into recession in 2021. That’s up from 25 per cent in the February survey. An additional 38 per cent of those polled predicted that recession will occur next year, down slightly from 42 per cent in February. Another two per cent of those polled expect a recession to begin this year. Trump has dismissed concerns about a recession, offering an optimistic outlook for the economy after last week’s steep drop in the financial markets. He said Sunday, “I don’t think we’re having a recession. We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.” Still, on Monday he called on the Federal Reserve to cut interest rates by at least a full percentage point “over a fairly short period of time,” saying that would make the U.S. economy even better and would quickly boost the flagging global economy.

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Foresters Acquisition Completed

Fiera Capital Corporation has completed its previously announced acquisition of all the issued and outstanding shares of Foresters Asset Management Inc. from Foresters Life Insurance Company. Upon closing, Foresters Asset Management Inc. was renamed Fiera Capital Fund Management Inc. (FCFM). FCFM is an Ontario-based investment management firm focused on institutional and insurance liability-driven investment with approximately $10.9 billion in assets under management as of July 31, 2019.

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Caisse Invests In Sanfer

Sanfer, a Mexican independent pharmaceutical company, has obtained a $500 million minority investment from the Caisse de dépôt et placement du Québec (CDPQ. The investment will enable Sanfer to execute on its continued expansion plans across Mexico and the broader Latin American region. Over the past two decades, the company has closed over 100 brand acquisitions, acquired eight pharmaceutical companies, and launched over 100 new products across Mexico and Latin America. It intends to use this new capital to accelerate its growth, both organic and through further acquisitions, across the region.

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Biscoe Joins Foyston, Gordon & Payne

Brooke Biscoe is credit analyst on the fixed income team at Foyston, Gordon & Payne Inc. He has three years of experience at rating agency Standard & Poor’s and three years in private debt experience at Next Edge Capital Corp. This new addition forms part of its strategy to expand its capabilities into other areas of the fixed income market.

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Session Looks At ‘Intersections’

‘Race, Mental Health and the Workplace’ will be examined at an Economic Club of Canada, in collaboration with Wellesley Institute, session. A panel of Derek Quashie, a partner in the immigration practices at PwC; Dr. Kwame McKenzie, CEO of the Wellesley Institute; and Karlyn Percil, CEO of KDPM Consulting and founder of the SisterTalk Leadership and Wellness Academy Group; will aim to increase collective awareness about the intersections between racialization, mental health, and workplaces. It takes place September 17 in Toronto, ON. For information, visit Mental Mealth Intersections

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August 19, 2019


Virtual Care Natural Next Step

Virtual care is a natural next step in technological innovation for healthcare, which has the potential to improve both quality of life for patients, and access to care in remote areas, all while increasing the healthcare system’s efficiency, say Dr. R. Sacha Bhatia, director of the Institute for Health System Solutions and Virtual Care at Women’s College Hospital; and Will Falk, a senior fellow at the C.D. Howe Institute. Healthcare has continued to be defined by visits to hospitals and doctors’ offices and now, increasingly, by time spent in hallways, they say. Answering healthcare’s challenges in the 21st century will not be achieved by having more 20th century buildings. It will come from modernizing the system through the use of new digital tools and integrating them into the day-to-day work of caring for patients. And Canadians are more than ready to embrace technology as underlined in a poll contained in a Canadian Medical Association report that also found 72 per cent of respondents think Canada has been slow to move toward virtual care. Key drivers of this transformation include giving all patients access to their own health information which they can share directly with their health providers. Comprehensive reviews of all healthcare services are needed to determine which services to virtualize and their respective prices. And the rollout of virtual care should be evaluated to see whether it improves health outcomes, the patient experience, value for money, and, critically, does not increase the administrative burden on frontline health providers. “We risk losing the potential transformational benefits of virtual care simply by maintaining rigid, dogmatic rules that penalize providers and organizations that want to innovate,” they say.

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CAP Income Tracker Falls

At June 30, the news wasn’t any better for Canadians looking to replace working income from a Capital Accumulation Plan (CAP) and government benefits, Eckler’s ‘CAPit (Capital Accumulation Plan Income Tracker). Gross replacement income fell back to 55 per cent for females and 57 per cent for males, while equity and bond markets yielded marginal positive returns and annuity rates fell. It says this could be the “new norm” as many of the current retirement systems and beliefs are based on factors that have changed considerably over the years: the decades-long decline of long-term interest rates and increasing longevity, for example. These fundamental changes mean that old ‘rules of thumb,’ like saving 10 per cent (the rate used in the tracker), are simply not going to lead to the same outcomes as they did before. While it’s important for plan sponsors and the industry in general, to acknowledge this “new norm,’ the message must also get to employees. With employees increasingly responsible for making a host of financial decisions about their retirement savings, they also bear the consequences of those decisions. Finding ways to provide employees with the knowledge they need to achieve their financial goals is vital to ensuring they are less stressed during their savings years and are prepared to retire on time, it says.

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Recession Risk Remains Low

Global recession risks remain low, says Joseph Little, global co-CIO and multi asset and global chief strategist at HSBC Global Asset Management. “We remain comfortable with our pro-risk stance in multi-asset portfolios as US and global recession risks remain low. Despite this month’s sell-off in risk assets, equity markets have performed well year-to-date and the valuation gap between equities and relatively expensive bonds continues to increase.” Still, given the downside risks to growth, a more cautious use of tactical (i.e. short-term) risk budget in portfolios is advocated. While the global economy is in a difficult place, investor pessimism could be “overdone,” he says. Looking at the growth outlook, U.S. activity is being buttressed by a solid labour market. Meanwhile, the recent weakness in Eurozone data has been driven mainly by a large downturn in the industrial sector. While there is no obvious sign of a turnaround there, the services sector – which accounts for the bulk of activity – remains robust. As well, global muted inflation trends keep the door open to further monetary policy easing. The Fed is likely to cut interest rates further this year and the ECB is expected to announce a stimulus package at its September meeting. Fiscal policy could also play an increasingly important role.

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Curve Carry Offers Return Potential

Global curve carry strategies have strong potential for excess returns above bond benchmarks, says a research paper from Robeco executives published by the CFA Institute. ‘Carry Investing on the Yield Curve’ sorted the government bonds of 13 developed markets into six maturity ranges, beginning with short-term bonds (one- to three-year) and ending with long-term bonds (15 or more years). A government bond’s ‘carry’ is the return on investment if there is no change to the yield curve. Rather than basing the research on individual bonds, as has been done in the past, the strategy employed for the paper buys multiple bonds within the maturity ranges, buying long bonds with a high carry and selling low carry maturities in each country. This ‘global carry factor’ can be considered a new bond factor since its excess returns are in addition to known and widely used bond factors. “In the long run, the entire excess bond return is carry; hence, carry can be viewed as the expected bond risk premium,” says the paper which examined the J.P. Morgan Global Government Bond index for Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, the UK, and the U.S.

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Jobs Left Over Lack Of Flex

FlexJobs’ 8th annual survey found 30 per cent of workers have left a job because it did not offer flexible work options and 16 per cent are currently looking for a new job specifically because of work flexibility issues. As well, 80 per cent said they would be more loyal to their employers if they had flexible work options. “In a tight labor market, companies cannot afford to ignore the value employees place on having flexible work options, but leaders also can’t dismiss the very real bottom-line impact offering flexibility has on their employees’ productivity and retention rates,” says Sara Sutton, founder and CEO of FlexJobs. “The flexible job market is currently very robust, so flexible job seekers are also feeling empowered to seek jobs that are more compatible with their life.” It also found 65 per cent of workers think they would be more productive working from home than working in a traditional office environment because there are fewer distractions, fewer interruptions from colleagues, reduced stress from commuting, and minimal office politics. Only eight per cent would choose to go to the office during traditional office hours when they need to optimize their productivity.

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U.S. Offers Cannabis Potential

The long-term potential of the legal U.S. cannabis market could balloon to $60 billion annually if recreational marijuana is made legal across all 50 states, says Echelon Wealth Partners. Its whitepaper ‒ ‘Cannabis in America: Investment Opportunities in the World’s Largest Cannabis Market’ underscores why the U.S. represents the most attractive market for cannabis investment in the world as it simply dwarfs annual spending in both Canada and international jurisdictions combined. “One of the most attractive aspects of the cannabis sector, more generally, from an investor standpoint is that consumers are familiar with the product and demand already exists,” says Matthew Pallotta, equity research analyst at Echelon Wealth Partners. “Rather than starting from scratch, the industry can focus on migrating illicit consumers to legal channels of purchase if or when legalization goes into effect.” Its examination of the U.S. cannabis market focuses specifically on multi-state operators (MSOs), which analysts feel presents the most attractive way for investors to gain exposure to the U.S. cannabis opportunity. While U.S. MSOs are currently trading at a discount relative to their Canadian counterparts, Echelon believes the discrepancy would be resolved with the passage of proposed legislation, such as the bipartisan STATES Act. However, even without the passage of such bills, the industry still presents a compelling investment opportunity that is attracting billions of dollars in new capital and growing each year.

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Chow Becomes Partner

Mark Chow is a partner at Aon. Since 2012, he has been associate partner leading the investment manager research team in Canada. He joined the firm in 2008 as manager, investment research, from Morningstar Researcher where he was senior fund analyst.

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Pension Training Offered

ICRA will present a level one pension plan training program. Areas to be covered include pension committee responsibilities, elements of investment policy, and actuarial aspects of pension plans. It takes place October 25 and 26 in Quebec City, QC. For information, visit Pension Training

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