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Daily News Alerts

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August 6, 2021

PORTFOLIOS CARRY MORE ESG RISK

A dividend-oriented portfolio carries nearly 20 per cent more ESG (environment, social, and governance) risk than the overall market, says Morningstar Indexes. Its analysis of a variety of investment approaches as represented by its equity indexes applied company-level Sustainalytics ESG risk ratings and carbon data to explore this question for its investor clients. This also showed a renewable energy portfolio is roughly 10 times as carbon-intensive as the global equity market. As well, value- and size-oriented portfolios may provide long-term performance advantages, but also carry higher ESG risk and carbon intensity. Finally, strategies that tend to overweight utilities or industrials ‒ such as high dividend yield, minimum volatility, and infrastructure ‒ can lead to carbon-intensive, high ESG risk areas of the market. “There are so many different facets to sustainable investing that investors need to consider for their portfolio that it can be a difficult road to navigate,” says Dan Lefkovitz, an index strategist at Morningstar.

August 6, 2021

DB REMAINS SIGNIFICANT

Registered defined benefit plans remain a significant source of retirement financial security, says the ‘2020 Report on the Funding of Defined Benefit Pension Plans in Ontario’ report from the Financial Services Regulatory Authority of Ontario (FSRA). The report provides pension stakeholders with funding, investment, and actuarial information on the registered DB pension plans it regulates. While the total number of DB plans registered with FSRA continues the declining trend mainly due to wind-ups and consolidations, the total plan membership remains relatively stable (at about 3.4 million) and market value of assets increased by about nine per cent to just under $700 billion compared to the 2019 report.

August 6, 2021

MENTAL WELLNESS CENTRE JOINS DBPLUS

The George Hull Centre for Children & Families, a non-profit organization committed to helping children and their families achieve mental wellness, is the latest organization to join the CAAT Pension Plan under DBplus. Employees of the centre dedicate themselves to working with families to help create better childhoods and brighter futures. By making the decision to join DBplus, the centre has ensured that those employees’ futures include the financial security of predictable lifetime retirement income. It previously sponsored a closed defined benefit pension plan and, for employees hired after 2010, a group registered retirement savings plan. DBplus, first launched by CAAT in 2019, provides a fixed-cost design which eliminates fiduciary and balance sheet risks for participating employers, along with the complexities of running a pension plan.

August 6, 2021

FIERA JOINS NET ZERO

Fiera Capital Corporation has joined the ‘Net Zero Asset Managers’ initiative, committing to work proactively towards the goal of reaching net zero greenhouse gas emissions by 2050 or sooner and to support broader efforts to limit global warming to 1.5 C. The international initiative aims to compel the asset management industry to commit to playing a more active role in battling climate change. It is managed by the United Nations-supported Principles for Responsible Investment (PRI) which the company signed in 2009 and five other founding partner investor networks. As part of its commitment to further reinforce its responsible investing approach, Fiera will set an initial target for a portion of its assets to be managed in line with achieving net zero emissions. This target will then be reviewed at least every five years, with a view to adding more investment strategies until all assets are included by 2050.

August 6, 2021

AIMCO SHORTLISTED FOR STEWARDSHIP AWARD

For the second consecutive year, AIMCo is on the shortlist for an International Corporate Governance Network (ICGN) ‘Global Stewardship Award.’ The network’s role is to bring global companies and stakeholders together to help advance the highest standards of corporate governance and investor stewardship. Higher standards of stewardship create long-term value and contribute to healthy and sustainable economies, societies, and the global environment. AIMCo is recognized for its efforts in the ‘Stewardship Disclosure – Asset Manager’ (less than £60 billion assets under management) category. The winners will be announced at the ‘ICGN Virtual Summit’ November 3.

August 6, 2021

GROWTH WORRIES STALL RISK RALLY

The risk rally stalled in July as global growth worries mounted, says FTSE Russell’s ‘July 2021 Monthly Performance Report.’ It says sentiment mirrored widening divergences in economic outlooks amid worries about the fast-spreading Delta coronavirus variant and supply-chain disruptions. Small-cap value stocks generally lagged large-cap growth peers as equity returns diverged in July. However, government bonds broadly rallied, notably inflation-linked bonds, and investment-grade outpaced high-yield credit. Oil, copper, and gold rose. Industry returns were also bifurcated. Technology contributed most to U.S. gains, but detracted significantly in Asia Pacific and Japan. Industrials contributed most to returns in Europe and the UK, but energy dragged on returns across markets.

August 6, 2021

MAPLE PARTNERS WITH HEADSPACE

Maple, a Canadian telemedicine and virtual care platform, has entered an exclusive partnership with Headspace, a global provider in mindfulness and meditation. This offering will provide Maple users with access to guided meditations, mindfulness practices, and wellness education to complement the primary and mental health specialist care already available through its integrated platform. Together, they will provide a mental health offering for Canadians as part of an integrated physical and mental well-being platform.

August 6, 2021

CANADIAN ETFS GATHER INFLOWS

Despite a rare outflow from fixed income funds, Canadian ETFs gathered $2.3 billion in July, bringing year-to-date flows to $32 billion, says a National Bank of Canada report. Fixed income ETFs experienced an outflow of $143 million during the month due to an “institutional-sized outflow” from the iShares Global Government Bond ETF. Although the fixed income category lost assets, high interest savings account ETFs once again had a solid month, raking in $352 million. Equities ETFs had an inflow of $1.9 billion, accounting for 82 per cent of flows in July. The majority of assets ($1.1 billion) went to index-tracking broad-based ETFs investing in Canadian, U.S., and global equities. Sector-based ETFs attracted $284 million. Investors had mixed market views in July, putting their money toward both cyclical sectors such as financials and technology, as well as defensive sectors such as energy, materials, and utilities. Low-volatility ETFs ‒ which lagged market indexes throughout the rebound last year ‒ had an inflow, taking in $71 million in July.

August 6, 2021

FORGET JOINS PICTET

Francois Forget is head of distribution – Canada at Pictet Asset Management. He joins the firm from Presima where he was executive vice-president and head of business development and strategic initiatives.

August 6, 2021

CDPQ TAKES MINORITY INTEREST

The Caisse de dépôt et placement du Québec (CDPQ) has made a minority investment in ApplyBoard, an online platform that empowers students around the world to access top quality education. The investment was made through CDPQ’s Equity 25 fund which targets companies that leverage diversity and inclusion as a vector of development and expansion.

August 6, 2021

PENSION RISK STRATEGIES EXAMINED

‘Demystifying DC Delegation: The time is now’ and ‘Managing Risks for Pension Fund Investors in Today’s Market’ will be examined at the Benefits and Pensions Monitor Meetings & Events ‘Pension Risk Strategies’ webinar. Eve Makarova, defined contribution delegated growth leader at Mercer (Canada) Limited, will outline the spectrum of delegated models and how they may impact decision-making frameworks and overall governance structure as well as explore potential risks and practical steps to assess and evaluate delegated partners. Blair McCreadie, head of Canadian real estate at Fiera Real Estate, will discuss the key risks that apply to general commercial real estate equity investing and dive into specific areas that pension fund investors should be aware of when engaging in these strategies. It takes place September 9. Information is at https://register.gotowebinar.com/register/1754645048174206987

August 5, 2021

AGILITY KEY IN MARKET

Agility is key in a market that seems to be moving faster than ever, pivoting with each trending headline: vaccine news, political shifts, company earnings,” says Mark Raes, head of product at BMO Global Asset Management Canada with the release of its mid-year exchange traded funds (ETF) report. One of the key themes is inflation will likely be monitored by central banks and investors as the economic reopening continues. This means ETFs with exposure to sectors such as industrials and materials, as well as U.S. treasury inflation protected securities (TIPS), can offer investors a hedge against inflation. This, coupled with a strong vaccination rollout, support a rotation out of growth stocks and into value stocks. Still, long term, innovation remains a pillar of the growth equation. Companies in this space are part of exponential growth markets that will continue to influence behaviours and routines and will power equity markets in the future. It also expects the growing investor interest in environmental, social, and governance (ESG) to be driven by multiple factors, including growing millennial investor participation, improved ESG data availability, and value-based preferences. Additionally, investors are more aware of the impact ESG risks can have on a company’s value and reputation.

August 5, 2021

MEDIAN RETURN POSITIVE AGAIN

The median return of Canadian investment plans was 4.35 per cent for the second quarter of 2021, says the ‘BNY Mellon Canadian Master Trust Universe,’ a BNY Mellon Global Risk Solutions fund-level tracking service. This marks the fifth consecutive positive quarterly median return following the initial pandemic reaction in the first quarter of 2020. The results show that leading plan sponsors have posted positive returns again this quarter, says Catherine Thrasher, head of strategic client solutions and global risk Solutions at CIBC Mellon and BNY Mellon. As well, “these positive investment markets have elevated Canadian plans to continue their rebound since the pandemic-driven market dislocation in first half of 2020,” she says. Among traditional asset classes, the Canadian equity universe median posted the highest performance, with a quarterly median return of 7.1 per cent. Fixed income returns were the lowest, posting quarterly performance of 2.44 per cent. With respect to non-traditional asset classes, private equity delivered the highest performance, with a quarterly median return of 4.94 per cent.

August 5, 2021

INVESTOR DEMAND SHIFTS QUICKLY

The rotation to value stocks during the economic recovery from the COVID-19 crisis and the rebound in growth stocks just months later provide a reminder of how quickly investor demand can swing with shifts in the economic cycle and why betting on the ‘hottest’ products can be a disaster for asset managers, says Coalition Greenwich. “The constant fluctuations in demand demonstrate the risk of trying to chase trends,” says John Franscioni, head of investment management research for the coalition and author of ‘Robust Product Development Processes for Asset Managers.’ “Best-in-class asset managers maintain robust product development systems that prepare for the future ‒instead of trying to predict it.” For most asset managers, product development ‒from idea capture to product release ‒ takes between three months and one year. This commitment of time and resources attached to developing a product underscores the importance of getting the right ideas into the product development process.

August 5, 2021

PRIVATE INVESTMENT FLOURISHES IN CHINA

Private investments, including private equity and venture capital (PEVC), hedge funds, and secondaries, are all flourishing in China due to favourable reforms and an accommodating economic environment, says Preqin’s ‘Alternative Assets in Asia-Pacific: Greater China’ report. Greater China’s PEVC has obtained critical mass, with more than $1.04 trillion in assets under management (AuM) as of September 2020, equating to 61 per cent of capital targeting the wider Asia-Pacific region. Venture capital remains the dominant strategy in Greater China, accounting for 46 per cent of total PEVC AuM based in the country as of September 2020., monthly cumulative performance has steadily improved for China’s hedge funds industry, although many hedge funds still struggle to implement sophisticated strategies outside of equity strategies. That said, 57 per cent of investors say China presents the best opportunities for hedge funds among emerging markets, the highest percentage of all asset classes. The report also suggests whilst the secondary private equity market in China is still niche, secondary transactions have risen in recent years with a record number of funds closed and aggregate capital raised.

August 5, 2021

WELLNESS CHAMPIONS SOUGHT

Alberta Blue Cross is looking to recognize Albertans who are everyday champions for wellness in their own lives, in their workplaces, and their communities. ‘The Faces of Wellness’ program is looking for Albertans across the province who are taking steps toward living healthier lives. “The last 16 months have been a challenging time for many Albertans as we coped with the pandemic, but even through this period there are so many Albertans who have continued to be champions for wellness in all its many forms,” says Brian Geislinger, vice-president of corporate relations with Alberta Blue Cross. Entrants will have the opportunity to win wellness-themed prizes, including the chance to win the grand prize of a weekend away in the Alberta Rockies. Entrants may also be profiled on the Alberta Blue Cross website and other mediums. Submission and nominations for #FacesofWellness are now open, with a deadline of September 30. For entry details, visit www.facesofwellness.ca

August 5, 2021

BUILD TO RENT PLATFORM CREATED

Poised to seize growth opportunities in the residential rental sector, Long Harbour has brought together PSP Investments and Cadillac Fairview, the real estate arm of the Ontario Teachers’ Pension Plan, to create a £1.5 billion build to rent platform. The joint venture will incorporate ‘Way of Life,’ Long Harbour’s residential management business, to combine investment, development, and operations capability within a single market-leading new platform. The Long Harbour Multi Family (LHMF) joint venture in the UK was established in 2019. Its portfolio of assets includes a development of over 480 homes for rent across two phases of development. The project is due to complete in 2023, with the first phase to launch in August.

August 5, 2021

CHILCOTT TAKES ON NEW ROLE

Sharon Chilcott, currently corporate secretary and managing director and associate general counsel, will take on the newly-created role of chief of staff as of September 1 at the Ontario Teachers’ Pension Plan. As chief of staff, she will be responsible for leading the daily operations and administration of the office of the CEO and will work closely with key partners across the business to drive critical enterprise initiatives. With more than two decades of experience practicing law in Canada and the UK, she joined Ontario Teachers’ in 2014.

August 5, 2021

WORKSHOP LOOKS AT RECONCILIATION

The Responsible Investment Association will offer a ‘Reconciliation Dialogue Workshop.’ Delivered by Reconciliation Canada, it explores the shared history of Indigenous peoples and all Canadians to build a deeper understanding of the individual and collective roles in overcoming this history to find a new way forward. The workshop will also cover ideas on how individuals and groups can move forward to adopt a reconciliation lens and take reconciliation action within their individual and professional roles. It takes place August 18. Information is at https://www.riacanada.ca/event/reconciliation-dialogue-workshop/

August 5, 2021

COMMUTED VALUE INTEREST RATE ASSUMPTIONS

The interest assumptions required to calculate commuted values and marriage breakdown values for an event which occurs in any month up to and including August 2021 are now available at www.an-actual-actuary.com. An Excel spreadsheet on the website includes the following worksheets:

  • Current CV Rates December 2020 CIA

  • Current Marital Values January 2012

  • Current Annuity Proxy

  • Current Interest on Contributions

  • Historical Ontario (Bill 133) Prior Rates

  • Historical CV Rates December 2020

  • Historical Marital Values 2012

  • Historical Annuity Proxy

  • Historical Revised CV Rate 2011-02

  • Historical CV Rate February 2011 CIA

  • Historical Marital-May 2009 CIA

  • Historical ‒ CV 2009 CIA

  • Historical ‒ CV 2005 CIA

  • Historical ‒ CV 1993 CIA

August 4, 2021

FUNDED POSITION OF PLANS IMPROVES

The funded positions of defined benefit pension plans in Ontario have improved steadily for five consecutive quarters and are at their highest levels since monitorin