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March 31, 2022

INCIDENCE OF DIABETES GROWING

Diabetes is a rapidly growing complex medical condition, both in Canada and around the world, says Colleen Adams, manager, health and digital product solutions, at Medavie Blue Cross. Speaking at its ‘Drive your Plans with Data’ session, she said from less than four per cent of the Canadian population in the year 2000, incidence of diabetes has more than doubled with 8.8 per cent of Canadians diagnosed with diabetes with another 6.1 per cent of high risk for developing this lifelong condition. Type Two Diabetes represents 90 per cent of the diagnosis and is correlated with aging, obesity, and sedentary lifestyles, all of which are on the rise, she said. However, more people are being diagnosed with diabetes, which increases the total market for diabetes medications. This also drives research into newer drugs which, when they first hit the market as brand name drugs, are more expensive than the older drugs which often have generic versions. The combination of more claimants and more expensive treatments has resulted in double digit per capita growth for three years running, she said. Diabetes is the number two trend driver of growth for all private plan expenditures, said Anne-Marie Smith, pharmacy consultant, at Medavie Blue Cross. There was a 13.6 per cent increase in trend per capita, resulting from an increase in drug costs with a negligible change in utilization. Claimants with diabetes typically have a higher cost per claimant compared to non-diabetes claimants as they generally are at a higher risk for comorbidities such as cardiac problems, high cholesterol, and gastrointestinal problems. So the overall costs for claimants with diabetes is also increasing year over year.

March 31, 2022

CANADA BENEFITS AS COMMODITY EXPORTER

Russell Investments Canada believes Canada will benefit from higher energy and agricultural prices as a net exporter of commodities and this should also support equities. However, it cautions that Canadian households have historically high levels of debt and raising economic vulnerabilities are forcing the Bank of Canada to move more slowly than markets have priced. In its ‘Q2 2022 Global Market Outlook,’ Shailesh Kshatriya, director, investment strategies at Russell Investments, says, “Canadian equities have been a relative bright spot amid global market volatility aggravated by Russia’s invasion of Ukraine. Commodity-related inflation remains problematic for the markets and economy; however, Canada’s equity benchmark has benefited from its higher allocation to the energy and materials sectors.” The outlook for Canadian equities remains favourable, based on an assessment of their investment decision-making building blocks of cycle, valuation, and sentiment. It expects the Canadian economy is expected to grow above trend in 2022. It also notes that earnings growth expectations for 2022 rose from under 10 per cent at the start of the year to over 14 per cent as of March 15, 2022. “Market valuation has improved; however, profit margins are stretched well above long-term averages. Maintaining high profit margins with rising input costs will be a challenge and, therefore, we rate value as slightly negative overall,” says Kshatriya

March 31, 2022

INSURANCE PREMIUM TAX RATE CUT

Plan sponsors with members residing in Quebec should see savings due to a cut in the insurance premium tax rate for group life and accident and sickness insurance from 3.48 per cent to 3.3 per cent, says an Eckler ‘GroupNews.’ In December 2014, the Quebec government temporarily increased the compensation tax portion paid on insurance premiums from 0.3 per cent to 0.48 per cent. This increase was originally scheduled to be in effect between December 3, 2014, and March 31, 2017, but was extended for five years ending on March 31, 2022. The change is effective April 1.

March 31, 2022

THEMATIC FUND ASSETS TRIPLE

Over the three years to the end of 2021, assets under management in thematic funds more than tripled to $806 billion worldwide, says Morningstar, Inc.’s ‘Global Thematic Funds Landscape Report.’ It shows thematic funds’ share of all assets invested in equity funds globally was 2.7 per cent as of the end of 2021, up from 0.8 per cent 10 years ago. “In recent years, we’ve seen a dramatic rise globally in the popularity of thematic funds,” says Kenneth Lamont, senior manager research analyst at Morningstar. “Our data shows these funds’ assets are growing to record levels across the globe and, as the menu of themed funds continues to expand, investor demand for clarity and guidance has increased commensurately.” Key findings from the report show a record 589 new thematic funds debuted globally in 2021, more than double the previous record of 271 new fund launches in 2020. These funds attempt to harness secular growth themes ranging from artificial intelligence to Generation Z. Europe is the largest market for thematic funds, accounting for 55 per cent of global thematic fund assets, having expanded from 15 per cent since 2002. In the U.S., thematic funds’ market share shrank to 21 per cent from 51 per cent over the same period.

March 31, 2022

CIBC MELLON SERVICING FORSTRONG ASSETS

Forstrong Global has selected CIBC Mellon and its global enterprise to provide asset servicing and digital solutions, including custody, accounting, recordkeeping, securities lending, financial statement preparation, investment data access, and tax reporting. Established in 2001, Forstrong manages global investment portfolios to capitalize on macroeconomic, geopolitical, and other world trends for Canadian financial institutions and individual investors.