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Daily News Alerts

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June 1, 2021

CANADIANS WANT FLEXIBILITY ON WORK

When the pandemic ends, over three-quarters (77 per cent) of Canadians want the flexibility to work in the office and remotely, says a survey by KPMG in Canada. Indeed, 71 per cent believe a hybrid workplace, or hybrid office, should be the standard model for all organizations, it says. Canadians, though, worry about how this reinvention of the workplace will be handled by their employers. Four in five (81 per cent) expressed concern that their bosses aren’t prepared nor equipped to manage hybrid workplace models and nearly half (49 per cent) feel they could be overlooked for promotions or face discrimination if they wanted to continue working from home. A similar number – nearly half (45 per cent) – believe their employer does not understand the implications of a hybrid workplace model. “Although the novelty of everyone working remotely for months on end has worn off, Canadians definitely crave the flexibility to stay at home or go into the office when required,” says Doron Melnick, partner and national leader of KPMG’s people and change practice. “It’s equally clear that Canadians have a lot of concerns about how that will work. For many organizations, it’s uncharted territory. But, the risks can be addressed with supports, such as training, technology, guidelines, and policies.”

June 1, 2021

MIXED MESSAGE SENT ON CRYPTOCURRENCIES

The government of Canada sends mixed messages about cryptocurrencies. Its website mentions that ‘digital currencies are not legal tender,’ says Kunal Sawhney, the founder and CEO of Kalkine. However, in the article ‘Cryptocurrencies Lack Utility, Can’t Be A Mainstream Economic Activity’ on the Benefits and Pensions Monitor website, he says recent developments in the digital currency realm in Canada contradict the message. For example, the Ontario Securities Commission has green-lit the world’s first bitcoin exchange traded fund (ETF) and a crypto mining firm has commissioned a site in Alberta to mine bitcoin, the world’s most popular cryptocurrency. And this is just the tip of the iceberg. However, although various stakeholders hold interests in cryptocurrencies, there are questions about whether these stakes are held in an economic activity that has utility.

June 1, 2021

DESJARDINS ACQUIRES HEXAVEST

Desjardins Group has acquired the assets of Hexavest, a Montreal, QC-based company that serves some 50 clients, mostly made up of institutional investors in Canada, the United States, Australia, and Asia. It boasts $5 billion in assets under management. The acquisition is expected to be finalized around September 1, 2021, subject to the usual conditions.

June 1, 2021

IMCO PROVIDES INTERNSHIPS

The Investment Management Corporation of Ontario (IMCO) is providing six paid internships at the C.D. Howe Institute for the summer of 2021. It will support internships for recent graduates of policy and economic programs to obtain experience while having an opportunity to inform debates over economic and social policy work in Canada.

June 1, 2021

JOINT MALL VENTURE FORMED

The Phoenix Mills Limited and Canada Pension Plan Investment Board (CPP Investments) have created a joint venture to develop a regional retail centre in Alipore, Kolkata, India. The investment in Mindstone Mall Developers Private Ltd. will be used to develop a retail centre with a potential leasable area of approximately one million square feet. Kolkata is a prominent business hub in Eastern India and home to several large manufacturing and information technology companies along with a well-developed banking sector.

June 1, 2021

TWO JOIN ALGONQUIN

Kathleen Biggs is a partner, investor relations, and John Tedesco is vice-president, business development, at Algonquin Capital. A 40-year veteran of the fixed income markets and asset management industry, most recently Biggs was head of business development at Lawrence Park Asset Management. Tedesco is a 25-year veteran of the asset management industry. He joins the firm from Invesco, where he spent 12 years as a vice-president and senior consultant.

June 1, 2021

CAPS DISCUSSED AT ACPM CONFERENCE

‘Capital Accumulation Plans – From Capital Accumulation to Pension Income’ and ‘Pension Cybersecurity 101’ will be discussed at the ‘2021 ACPM National Conference. Theme of the event is ‘Optimism, Evolution and Reinvention: Finding the Road to Recovery and Retirement.’ Featured sessions include Stephen Poloz, a special advisor at Osler, Hoskin & Harcourt LLP and former governor of the Bank of Canada who will provide an economic update and an international pension comparison panel discussion with Keith Ambachtsheer, president of KPA Advisory Services Ltd.’ Dr. David Knox, a senior partner at Mercer; and Jim Stanford, an economist and director of the Centre for Future Work. It takes place September 14 to 16. Information is at https://www.acpm.com/national.aspx

May 31, 2021

ESG ISSUES INCREASINGLY IMPORTANT

ESG (environment, social, and governance) issues are playing an increasingly important role in investment decision-making, with investors applying these non-financial factors as part of their analysis to determine a company’s long-term profitability, says a Capital Group publication. In the past five years, U.S. investors have poured assets into sustainable funds in record-breaking numbers, with US$51.1 billion channeled into sustainable funds in 2020 alone. ‘The future of ESG investing depends on deep analysis’ says the challenge remains identifying which ESG issues are relevant, how they fit within a particular portfolio, and how they will be reflected in the share price. Still in the early stages of the evolution of ESG investing, the investment community may need another five years to figure where the industry fits into this emergent trend, it says. This means a sustainable business plan must include ESG considerations as maintaining a long-term dialogue with management, rather than merely reviewing financial records, can reveal how a company thinks about ‒ and acts upon ‒ ESG issues. And while investors may be drawn to ESG funds for obvious priorities like climate change, human rights, or board diversity, other aspects to consider include supply chain issues or providing for underserved communities.

May 31, 2021

DEPRESSION DIFFICULT TO DEFINE

Depression is very difficult to define, says Dr. Diane McIntosh, chief neuroscience officer at TELUS Health. Speaking at its ‘Annual Conference 2021,’ she said, a depression diagnosis is generally based on the patient experiencing five out of nine symptoms nearly every day for more than two weeks, with a change in previous functioning. In addition, the patient must have either a depressed mood or anhedonia (a loss of pleasure in things the patient normally enjoyed). “Then there’s a constellation of other symptoms, and when you take all the permutations and combinations together, there are more than 1,000 different ways that depression can present,” said Dr. McIntosh. Risk factors for depression include biological, psychological, and social factors. Of particular relevance in a time of social distancing, she said social support is one of the greatest protectors of mental health and a lack of social support is a powerful predictor of depression. As well, women are twice as likely to develop depression and many other mental illnesses, perhaps in part because of the lifelong effect of estrogen on women’s brains. In addition, women’s bodies metabolize medications differently, so women and men require different treatment plans.

May 31, 2021

COMMERCIAL PROPERTY STABILIZES

Canadian commercial property investment market conditions stabilized during the first quarter, says Morguard’s ‘2021 Canadian Economic Outlook and Market Fundamentals First Quarter Update.’ An increased volume of COVID-19 vaccinations reported across the nation boosted investor confidence as part of a more optimistic economic outlook despite further uncertainty triggered by a third wave of the pandemic. Low-risk industrial and multi-suite residential rental properties recorded stable-to-high transaction activity, reflecting increased confidence from the investment community. A more cautious approach was taken by investors with regard to potential office and non-essential retail property asset acquisitions. “Defensive assets, such as multi-suite residential rental and industrial, garnered strong bidding due to their relatively stable and positive fundamental outlooks,” says Keith Reading, director of research at Morguard. “The positive impacts of the vaccine rollout and government transfers to Canadian businesses and households are expected to boost both economic and investment market performance in the second half of 2021 as the outlook for the commercial real estate sector becomes clearer.”

May 31, 2021

EUROPE CONSIDERS INFLATION RESPONSE

As the COVID-19 vaccination rollout gathers pace and businesses reopen, Europe’s investors are considering how to respond to the prospect of higher inflation caused by a surge in spending as pent-up demand is released when lockdowns are lifted, says Cerulli Associates. Inflation in the EU is forecast to be 1.9 per cent in 2021 and 1.5 per cent next year, edging toward the European Central Bank’s two per cent target, an upper limit also set by many other national authorities, including the Bank of England. However, opinion is divided between cautious inflation watchers and those who believe that any rise will be short-lived, it says. “Investors can protect against inflation in several ways, directly or indirectly, and one area of the market that is already starting to see increasing buyer action is the inflation-linked bonds market. Fabrizio Zumbo, associate director, European asset and wealth management research at Cerulli, says investors have indirect tools at their disposal to help hedge against rising prices. “Commodities, including gold, are often favoured as investors go into defensive mode,” he says.

May 31, 2021

BUILDING ALIGNMENT EXAMINED

‘Building Alignment Across Organizational Strategy, Investments, Regulatory Requirements and Operational Considerations’ will be examined at a Benefits and Pensions Monitor Meetings & Events webinar. Alistair Almeida, segment lead, asset owners, at CIBC Mellon; and Kendra Kaake, director of investment strategy at SEI; will provide a summary of trends and considerations plans are exploring for their investment and asset strategies; a framework for investment management that leverages real-time data to drive critical decisions; and practical examples of a holistic approach for achieving better outcomes, with clear accountability and direction. It takes place June 14. Information is at https://register.gotowebinar.com/register/1284029885057401615

May 28, 2021

GENERIC SUBSTITUTION DEFINITIONS VARY

Today, amongst private plans, between 80 and 90 per cent of private plans have some sort of generic component within their drug plan design, says Joanne Jung, pharmacy practice leader at Willis Towers Watson. However, “when you dig into it, it’s not as simple as it seems” because there’s different terminology for generic substitution, she said at the ‘CPBI National Bridging the Gap ‒ Increasing private sector drug benefit plan sustainability’ session. Different insurers have different names associated with a type of generic pricing they apply in their plans. So mandatory generic might mean something else with another insurer. This makes it really important to understand the type of generic plan offered because that can impact the degree of generic utilization. A very rigorous strict plan, she said, would simply only cover generics. If a member fills a prescription for a brand drug that has a generic equivalent, there would be no coverage for that drug. However, this is not very common at all, she said. What’s most common in Canada are enhanced generic plans. Unless a doctor says no substitution is allowed, the pharmacy can substitute a generic. And the plan member will not be reimbursed for the cost of the brand drug unless there are medical reasons to do so. Finally, there’s the simple or voluntary generic. This is a plan where if the doctor writes no substitution on the prescription, the pharmacists can override that. So as sponsors move through these versions of generic substitution, there’s less savings and lower generic utilization. Jim Keon, president of the Canadian Generic Pharmaceutical Association (CGPA), said since 2007, PMPRB (Patented Medicine Prices Review Board) studies show the price of generic medicines in Canada had fallen by 60 per cent and some of the top selling generics have seen their prices drop by over 80 per cent. Its last report in 2018 revealed generic prices were five per cent below the average of the countries that it compares with Canada. And while costs have gone up during the pandemic, the price of generic medicines has not changed whatsoever, he said. Currently, 73 per cent of prescriptions are filled with generic medicines, yet the dollar cost are less than 20 per cent of all costs. This means about three quarters of all prescriptions are filled with generics for less than 20 per cent of the costs.

May 28, 2021

CROSS-GENERATIONAL APPROACH NEEDED FOR PLANS

Plan sponsors need to take a cross-generational approach to their employee benefits plans, says Catherine Bierman, senior product specialist at Medavie/Blue Cross. In its ‘Flexing your Benefits: How modern plan ‘extras’ can pack a punch with minimal cost to employers and maximum impact for employees’ session with Derek Weir, its manager of optional benefits, she said, “We know the one-size-fits-all benefit plan era is gone; they don’t meet the needs or the expectations of multi-generational workforces. Today, people are looking for robust benefit packages with a blend of options that can be tailored to meet the collective and individual needs of members,” she said. This means plan sponsors, for example, need to consider reimbursing members for making proactive choices about improving their health and wellness. Ways to add more flexibility to plans include HSAs (health spending accounts). “These pay off in the long run and they’re a cost effective way to do this. They also hold broad appeal for the five generations that are working side-by-side in today’s workplaces,” she said. With a traditional benefit plan, there are a variety benefits to choose from, said Weir. Traditionally, they choose between different benefits in a basket. With flex plans, most people envision good, better, or best plans which may have higher or lower reimbursement levels or a different mix of benefits maximums. Nowadays, there’s more flexibility, even inside traditional benefit plans. It’s not just about choosing between benefits, but it’s also about providing choice within a given benefit, and even how these benefits are accessed. The trend here is making it easier for employees to access the services provided through the benefit plan based on their lifestyle. “So if you build on optional benefits or voluntary benefits as they’re sometimes called, there’s a broader, more flexible approach to benefit plan design that brings choice for the member to a whole new level,” he said.

May 28, 2021

MENTAL HEALTH REMAINS NEGATIVE

The LifeWorks Inc. (formerly Morneau Shepell) ‘Mental Health Index’ reveals a negative mental health score among Canadians for the 13th consecutive month. The index score for April is -10.7. Negative scores indicate a lower level of mental health compared to the pre-pandemic benchmark. The April score is slightly higher than it was March 2021 (-11.2). In April, the majority of sub-scores showed improvement over the previous month. The anxiety sub-score improved the most when compared to March, from -12.7 to -11.6 month-over-month. This positive trend also extends to the psychological health sub-score, which increased from -3.9 to -3.3, beginning to reverse a previous trend of steady declines since the inception of the index. While this is positive, all sub-scores excluding financial risk remain well below the pre-pandemic benchmark, indicating that Canadians’ mental health remains at significant risk. “Canada has experienced an uneven recovery in the past month, with more restrictive lockdowns and uncertainty about vaccine availability causing continued feelings of isolation and uneasiness. This appears to have taken a positive turn in recent weeks, with lowering case counts contributing to a positive shift in optimism. The mental health of working Canadians, however, is still well below the level it was prior to the pandemic,” says Stephen Liptrap, president and chief executive officer of LifeWorks. “Employers must recognize the long-term consequences of this and take the appropriate steps to get ahead of future uncertainty and mental strain by providing accessible mental health support to employees.

May 28, 2021

GROWING NUMBERS USE RMS

Growing numbers of investment managers and asset owners are using research management systems (RMSs) to streamline research and manage multiple data sources employed by analysts and portfolio managers in their investment processes, says the ‘Q1 2021 Coalition Greenwich’ study. It shows more than a third of U.S. asset managers and asset owners are using an RMS, up from 26 per cent in 2019. In addition, asset managers are employing RMSs to help manage content from an average of 20 research providers, with some larger firms employing double that number. Although MiFID II is causing the number of research providers to drop, complexity is on the rise as investors seek new data sources such as environmental, social, and governance (ESG) data and expand their use of alternative data. Incorporating these new sources will add additional difficulty to the already daunting task of research management ‒ a process that includes data procurement, workflow standardization, consumption tracking, compliance monitoring, and other functions. Institutional investors that adopt an RMS report a positive impact on productivity and compliance. Almost 70 per cent report an increase in productivity since implementing an RMS and 55 per cent experienced improved compliance.

May 28, 2021

MORE CORPORATE CREDIT DOWNGRADES EXPECTED

European institutional investors and wealth managers expect more corporate credit downgrades and defaults over the next nine months, says research commissioned by Tabula Investment Management Limited. It says 45 per cent expect more downgrades and defaults and only 41 per cent expect the fixed income market to stabilize. Overall, 84 per cent of professional investors expect flows into fixed income funds to increase and 76 per cent believe a key reason will be because of increased market volatility and shocks. For 67 per cent, flows will rise because investors will be looking for income as companies cancel, suspend, or cut dividends. Similarly, 63 per cent think flows will increase because on-going strong support from central banks and governments will continue to make bonds attractive for investors.

May 28, 2021

OMERS ACQUIRE STAKE IN SCHOOLS

OMERS Private Equity has signed an agreement to acquire a 25 per cent stake in International Schools Partnership (ISP) from Partners Group. ISP is a group of 50 international schools currently spanning 15 countries and serving around 45,000 students globally through multiple curricular options. It plans to expand its global network, after having added 50 schools between 2014 and 2020. OMERS Private Equity invests on behalf of OMERS.

May 28, 2021

MARSHALL HEADS SALES

Andrew Marshall is head of sales, Canada, at Aviva Investors. Based in Toronto, ON, he has more than 20 years of investment industry experience. Most recently, he was senior vice-president of institutional client services with Fiera Capital. Prior to that, he spent 17 years with Standard Life Aberdeen.

May 27, 2021