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August 31, 2016

Hedge Fund AUM Drop

Using data from its ‘Hedge Fund Online’ product, Preqin estimates that there were net outflows of $34 billion over the first half of 2016. The majority of outflows ($20 billion) occurred in the second quarter. As a result, as of June 30, the hedge fund industry represented a total of $3.11 trillion in assets under management (AUM), down from $3.14 trillion at the end of 2015. Credit and equity strategy funds suffered the greatest outflows, $26 billion and $25 billion respectively. By contrast, CTAs increased their AUM by 11 per cent over the first half of the year, recording the greatest inflows of any strategy ($17 billion). “Growing concern from investors regarding the recent performance of the hedge fund sector has manifested as two consecutive quarters of net outflows, taking the total size of the industry to approximately $3.1 trillion as of the end of the first half of 2016, says Amy Bensted, head of hedge fund products at Preqin.

iA Website Earns Award

For a third consecutive year, the group savings and retirement sector of iA Financial Group has been recognized by the Insurance & Financial Communicator's Association (IFCA. This year, the sector won the award of excellence in the ‘Company Websites – Private/Internal’ category for its secure website for group retirement plan sponsors and advisors. Features and benefits of the Web environment for clients and advisors include better control of their retirement plans, thereby maximizing the impact; a dashboard that provides an instant, overall view of the plan, facilitating plan member management; daily updates of new statistics which allows users to access asset allocation, plan health information, and data regarding website and planning tool usage by plan members; and an online contribution tool which simultaneously synchronizes with the plan member list which maximizes usage.

Templeton Using NLG

Narrative Science, a provider of advanced natural language generation (Advanced NLG) for the enterprise, has entered a relationship with Franklin Templeton Investments to utilize its ‘Quill Portfolio Commentary’ solution. The move is intended to enhance the efficiency of Franklin Templeton's fund commentary process. The commentary enables Franklin Templeton's global marketing team to extensively scale standard fund reporting coverage and frequency. This will free up time and resources to let Franklin Templeton's team of investment experts focus on more complex analysis and forward-looking perspectives.

Uborcev Has New Position

Alexander Uborcev is director of integrated people management at RBC. Most recently, he was senior manager of integrated people management at the Royal Bank of Canada, a position he held since July 2014. Prior to that, he was an associate vice-president at Aon Consulting, a firm he joined in 2005.

Wesseling Named President

Rob Wesseling is president and chief executive officer at the Co-operators Group Limited, effective December 1. He is currently executive vice-president, property and casualty operations, Co-operators General Insurance Company and chief operating officer of the Sovereign General Insurance Company. He has spent the last 19 years with the company in increasingly senior leadership positions. He replaces Kathy Bardswick, the current president and CEO of the Co-operators Group Ltd., who is retiring.

Social Finance Focus Of Forum

The MaRS Centre for Impact Investing’s‘Social Finance Forum’ is for impact investors, social entrepreneurs, and financial professionals who believe that business is about more than money – it can be a powerful force for good. Sessions will look at how to attract millennials to impact investing, how governments can best capitalize on the fast pace of social innovation, and how to measure the social impact being created. Speakers include Tomicah Tillemann, a former State Department advisor to Hillary Clinton, and Greg Shell, whoruns Bain Capital’s impact investing practice. It takes place October 27 and 28 in Toronto, ON. For information, visit http://www.socialfinanceforum.ca/

August 30, 2016

Institutional Investors Want Climate Deal Ratified

As leaders of the world’s largest economies prepare to attend the upcoming G20 meeting in Hangzhou, China, 130 investors (with over $13 trillion in assets under management) from a coalition of six organizations including the Institutional Investors Group on Climate Change and the Investor Network on Climate Risk have written to the G20 heads of state urging them to ratify the Paris Climate Agreement this year. They also call on G20 nations to double global investment in clean energy, tighten up climate disclosure mandates, develop carbon pricing, and phase out fossil fuel subsidies. The letter also welcomes the work of the G20 Green Finance Study Group, which aims to enhance the contribution of institutional investors to the greening of mainstream financial flows. Finally, they use the letter to urge the G20 to both prioritize implementation of their nationally determined contributions and to prepare to strengthen them with the goal of ensuring all G20 nations meet their commitments and raise their climate ambition during 2018 to achieve the Paris Agreement’s goals.

Emerging Risk Oversight Reviewed

The Department of Finance Canada is reviewing the financial services sector's oversight on emerging risks such as climate change, cybersecurity threats, and the rise of financial technology (fintech). The first part of the two-stage review of legislation and regulation sets the scene, enumerating trends and seeking feedback on areas for potential reform. This will lead to a second consultation paper due to be published in 2017 which actually proposes reforms.The initial consultation paper indicates that increased urbanization, terrorism, and climate change have increased the potential for losses from catastrophic events, the paper says. Cybersecurity threats are a "growing concern" for both the government and the financial services sector and the rise of fintech may also pose challenges to the industry and policy-makers in the sector.Written comments should be forwarded by November 15 to LegislativeReview-ExamenLegislatif@canada.ca or Financial Institutions Division, Financial Sector Policy Branch, Department of Finance Canada, 90 Elgin St., Ottawa, ON K1A 0G5 by November 15.

Replacement Level Turns Up

Despite a further decrease in interest rates, the trend for Eckler’s Capital Accumulation Plan Income Tracker (CAPit) – which measures the replacement income level generated by a typical capital accumulation plan (CAP) – has turned up since March 31. This is only the second time in its history that the CAPit has increased. Driving this surprising result is increased returns for Canadian equities during the second quarter which more than offset the impact of low interest rates, resulting in an improved CAPit from quarter one to this quarter. While the uptick is good news for CAP members, how members respond to it might not be. Making investment decisions is challenging for most members who may have knee-jerk reactions to market changes that could jeopardize their long-term financial success. As they move closer to their anticipated retirement date, to ensure they reach their income target, CAP members should pay more attention to their savings portfolios by seeking qualified advice as needed. Plan sponsors can support them by offering one-on-one retirement counselling sessions – particularly targeting those close to retirement – to help curb members’ anxiety and ensure they reach their retirement goals. “Recognizing that members have limited time, interest, and ability to manage their retirement portfolios, smart plan design and targeted communications that help members arrive at optimal outcomes are key,” says Janice Holman, a principal in Eckler’s Toronto, ON, office. “Plan sponsors that manage their plans to maximize outcomes will benefit from happy retirees who are able to leave the organization when they want.”

Mobile Tools Important For Saving

Sixty-six per cent of both Boomers and Millennials in the U.S. say that mobile apps and tools are either important or very important to manage and track the value of their retirement savings, says a Willis Towers Watson survey. It found 59 per cent of Millennials and 54 per cent of Boomers place a high value on tools to help them monitor when they can expect to retire and how much retirement income their savings will generate. As well, 33 per cent of Millennials, but only 24 per cent of Boomers, rate wearable devices to track their health as important or very important. Thirty-five per cent of Millennials versus only 16 per cent of Boomers rate apps to track diets as important or very important. And while 27 per cent of Millennials value apps to monitor sleep habits, only 14 per cent of Boomers believe those apps are valuable. “There is a misconception that Boomers don’t have much need or use for technology, especially when it comes to preparing for retirement and managing their finances once their working days are over,” says Steve Nyce, senior economist at Willis Towers Watson. “In reality, all generations feel vulnerable about their long-term financial security and ability to retire comfortably and recognize that technology can help them engage in and make important decisions about their health and personal finances.”

Case Grows For Buying Into Funds

The latest round of central bank interest rate cuts and quantitative easing extensions will bring some relief to asset managers suffering in the wake of the Brexit vote by further strengthening the case for buying into funds instead of holding cash, says the ‘Cerulli Edge ‒ European Monthly Product Trends Edition.’ While the firm is confident that the UK's decision to leave the European Union is not a game changer, it acknowledges that the funds worst affected by the summer's outflows may have to increase marketing efforts to convince investors to return and to find new investors. "Most firms are not expecting the outflows, which admittedly were very large, to be magically reversed in the next month. However, they have already stabilized and most industry watchers expect the second half of the year to show a more positive trend," says Barbara Wall, its Europe managing director at Cerulli Associates, adding that the resultant shakeout may intensify the pressure on fees.

ETF/ETP Assets Reach New Record

Assets invested in ETFs/ETPs listed in Canada have increased 25.3 per cent year to date to reach a new record of US$81 billion at the end of July, says ETFGI. Net inflows gathered by ETFs/ETPs listed in Canada in July were US$180 million marking the 21st consecutive month of net inflows. Record levels of assets were also reached at the end of July for ETFs/ETPs listed globally at US$3.343 trillion, in the United States at US$2.367 trillion, in Europe at US$539.16 billion, and in Japan at US$191.82 billion. Commodity ETFs/ETPs gathered net inflows of US$66 million and fixed income ETFs/ETPs gathered US$32 million, while equity ETFs/ETPs experienced net outflows of US$75 million. “Investor confidence returned during July after the surprising result of June’s Brexit vote. The S&P 500 was up 3.7 per cent in July. Developed markets outside the U.S. gained 5.1 per cent and emerging markets were up 4.8 per cent," says Deborah Fuhr, managing partner at ETFGI.

Wright Named CEO

Hugh Wright is managing partner and CEO at McInnes Cooper. His three-year term commences September 1. A member of the firm for 20 years, he has led the its pensions and benefits practice group for many years and will continue to do so. He is a previous member of the firm’s board of directors and also led the Halifax, NS, litigation group. He is recognized in ‘Chambers Global,’ ‘Lexpert’ and ‘Best Lawyers in Canada.’ He is also chair of the board of directors of the Association of Canadian Pension Management and is a director of the Canadian Bar Insurance Association.

Pharmacogenetics Role Examined

The role of pharmacogenetics in a benefits plan, a long-term view on interest rate and economic growth, and pension risk will be among the topics at the ‘CPBI 2016 Western Regional Conference.’ It takes place October 5 to 7 in Whistler, BC. For information, visit www.cpbi-icra.ca

August 29, 2016

Brexit Blamed For Loss

The world’s largest pension fund is blaming a $52 billion quarterly investment loss on the UK’s Brexit vote in June to leave the European Union. Japan’s Government Pension Investment Fund (GPIF) in the April to June quarter of 2016 almost matched the $50 billion losses it recorded in the 2015-16 financial year, its worst year since the global financial crisis. The investment losses for the three months to June 30 were -3.88 per cent, a drop that took the total value of the fund below $1.3 trillion. The result of the British referendum on the EU had been different from market expectations creating a shock that saw the yen soar against all major international currencies as investors turned to it as a safe haven.

Outliving Savings Biggest Fear

The biggest retirement fear of more than half (51 per cent) of U.S. workers’ is outliving their savings, says the Transamerica Center for Retirement Studies. This is followed by Social Security being reduced or ceasing to exist, cited by 47 per cent; declining health that requires long-term care (45 per cent); not being able to meet the basic financial needs of their family (42 per cent); dementia or Alzheimer’s (35 per cent); lack of access to affordable healthcare (32 per cent); and being laid off (19 per cent). Fifty-four per cent of workers plan to work past the age of 65 and of this group, 13 per cent do not expect to retire. Just over half (51 per cent) of workers plan to work after they retire, including 38 per cent who plan to work part-time and 13 per cent who plan to work full-time. Only 22 per cent do not plan to work after they retire.

LOFT Collaborates On Deep Learning

Manulife's Lab of Forward Thinking (LOFT) is collaborating with indico data solutions, a company that specializes in Deep Learning. This collaboration is part of a strategic effort to leverage best-in-class products and accelerate business adoption of innovative technologies such as Artificial Intelligence (AI), blockchain, and virtual reality. Manulife will use indico's platform to develop an artificial intelligence (AI) and Deep Learning tool to analyze unstructured financial data. This will enable it to analyze data from news articles, analyst reports, and other similar sources and present recommendations that could help investment researchers and portfolio managers make more informed decisions faster than ever before.

Ivanhoé Cambridge Invests In Shopping Mall

Ivanhoé Cambridge is investing $72 million in the redevelopment of a British Columbia shopping mall. The Mayfair Shopping Centre in Victoria will be redeveloped over the next two years to increase the gross leasable area of the asset from 42,180 square metres to 51,470 square metres by late-2018. The expansion will be anchored by two new large format stores. Ivanhoé Cambridge is a subsidiary of the Caisse de dépôt et placement du Québec.

Joint Conference CPBI First

The 2016 joint ‘Regional Conference for Ontario and Quebec’ delegates is the first of its kind for CPBI. Keynote speaker is Karl Subban, father of professional hockey player P. K. Subban. He will talk about inspiring five children, three of which have been drafted by the National Hockey League. Workshops will be held on drug plan management, mental health, decumulation, and solvency funding. It takes place September 12 to 14 in Mont Tremblant, QC. For information, visit Ontario CPBI

August 26, 2016

Human Rights Now Focus

CPP Investment Board (CPPIB) has added human rights as one of its focus areas for engaging with the companies it invests in. It says as the trusted manager of pension money for 19 million individuals, it has “an obligation to protect and enhance” the value of the fund. One of the ways it does this is by advocating for changes that it believes will build value at companies during the long horizon over which it invests. Its focus areas had previously been climate change, water, executive compensation, and the extractive industries (otherwise known as the oil and gas and mining sectors). The human rights focus area will replace the extractive industries focus area, but despite this change, engagements with the oil and gas and mining sector on a variety of ESG matters will remain a key priority.

Six Of Top 10 Canadian

Six of the 10 largest allocators to infrastructure are headquartered in Canada and have a combined $59 billion in assets under management (AUM) held by Prequin’s $1 Billion Club of Infrastructure investors. These six hold 19 per cent of the club’s allocation to infrastructure. Its research identified a group of 69 institutional investors ‒ including 11 from Canada ‒ that have allocated $1 billion or more to the asset class. More than two-thirds (69 per cent) of the club have a separate infrastructure allocation, compared to 34 per cent of smaller investors. These investors also have an average allocation to infrastructure of seven per cent of total AUM, compared to 3.3 per cent for their smaller counterparts. This level of resource and experience allows them greater access to the market through direct investments and 82 per cent of club investors invest directly into infrastructure assets, compared to 31 per cent of other investors. Public pension funds account for the largest proportion (23 per cent) of any investor type in the club, slightly more numerous than asset managers (21 per cent).

PRPP Comes To Nova Scotia

Nova Scotians now have a new retirement savings option. Pooled registered pension plans (PRPPs) are now available to help them ensure financial security during retirement. While it passed the Pooled Registered Pension Plan Act in the fall of 2014, the government signed a multilateral agreement earlier this summer with several provinces and the federal government. Under the agreement, the federal Office of the Superintendent of Financial Institutions will be responsible for licensing, registration, and supervision of PRPPs in Nova Scotia. The plans are also available in Saskatchewan, British Columbia, and Quebec, and other provinces are able to participate.

Stirpe Joins Best Doctors

Gino Stirpe is director of sales at Best Doctors Canada Insurance Services Inc. He has over 25 years of sales experience in the insurance industry and is responsible for leading its sales and building a distribution network across Canada.

Survey Results Presented

Art Babcock, of Aon Hewitt Consulting, will present the results of the 2016 ‘Sanofi Canada Healthcare Survey, at a CPBI Northern Alberta session. He is a member of the Sanofi-Aventis Healthcare Survey advisory board. The annual survey provides information for sponsors and employers to consider as they review their benefits and wellness programs and determine specific initiatives to ensure a healthy workplace and provide supports to employees. It takes place September 21 in Edmonton, AB. For information, visit Sanofi Survey

August 25, 2016

CGIB Wants Proper Amendment Process

The Canadian Group Insurance Brokers (CGIB) has issued a ‘call to action’ for insurers and third-party administrators (TPAs) to return to a proper and legal plan amendment process to restore faith in group benefit policies. Brokers and MGAs are being asked to add their names to its online petition (http://www.cigb.ca/broker-support/) to show insurers and TPAs their commitment to solve a new problem for brokers and clients. In recent years, many insurance companies have altered their amendment process, leading to changes taking place at any time and with little or no warning to the broker and client, says Dave Patriarche, of the CGIB. This leaves brokers and MGAs hanging in the balance between insurers and clients. Much of the time, amendments arrive in the form of an eMail, as opposed to a more official form of correspondence. Simply reading the eMail is a binding contract, as opposed to the start of a broker/client conversation at plan renewal, he says. The petition specifies that any amendments to policies should be done only at renewal and that amendments be contract-specific.

Managers Can Earn Diploma

Managers at McDonald's Canada can now get help to earn a college diploma. Managers who complete some of the chain's training can bypass the first of two years of a business or business administration diploma at Ontario's 24 public colleges. Sharon Ramalho, chief people officer at McDonald's Canada, says the company has a "vested interest in making sure that we help our people educate themselves, that we train, that we teach." Workers can choose to continue working while studying thanks to flexible work arrangements. McDonald's and the British Columbia Institute of Technology have had a similar set up since 2014. Currently, about 120 of the chain's managers are enrolled.

T. Rowe Adds Fourth Pooled Vehicle

T. Rowe Price has introduced a pooled investment vehicle within its global focused growth equity strategy which is now available to Canadian institutional investors. This is the fourth pooled investment vehicle that it has launched in Canada in the past 18 months. It complements the firm's existing suite of Canadian pools in the international concentrated equity, U.S. large-cap core growth equity, and global growth equity strategies.It is constructed primarily using a bottom-up research process and consists typically of 60 to 80 high-conviction stocks with improving fundamentals and strong growth prospects. The objective is to achieve long-term capital growth by investing in a focused number of stocks sourced from developed and emerging markets and across the market capitalization spectrum.

Curriculum Carefully Developed

The International Foundation's ‘49th Annual Canadian Employee Benefits Conference’ features a curriculum which is carefully developed by active trustees and administrators along with the industry’s leading authorities from investment and fund management firms, legal and consulting businesses, and government and regulators. It takes place November 20 to 23 in San Diego, CA. For information, visit www.ifebp.org/canannual


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