Majority Of Boards Lack Women
Women accounted for 19.4 per cent of directors on Canadian boards in 2016, says a Statistics Canada study. It found 28 per cent of corporations had one woman on their board of directors and15.2 per cent had more than one woman. However, 56.8 per cent of corporate boards of directors were composed entirely of men. Women were more likely to be on corporate boards with three or more directors (55.2 per cent), compared with 31.4 per cent for corporations with two board directors and 14.6 per cent of corporations with one director. Government business enterprises had the highest share (28.8 per cent) of women on corporate boards in 2016, followed by public corporations (20.5 per cent). Previous work has shown that the representation of women on corporate boards for public corporations rose from 2015 to 2017 following new regulations that required publicly traded corporations to disclose information on representation of women on boards. Private corporations had the lowest representation of women on boards of directors at 17.4 per cent. Studies in the United States and in Europe have shown that corporate boards with three or more women, defined as a “critical mass” in the literature, were more likely to perform differently than those with fewer or no women. Having three or more women on a board seems to modify boardroom dynamics with a positive environment for innovative ideas.
Alternatives Broaden Return Horizon
By increasing their alternatives asset classes, institutional investors can broaden their return horizon, says Ted Welter, managing director and chief investment officer, alternative investments, TD Asset Management. Speaking on ‘Alternatives: Diversifying for Long Term Success’ at TD Asset Management’s ‘Sharing of Knowledge Learning Series 2019,’ he said alternatives can include infrastructure, commercial mortgages, and real estate. All have the common themes of preservation of capital, low volatility, low correlation to equities, and predictability of income. And since they are illiquid, streams of long-term income need to be built. The story is adding value by enhancing returns while reducing risk. However, it is also important to manage tail risks, especially in vehicles which ramp up returns by increasing their leverage. He also said real assets serve the economy. Urbanization and technology are the new drivers of economic growth and the trillions of dollar needed for infrastructure projects need to be serviced with capital. Canadian institutions are looking at it, but access to global capital to meet that demand is resulting in competition.
Manulife Unifies Businesses
Marking another milestone in its transformation into a digital, customer-centric global company, Manulife has unified its institutional, retail, and retirement wealth and asset management businesses around the world under a single, new brand: Manulife Investment Management. These businesses formerly operated under multiple brands and as separate units in different markets. Manulife Investment Management now brings its wealth management and investment expertise together across these three complementary business lines and across the Americas, Asia, and Europe to better serve investors worldwide. This unified presence will provide customers and intermediaries with a more consistent, seamless entry into its various investment management businesses, including the launch of manulifeinvestmentmgt.com. Paul Lorentz, president and CEO, global wealth and asset management, says, “Our value proposition is dependent on our commitment to our customers’ success and on our investment and wealth management expertise across both public and private asset classes, coupled with a global model that can be delivered regionally.”
Canadian Breakthroughs Commercialized Elsewhere
Tomi Poutanen, chief artificial intelligence officer, TD Bank Group, fears artificial intelligence (AI)and machine learning will be like other Canadian innovations. His concern is the academic and scientific research breakthroughs made here will be commercialized elsewhere so an industry never develops, he said in an indepth conversation at the TD Asset Management ‘Sharing of Knowledge Learning Series 2019.’ If it is accepted that AI is going to be a productivity enhancer, talent is needed to build an industry here and that is being solved with the creation of the Vector Institute for Artificial Intelligence. It has quickly grown to become one of the world’s top AI research institutions and is helping to educate the next generation of leaders. The other issue is the need for capital. Silicon Valley in California was built with venture capital which is not in Toronto, ON, although it is in Montreal, QC. That is changing however with major institutions like the Canadian Pension Plan Investment Board, the Public Sector Pension Investment Board, and TD stepping in. He said AI and machine learning are transformative to all lines of business. The promise of AI, for example, is the ability to put the personal advice offered by bank branch mangers 30 years ago into someone’s pocket today. And while there are fears it will replace jobs, he said the only ones in danger are those for mundane tasks where a lot of thinking is not necessary.
Cooke Offers Digital Wellness
Employees at Cooke Aquaculture Inc. have an opportunity to take a major step toward improved all-around wellness with the launch of a digital platform that will facilitate individual and workplace wellbeing. Glenn Cooke, its CEO, says, “This investment is part of our ongoing commitment to creating a culture that empowers our people to grow, connect, and thrive.” It has partnered with Sprout to implement a digital platform that connects the company’s employees, promotes a shared culture across locations, helps facilitate corporate-led wellness challenges, and empowers employee health and wellness with easy-to-use and rewarding programming. Sprout’s web and app-based platform will give Cooke employees access to technology for health risk assessments and the tools they need to take control of their wellbeing. With games, challenges, and other incentives, it will help people realize meaningful health and wellness results. Families of employees will also have access to all of these features and tools.
Median Return Jumps
The median return of the BNY Mellon Canadian Master Trust Universe, a BNY Mellon Global Risk Solutions fund-level tracking service, was up 7.02 per cent for the first quarter of 2019, after ending 2018 with negative global market performance. The one year median return as of March 31 was 6.3 per cent, while the median 10-year annualized return was 9.77 per cent. “Financial markets around the globe experienced a recovery during the first quarter after last quarter’s sharp declines, with positive returns recorded across all equity segments,” says Catherine Thrasher, strategic client solutions and global risk solutions, CIBC Mellon and BNY Mellon. “All equity asset classes posted positive results for the quarter, signifying regained confidence over the 2018 global market volatility.” U.S. equity delivered the highest asset class performance, with a median return of plus 11.08 per cent. Canadian equity performance also rebounded, with a positive quarterly median return of 10.74 per cent. International and non-Canadian equity median returns were behind the North American equities market, but were still positive at 8.66 per cent and 9.95 per cent respectively. The Canadian fixed income median performance was also higher than the previous quarter at 4.63 per cent and with a one-year return of 5.97 per cent.
Risk ‘Always’ A Worry
Carlos Phillips, a vice-president and director at TD Asset Management, says investors in equity markets should “always” worry about risk. He told the ‘Quantitative Equity Investing: Navigating Today’s Uncertain Markets’ session at its ‘Sharing of Knowledge Learning Series 2019’ that equity investing is a risk first discipline. However, no-one wants to talk about risk until it is too late. Last year was reminder to start the conversation on protecting portfolios. In 2018, there were two spikes in volatility. The first was an inflation story fueled by inflation fears which sent equities and fixed income returns tumbling. The second was a growth scare triggered by fears that the U.S. central bank might trigger a recession by hiking interest rates. While both were small events, but they were a reminder that small events can trigger volatility. However, factor investing offers some protection. From 1963 to 2018, every factor had a top quintile performance led by low vol which often offered more returns with less risk, he said. Other factors may return more, but have more risk. However, investors also need to be adaptable. If they know, for example, a style will not perform as well in an inflationary period, they can move to something they believe works, but this adaptability must be core to the way they invest. This continuous adaption is being made possible by technology like artificial intelligence and machine learning which is allowing the creation of more risk models and combining the insights from these. These models are capturing risks never captured before.
Appetite For Blended Impact Investing Grows
There is a well-established and rapidly growing appetite for impact investing with a blended (public/private) approach widely accepted, says ‘Investor views on Public/Private approach,’ KBIGI’s impact investing survey. However, the ability to access appropriate investment opportunities is by far the biggest challenge the industry is facing. In the public equity space, the ability to make impact at scale is the biggest attraction. And while trade-offs exist between the public equity and private equity approaches, investors don’t accept that there is a trade-off between investment performance and impact. However, it says the impact community-at-large needs to do more to connect, educate, and make impact investing more tangible for investors.
Private Equity Prospects Positive
The prospects for private equity in 2019 are positive, says the ‘Preqin Investor Outlook: Alternative Assets H1 2019.’ It finds that nine out of 10 investors are satisfied with the performance of the asset class and 31 per cent intend to invest more in private equity in 2019 than in 2018. This comes despite concerns that headwinds may put pressure on future returns with asset valuations rated as the biggest challenge in the next 12 months by over 70 per cent of investors and many thinking that pricing is higher compared to last year. The majority of investors believe that assets are overvalued and see a correction approaching – including 39 per cent that expect it to come in 2019. In consequence, almost a third of investors expect their private equity portfolios to perform worse in the coming year than in 2018, but the majority are still confident that the asset class can meet their targets.
Federated Buys Part Of PNC
Federated Investors will buy parts of PNC Financial Services Group’s asset management business, PNC Capital Advisors. Under the deal, $484.9 billion asset manager Federated will acquire nearly $14 billion in assets from PNC. At the close of the deal, PNC Capital Advisors will continue to manage $21 billion in custom liquidity and fixed income solutions for PNC’s corporate and institutional clients as well as $26 billion in OCIO assets through its institutional advisory business.
Perry Joins Empire Life
Michael Perry is senior vice-president, group solutions, at the Empire Life Insurance Company. He joined the company in 2016 as vice-president, group product and marketing. Prior to joining the firm, he spent more than 20 years in the Canadian banking industry in senior marketing, product development, and business effectiveness roles. He also led the creation of new business-to-business insurance product lines, including an employee benefit suite of products for a consulting firm based in Toronto, ON.
Session Links Technology And Investment
‘Artificial Intelligence, Technology, Blockchain & Investment’ will be explained at CPBI Atlantic sessions. Featured speakers are Arijit Das, senior vice-president ‒ automation, architecture, and innovation ‒ shared services, at Northern Trust; and Krista Sacrey, a principal at Eckler. It takes place May 28 in St. John’s, NL, and information is at St. John’s AI. Information on the May 29 session in Halifax, NS, is at Halifax AI. Visit Saint John AI for details on the May 30 session in Saint John, NB