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November 22, 2019


Sun Life In Annuity Deal With RYAM

Sun Life will take over the responsibility for defined benefit pensions owed to nearly 1,500 Ontario and Quebec pensioners and beneficiaries from Rayonier Advanced Materials (RYAM) in a $293 million annuity buy-out transaction. It will begin administering pension benefits for these plan members early in 2020. Members’ pension benefits will remain unchanged. This transaction highlights a growing trend in Canada. Organizations with DB pension plans are seeking better risk management solutions so they can focus on their core business while ensuring members’ benefit security. An annuity buy-out is a group annuity policy that transfers all the risks for a group of members from an employer’s balance sheet to an insurer’s balance sheet in exchange for a premium. The insurer assumes responsibility for making pension payments to the employer’s plan members, with no change to the payment frequency or amounts.

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Long-term Stagnation Risk Raised

Trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy and raising the risk of long-term stagnation, says the OECD’s latest ‘Economic Outlook.’ World GDP growth is expected to be 2.9 per cent this year ‒ its lowest annual rate since the financial crisis ‒ and remain at 2.9 per cent-and three per cent in 2020 and 2021. Global GDP expanded 3.5 per cent in 2018. Bold action is needed to address both the high levels of uncertainty facing businesses as well as the fundamental changes taking place in the global economy. Policy-making must lead the transition to cleaner energy and to an increasingly digital world. Governments must work together urgently to boost investment and establish fair international rules on taxation and trade. Laurence Boone, the chief economist for the OED, says, “It would be a mistake to consider these changes as temporary factors that can be addressed with monetary or fiscal policy: they are structural. Without co-ordination for trade and global taxation and clear policy directions for the energy transition, uncertainty will continue to loom large and damage growth prospects.” The slowdown involves advanced and emerging market economies alike although its severity varies according to the importance of trade in individual countries. Growth in Canada is forecast at 1.5 per cent this and grow to 1.6 per cent and 1.7 per cent 2020 and 2021.

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Private Credit Expands Across Strategies

Private credit will continue to expand across both existing strategies and into new markets, says ‘Financing the Economy,’ a research paper from the Alternative Credit Council (ACC), together with global law firm Dechert LLP. Its fifth annual flagship paper 68 per cent of survey respondents plan to increase their lending in the SME/mid-market space, despite the sense that this core market is suffering from saturation. It says the European and U.S. markets continue to be the biggest source of growth for private credit. Half of respondents expect to invest more capital in Europe while 43 per cent expect to invest more in the U.S. market. A third of managers are targeting future expansion in the Asia Pacific region, with almost 20 per cent specifically targeting either India or China. The report also indicates that interest in the UK market appears to be cooling slightly. Distressed, real estate, and asset-backed lending are among the other more popular growth strategies. The research concludes that institutional capital is driving the future of private credit. This asset class is a key component in institutional portfolios, particularly for those seeking income producing assets at a time of low yields in public fixed income markets and relatively high equity market valuations.

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OMERS Pensions Increase

OMERS will increase pensions by 1.89 per cent as of January 1. This increase reflects general changes in the cost of living as measured by the Canadian Consumer Price Index. Each January, pensions increase by 100 per cent of the increase in the Canadian Consumer Price Index (CPI), up to a maximum of six per cent. If the CPI is greater than six per cent, the excess is carried over for use in future years. Most members whose pensions began in 2019 will receive a pro-rated increase.

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ESG Relevance In Credit Grows

Environmental, social and governance (ESG) risks are increasingly relevant to players in global credit markets, says Moody’s Investors Service. Its report found that several factors ‒ including increasing investor demand and the growing materiality of ESG risks ‒ are driving firms’ approaches to ESG investment. It says 37 per cent of respondents cited the financial materiality of ESG risks, 30 per cent pointed to the need to meet growing client demand for impact investing, and 15 per cent said the need to manage reputational risks are driving their ESG investing efforts. Additionally, over half (52 per cent) of respondents said that the availability of data and disclosures represents the biggest challenge when integrating ESG into credit risk assessments.

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Picton Mahoney Celebrates Anniversary

Picton Mahoney Asset Management has celebrated 15 years in the asset management business. Over this time, the firm has served some of Canada’s largest institutions and investors with its investment process. Key differentiators of this process include the development of a proprietary portfolio construction framework and offering distinctive investment management strategies through discretionary managed accounts, as well as hedge, alternative, exchange traded, and mutual fund solutions. As of October 31, it had $7.4 billion in assets under management. The firm is Canadian and 100 per cent employee-owned.

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King Heads LifeWorks

Neil King is president of LifeWorks and executive vice-president at Morneau Shepell, effective January 1, 2020. He replaces Rita Fridella who is retiring after more than 25 years at the firm. The two will work together during December to ensure a smooth transition. During his more than 10 years with the firm, King has worked in the majority of its lines of business, most recently, he was U.S. chief commercial officer.

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Property Index Results Presented

Simon Fairchild, executive director of MSCI, will kick off the ‘REALPAC/MSCI Canada Real Estate Investment Forum’ with the presentation of the 2019 results of the ‘Canada Quarterly Property Index.’ Then, REALPAC’s CEO Michael Brooks will moderate a panel of industry experts to discuss the results and state of the industry. It takes place January 31, 2020, in Toronto, ON. For information, visit REALPAC/MSCI

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November 21, 2019


Morneau Continues As Finance Minister

Bill Morneau will remain as Canada’s finance minister. First elected in the 2015 federal election as the member of parliament for Toronto Centre, he was first appointed to the post then. Previously, he was executive chair of human resources firm Morneau Shepell which was founded by his father Frank in 1966 as the actuarial and benefit consulting firm W.F. Morneau & Associates. He joined the company in 1987 and held positions of increasing seniority including as president in 1992, president and chief executive officer in 1998, and chair and chief executive officer in 2008.

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Group Alleges CPPIB Not Considering Global Warming

A report by the Corporate Mapping Project and the B.C. office of the Canadian Centre for Policy Alternatives alleges the Canada Pension Plan Investment Board (CPPIB) is not considering global warming when it invests the pension funds of Canadians. The report says the CCPIB has more than $4 billion invested in the top 200 publicly traded oil, gas, and coal companies. James Rowe, a University of Victoria School of Environmental Studies associate professor, one of the report authors, and a co-investigator with the Corporate Mapping Project, says, “As one of the largest investors in the country, they have a significant role to play in facilitating the needed energy transition and our report shows, unfortunately, they are not fulfilling that role at the moment.” In order to stay within the 1.5 degree increase in global average temperature ‒ committed to by Canada and 194 other countries in the 2016 Paris Agreement ‒ fossil fuel extraction must be severely limited. But companies with Canada Pension Plan investments have reserves that, if extracted, would send emissions soaring, says the report. Reserves are factored into company valuations, which means the board has invested billions of dollars in companies whose financial worth depends on overshooting their carbon budget, the report says.

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Employers Need Written Contracts

Employment contracts should always be in writing as oral agreements are usually invalid and difficult to prove if contested, says Joel Gomes, senior human resources manager at Beneplan Inc. Speaking at its ‘HR Conference 2019’ on employer human resources best practices, he said if an employer has people who have been working for years without a written contract, they write which formalizes the employee and employer obligations in place when the person was first hired. These agreements should set out hours of work, vacations, job functions, overtime provisions, lay-off rights, and benefits clauses. In addition, all new employees need to sign written company policies. These don’t need to be cumbersome, but they need to define employee and employer obligations, codes of conduct, and expected behaviour. They also assist employers when defending themselves against claims over dismissal or human rights.

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Definition Of Workplace Fatigue Missing

Professional burnout is affecting a wide range of jobs, workplaces, and industries, and there is no standard definition or management practice in place to address this issue, says CSA Group’s ‘Workplace Fatigue: Current Landscape and Future Considerations.’ It finds that a common definition of workplace fatigue is currently lacking in Canada, even though this year, for the first time, the World Health Organization recognized burnout as a medical diagnosis. Without a standard definition of what workplace fatigue means in Canada, it’s difficult to say how pervasive the problem is. While a number of industries in Canada, including aviation, rail, marine, nuclear, oil and gas, healthcare, and defence, do recognize fatigue as an issue for workers, there is no comprehensive definition of workplace fatigue, what causes it, or how it may affect performance. In some workplaces, the potential consequences of fatigue can be a matter of life and death.

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Savings Can Disappear In Subsequent Years

Most “unethical” group benefits plan quotes have two things in common, says Vince Principato, president of Beneplan Inc. In the ‘Shopping the Market for Group Benefits’ at its ‘HR Conference 2019,’ he said that they will reserve the right to change the parameters if a plan is modified and to increase rates and their discretion. He said whenever they encounter quotes to lure them away for their existing provider, they need to talk to their broker or advisor to find out what is happening. Often times these quotes will offer a significant saving in the first year only to have premiums jump by double-digits in year two and three. He advised plan sponsors to simply look at the numbers without emotion. Pricing, he said, is technical, but it is not rocket science as he provided a primer on how premiums are set. However, aside from salaries and rent, health insurance is the next biggest line item on the balance sheet and benefits premiums continue to rise by eight per cent per year mainly due to drug costs.

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iA Pilots Medication Adherence Project

iA (Industrial Alliance) has partnered with mobile app MedHelper on a pilot project which has the objective of making life easier for its insureds who take medication on a daily basis and to help them adhere to their medical treatments. As part of this pilot project, it will provide facilitate regular medication intake of its insureds by monitoring their treatment plan (daily reminders, management of medical appointments, possibilities of creating treatment plans with non-medical activities, and much more). This initiative is more than relevant given that 58 per cent of Canadians do not take their medications as prescribed to treat their chronic conditions according to Express Scripts Canada’s ‘2019 Report on Prescription Drug Trends,’ making this a major issue not only for the insurance industry, but also for employers who offer group insurance plans and ultimately for insured persons whose health condition may be affected by non-compliance with their medical treatments. The aim of this pilot project is to analyze and measure the interest and engagement of its insureds in adopting good habits when it comes to taking their medications.

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Travel Motivates Employees

There is no better incentive than travel to motivate employees, says Erica Pearson, co-founder and CEO of Vacation Funds. She told the ‘Vacation Funds’ session at the ‘Beneplan HR Conference 2019’ that employees have as much difficulty managing their time as they do money. One result is that they are hesitant to take time off work because they don’t want to let their colleagues down or have their work pile up. However, companies that offer vacation funds as part of their total rewards strategy are increasing their attraction and retention as well as engagement of their workforce. And with average turnover in Canada at 16 per cent and the cost of turnover at 20 to 200 per cent of salary, there is also financial benefit to offering this lifestyle benefit. Simply put, companies offer a match to funds employees put into a vacation fund. In most cases, it is a ‘use it or lose it’ which provides further motivation for employees to use their vacation time. The goal is to increase vacation day utilization and reduce balance sheet liabilities, if any, as well as re-energize employees and reduce burn-out. And while cash is important to employees, it doesn’t make an emotional connection with employees does occur with non-cash rewards. And with 80 per cent of employees saying if they felt supported or encouraged by their boss they would take time off, offering vacation funds is investing in employee satisfaction, productivity, and retention by helping them take their vacations.

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Climate Change At Tipping Point

According to the UN Intergovernmental Panel on Climate Change (IPCC), the evidence is clear that important tipping points, leading to irreversible changes in major ecosystems and the planetary climate system, have already been reached or passed, says Paula Glick, co-founder of Honeytree Investment Management. With leading publications increasingly using the term ‘climate crisis’ instead of ‘climate change,’ the stark reality of climate change has major financial implications. Mark Carney, governor of the Bank of England, and François Villeroy de Galhau, governor of Banque de France, have both said the climate crisis requires “a massive reallocation of capital. If some companies and industries fail to adjust to this new world, they will fail to exist.” While climate change poses risks and opportunities to most industries, few industries are in the crosshairs quite like the energy industry. Oil and gas companies are facing pressure from regulators, pressure from consumers, and pressure from investors, she says.

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Donald Among Most Powerful

Frances Donald, chief economist and head of macroeconomic strategy at Manulife Investment Management been recognized by the Women’s Executive Network (WXN) as one of Canada’s ‘Most Powerful Women.’ The award recognizes the professional achievements of strong female leaders across the country. The youngest chief economist and one of only two women at a major Canadian financial institution, she has become a key player in taking the firm to the next level as an investment leader. She is using a unique blend of insight and irreverence to help position Manulife as a fresh thinker and thought leader, not only in Canada, but around the globe.

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Niche Solutions Sought To Generate Alpha

Although asset addressability is on the rise among institutions in Asia ex-Japan, asset owners are expecting much more from managers as they diversify and search for yields, says Cerulli Associates inInstitutional Asset Management in Asia 2019: Meeting the Need for Niche Solutions.’ With the growing sophistication among asset owners, they are demanding greater control over their investments and seeking specialized solutions, ranging from alternatives to emerging strategies, like factor-based and sustainable investing. “Amid the heightened volatility, meeting future liabilities is weighing down on pension funds and insurers across the region. This translates to the growing demand for niche solutions to generate alpha. Knowing how to prioritize the needs and manage the risk-return expectations of different asset owners is a huge competitive advantage for managers,” says Jaslyn Ong, an associate analyst from Cerulli Associates. Asia ex-Japan institutional investable assets grew by 4.2 per cent year-on-year in 2018. Growth momentum remains intact, with investable assets estimated to expand at a compound annual growth rate of 7.5 per cent between 2018 and 2023.

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ETF Assets Reach $6 Trillion Globally

Global ETF assets have surpassed $6 trillion in assets, says research from EPFR. In 2019, global ETF assets have added $840 billion from January 1 through October 31. Since the global financial crisis (GFC), ETF assets have grown six-fold from $1 trillion in December 2009 to $6 trillion in November 2019. It says as different strategy types come in and out of favour due to market trends and investor appetite, there has been a dramatic surge in relative flows into ETFs with socially responsible (SRI) or environmental, social, and governance (ESG) mandates. The research indicates this emerging trend reflects preferences of a growing cohort of millennial investors. Older investors recognize SRI/ESG as a means of getting another layer of due diligence without sacrificing performance. Since the first quarter of 2016, the collective performance gain for all equity ETFs is 39 per cent versus 35 per cent for ETFs with SRI/ESG mandates.

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Carayannis Has New Role

Spyro Carayannis is institutional investments sales leader for Mercer Canada’s delegated business in the central region. Based in the Toronto, ON, office. Previously, he held various roles within its investment business. He also held senior level business development roles with large Canadian employers, where he led the marketing of investment strategies to OCIO platforms both in Canada and in the United States.

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Pension Investment Forecast Offered

The CPBI Ontario ‒ Toronto Chapter will present a ‘Pension Investment Forecast 2020.’ The seminar offers attendees the opportunity to network with leaders in responsible investing, to hear from influential industry professional and thought leaders, and to learn about the latest issues, trends, and developments in the field. It takes place January 16 in Toronto, ON. For information, visit Pension Forecast

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November 20, 2019


Canadians Fear Outliving Retirement Savings

Nearly half (47 per cent) of working Canadians believe there is a serious risk they could outlive their retirement savings, says the ‘2019 Sun Life Barometer.’ This is all too common for many retirees with nearly a quarter (23 per cent) describing their lifestyle as ‘frugal.’ Following a strict budget and refraining from spending money on non-essential items, 72 per cent say their retirement is not what they were expecting. Among working Canadians, 75 per cent don’t have a financial plan and 44 per cent expect to be employed full-time at the age of 66. Among the ‘frugal’ retirees who worked past age 66, nearly two-thirds (65 per cent) said it was because they needed to work rather than because they wanted to work (35 per cent). Of these Canadians simply aren’t prepared for this chapter of their lives, with only 14 per cent having a financial plan prior to retirement.

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EMs Affected By ESG Challenges

While governance has long been a prominent issue for emerging markets (given the large number of family or state-owned enterprises, prevalence of related-party transactions, and sometimes weak protection of minority shareholders’ rights), environmental and social challenges have just recently started to come to the forefront for institutional investors as asset managers have gained a greater understanding of these issues and how they come to play into the long-term investment case, says Juan Salazar, director and EM specialist, Responsible Investment, BMO Global Asset Management EMEA in its ‘Institutional Quarterly.’ Importantly, populations across EM have started to become affected by the impacts of ESG challenges. New scientific reports are proving almost weekly how vulnerable nations like India, the Philippines, and Vietnam are to climate change and many of these poorer economies do not have the resources to combat these problems. As well, anecdotally, it has been remarkable to see how the landscape has evolved over the last decade, he says. Just 10 years ago, informed, or constructive, conversations with EM-based companies about water pollution seldom took place. Now, now there is an understanding that robust ESG management is actually a sound business strategy that can create value for the long-term.

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Yields May Start To Recover

As global growth emerges, investors should look for yields to recover and cyclical sectors to begin outperforming, says Greg Taylor, CIO of Purpose Investments. “The combination of improving trade tensions and accommodative central banks should be enough to jolt markets higher into year-end,” he says. “Investors got too bearish and positioning had been too defensive. Markets ‘climb a wall of worry’ and as fears fade away, barring any major shocks, new highs should be on the table for the next few months.” With 2020 setting up to be a volatile year with the U.S. election dominating headlines which may knock investor confidence at times. As well, globally, there is civil unrest in many counties, but “we should be able to leave those problems for now as markets look ready to bounce,” he says.

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AIMA Applauds OSC Streamlining Report

The 100+ steps outlined in the ‘Reducing Regulatory Burden in Ontario’s Capital Markets’ report from the Ontario Securities Commission (OSC) are a great start to streamlining market participation for both public and private industry participants, says Claire Van Wyk-Allan, director and head of Canada for the Alternative Investment Management Association (AIMA). The report highlights specific actions that will create efficiencies for market participants interacting with Ontario’s capital markets, while protecting the integrity of these markets and investors.

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Rubenstein Inaugural Chair

Gale Rubenstein is the inaugural chair of the UPP Board of Trustees. The UPP is the first jointly sponsored, defined benefit pension plan for Ontario’s university sector. Participants are the University of Toronto, University of Guelph, and Queen’s University. She is a partner at Goodmans LLP. The official registration date of the UPP is January 1, 2020.

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Commercial Real Estate Examined

‘Canadian Commercial Real Estate Investing: Building a Progressive Real Estate Debt and Equity Investment Strategy’ is the topic of a CPBI Pacific continuing education session. Lee Riggs, administrator at the International Union of Operating Engineers Local 115; and Lezlie Mintz, vice-president, business development, at ACM Advisors Ltd; will share their insights on Canadian commercial real estate investing including what really drives the decision to invest in real estate as an alternative investment, broadening the asset class further into real estate debt and real estate equity, and some of the current strategies and themes seen in today’s Canadian commercial real estate landscape. It takes place February 11 in Vancouver, BC. For information, visit Commercial Real Estate

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November 19, 2019


Interest In Climate Change Becoming Extraordinary

Growth in interest in climate change has been extraordinary in the past year, says Deirdre Cooper, head of Investec Asset Management’s global environment strategy. She said it has moved from being near the bottom of investor concerns to the top of the list. To deal with the issue of climate change, investment needs to accelerate by $2.4 trillion a year to reach the target of limiting the increase in global temperature to 1.5°C by 2030. Current investment will limit the increase to 3.4°C. Institutional investors expect that climate risk is already showing up in portfolios. The current top risk is regulatory, but they are starting to see physical risk appear. Almost half (47 per cent) measure the carbon footprint of the companies they invest in and translate that into returns, the vast majority only look at what she called “scope one” which is anything coming from a chimney or a tailpipe and “scope two” which is emissions from energy sources like electricity. What is missing is attention on “scope three” which is carbon creates in the supply chain and the products sold and used and this doesn’t make sense. Indeed, 75 per cent of emissions in the market are from scope three.

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UK Creating ‘Common Language’ For RI

In an effort to establish a “common language” for how money managers market responsible investment (RI) strategies to clients, the UK’s Investment Association has created its own definitions and categories for responsible investment approaches to help investors compare funds. Beginning in 2020, the association members will also be asked to identify their funds’ responsible investment characteristics such as stewardship or exclusions. “The agreement of industrywide definitions provides (investors) with that much-needed clarity and choice,” says Chris Cummings, CEO of the association. “The investment management industry can now give its customers a clear picture of the opportunities available to them and the confidence that their chosen product matches their expectations.” The association will be collecting responsible investment data on segregated mandates and firm-level data on stewardship, ESG integration, and exclusions for its annual survey in 2020.

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CPPIB Releases Sustainable Investing Report

The Canada Pension Plan Investment Board (CPPIB) has released its ‘12th Report on Sustainable Investing,’ demonstrating its continued focus on identifying and addressing environmental, social, and governance (ESG) factors. Mark Machin, president and chief executive officer of CPPIB, says, “Embedding ESG factors more deeply into our investment process advances our investment objectives. Addressing risks and opportunities resulting from climate change and promoting the effectiveness of boards of our portfolio companies, for example, help us improve investment returns over the long run. CPPIB continues to build a portfolio designed to achieve a maximum rate of return without undue risk of loss, taking into account the factors that may affect the funding of the CPP and the CPP’s ability to meet its financial obligations.”

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Co-operators, WorldCare Partner On MSO

The Co-operators, in partnership with WorldCare Health, Inc., is offering a medical second opinion (MSO) product for mental health to its group benefits clients. Phase two is an institution-based MSO product that virtually recreates the experience a client struggling with either a critical medical or mental health illness would receive if they were to visit a physician or psychiatrist in-person. It combines the critical illness medical second opinion review with an additional layer that provides access to hundreds of sub-specialized psychiatrists and 60 specialty clinical and research programs that address virtually every aspect of psychiatric disorders including child and adolescent psychiatry.

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Fixed Income Manager Struggle

Many fixed income managers have struggled to produce market-beating gains this year from their bets in government and corporate debt, says a research report from S&P Global. The majority of active fixed income managers lagged their benchmarks in the year through June with global income the sole exception. Managers of loan and government long funds struggled the most. All such funds tracked by S&P failed to outperform over the same period, the report shows. That’s a “stark contrast” to 2018, when underperformance plagued just 17 per cent of government long funds and 57 per cent of loan participation funds.

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Ivanhoé Cambridge Acquires Stake In Golden Capital

Ivanhoé Cambridge has acquired a strategic equity stake in Golden Capital, a German real estate vehicle focused on manage-to-core office investments. Managed by Lianeo Real Estate, it owns and manages diverse private real estate platforms in Germany. Its portfolio consists of 39 properties, the vast majority office buildings, located in the seven largest cities of Germany.

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Émond Has New Role

Charles Émond is executive vice-president, Québec, private equity, and strategic planning for the Caisse de dépôt et placement du Québec (CDPQ). In this role, he will continue to lead its investment strategy in Québec, in addition to leading its private equity activities outside of Québec. This combination of the private equity teams under one leadership will allow it to fully benefit from the expertise its teams have acquired over the years, in addition to making it easier to share best practices.

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Session Looks At Economic Growth

l’ICRA Québec’s ‘Economic Forecast 2020’ will examine economic growth, interest rate trends, profits of publicly traded companies, and uncertainties and investment opportunities. Speakers are Michael Greenberg, vice-president and portfolio manager at Franklin Templeton, and Maxime Lemieux, portfolio manager at Fidelity Investments Canada. It takes place January 16 in Montreal, QC. For information, visit Economic Forecast

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November 18, 2019


Loyalty Cards Cost Private Plans

Loyalty cards that encourage patients to buy brand-name drugs have forced Canada’s private insurance plans to spend nearly 50 per cent more than they would have if patients had filled their prescriptions with cheaper generics, says a University of British Columbia study. The discount cards – which patients can get from doctors and pharmacists or by signing up online – have barely affected government drug spending in Canada and actually benefited some Canadians who paid out of pocket. However, they are having a major impact on private insurance plans, leading those plans to spend, on average, $23.09 more per prescription than they would have if their members had picked a generic instead. “Ultimately, that’s going to raise the premiums in those plans and that’s going to come up the next time [workers] go into collective bargaining,” says Michael Law, lead author of the study and a UBC professor who holds a Canada research chair in Access to Medicines. “That’s going to mean a cut to something else that would probably provide a lot more benefit than taking a brand instead of a generic when they’re chemically identical.” The pharmaceutical industry’s discount cards are designed to convince patients to stick with more expensive brand-name drugs. Also known as co-pay cards (CPCs), they may also increase drug costs for payers by increasing the insured’s premiums, although the introduction of mandatory generic substitution was intended to mitigate this effect.

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ESG In Passive Faces Pitfalls

The integration of environmental, social, and governance (ESG) considerations into passive investing is gathering momentum, but there are potential pitfalls ahead, says Cerulli Associates. The proliferation of new indices constructed to tilt and weight benchmark components in accordance with investors’ climate, social, or governance priorities is increasingly fueling industry debate on how to meaningfully integrate ESG considerations into passive strategies. Rapid innovation in smart beta and factor investing is one of the main catalysts of increased product availability for European investors. Although demand for responsible investment indices is expected to keep growing, the risk is that they could fail to match the sustainability criteria investors believe they are buying. For example, environmental-themed indices typically tilted away from big polluters initially. The next phase was to tilt away from companies with large fossil fuel reserves. Now the emphasis is on increasing exposure to companies with revenues exposed to the ‘green economy.’ However, climate risk and its potential impact on portfolios in the future is a complex matter. The issue is further complicated by the fact that managers are packing different visions of ‒ and beliefs about ‒ ESG into their low-cost products. The successful integration of ESG into passive strategies will, it says, ultimately depend on managers being able to enhance their stewardship of and their engagement with the thousands of companies they track.

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Trade War Developments Not Game-Changer

With financial markets buoyed by positive developments in the U.S.-China trade war, Alliance Bernstein is not convinced it’s a game-changer for the global economy. Its ‘November Global Outlook’ says this is due in part to the fact negotiations might still fail. However, the main reason is that the so-called phase-one agreement is unlikely to end the uncertainty weighing on business investment, particularly at a time when other populist risks are clouding the outlook. It says recent developments have prompted it to lower its 2020 global growth forecast to 2.2 per cent from 2.3 per cent, largely because of a downward revision to China (5.8 per cent from six per cent). As well, better news on trade needs to be tempered by less certainty on the policy front. It still expects the Fed and European Central Bank (ECB) to provide additional monetary-policy stimulus, but its conviction levels are lower than they were.

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Personality Determines Retirement Spending

How quickly savings are spent in retirement may have as much or more to do with personality as debt or leaving an inheritance, says a study published by the American Psychological Association. It found that people who are more agreeable or more open to new experiences – or those who are more neurotic or negative ‒ might spend their retirement savings at a faster rate than those who are more extroverted or have a positive attitude. “Little is known about what personally motivates retirees to withdraw money from their investment portfolios as most studies on portfolio withdrawal rates address technical issues, such as minimizing risk of financial shortfall or making spending adjustments based on perceived life expectancy,” says Sarah Asebedo, of Texas Tech University and lead author on the study. “The study found that those with greater conscientiousness, extroversion, positive emotions, and feelings of control over their finances withdrew from their retirement portfolios at a lower rate than those with greater openness, agreeableness, neuroticism and negative emotions. The results remained even after accounting for many of the technical factors that are known to affect portfolio withdrawal decisions such as the expectation of leaving an inheritance, age, marital status, and mortgage debt. The findings suggest that financial professionals should take the personality traits of their clients into account when developing retirement strategies instead of focusing entirely on their clients’ financial situations.

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Oxford Developing Multi-level Industrial Property

Oxford Properties Group has unveiled its plans to develop Canada’s first large bay multi-level industrial property. Comprising 707,000 square feet over two levels, the project will be built at its Riverbend Business Park in Burnaby, BC. The site of a former paperboard milling operation, it has transformed the brownfield site into a progressive and environmental award-winning 1.35 million master planned business park which will now bring the first large scale multi-storey distribution centre concept to Canada. The development will be on two levels. The ground floor comprises 437,000 square feet with 32-foot clear heights. The second storey, which is accessible to full size transport trailers via a heated ramp, consists of 270,000 square feet, 28-foot clear heights and a 130-foot truck court. It can provide a single customer with 707,000 square feet of contiguous space, making it the largest available industrial property in the Greater Vancouver Area. Oxford Properties Group is the global real estate arm of OMERS.

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Mental Wealth Kicks Off Year

The Economic Club of Canada will kick of its ‘Year of the Mind’ with a session on ‘Mental Wealth, Our Most Valuable Resource for Change.’ It will provide a 360-degree perspective on how to achieve and maintain good mental health from speakers including Jacques Goulet, president of Sun Life Canada; Bill Howatt, chief of research, workforce productivity for the Conference Board of Canada, former chief research and development officer for workforce productivity at Morneau Shepell; and founder of Howatt HR Consulting; and Nora Spinks, chief executive officer at the Vanier Institute. It takes place April 6, 2020, in Toronto, ON. For information, visit Mental Wealth

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