Archive for the ‘Miscellaneous News’ Category

Canoe Financial Buys Right to Manage Fiera Canadian Preferred Share Class

Saturday, August 15th, 2020

This is very old news at this point, but better late than never!

Canoe Financial has announced (on 2020-4-9) that it:

reached an agreement under which Canoe Financial will acquire the rights to manage all of Fiera Investments’ retail mutual funds listed below (the “Mutual Funds”), representing approximately $1.14 billion in assets. The transaction is expected to close on or about the end of the second quarter of 2020, subject to receipt of all necessary approvals.

Regulatory approval was granted 2020-6-17:

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Approvals Sought are granted.

As a result “Fiera Canadian Preferred Share Class” was merged into “Canoe Preferred Share Portfolio Class”, a new Canoe Portfolio Class Fund to be created prior to the Merger Date consisting of Canoe Preferred Share Class and units of Canoe Trust Fund.

Accordingly, the acquisition closed on 2020-6-26.

The new fund has been assigned a page on the Canoe Financial website with an inception date of July, 2020.

Fed Issues Sunday FOMC Statement; Policy Rate Cut Full Point

Sunday, March 15th, 2020

The Federal Reserve has announced:

The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending rose at a moderate pace, business fixed investment and exports remained weak. More recently, the energy sector has come under stress. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation have declined; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2 percent objective.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals. To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. The Committee will also reinvest all principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Open Market Desk has recently expanded its overnight and term repurchase agreement operations. The Committee will continue to closely monitor market conditions and is prepared to adjust its plans as appropriate.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Randal K. Quarles. Voting against this action was Loretta J. Mester, who was fully supportive of all of the actions taken to promote the smooth functioning of markets and the flow of credit to households and businesses but preferred to reduce the target range for the federal funds rate to 1/2 to 3/4 percent at this meeting.

In a related set of actions to support the credit needs of households and businesses, the Federal Reserve announced measures related to the discount window, intraday credit, bank capital and liquidity buffers, reserve requirements, and—in coordination with other central banks—the U.S. dollar liquidity swap line arrangements. More information can be found on the Federal Reserve Board’s website.

The last cut, by 50bp to a range of 1.00-1.25%, was announced on March 3. Well, nobody can accuse them of not taking the coronavirus seriously!

I will leave consideration of the question of whether this announcement is well suited to the Ides of March to the reader.

Update: They later announced technical measures to improve credit availability under the headings:

  • Discount Window
  • Intraday Credit
  • Bank Capital and Liquidity Buffers
  • Reserve Requirements

… and coordinated Central Bank action:

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.

These central banks have agreed to lower the pricing on the standing U.S. dollar liquidity swap arrangements by 25 basis points, so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 25 basis points. To increase the swap lines’ effectiveness in providing term liquidity, the foreign central banks with regular U.S. dollar liquidity operations have also agreed to begin offering U.S. dollars weekly in each jurisdiction with an 84-day maturity, in addition to the 1-week maturity operations currently offered. These changes will take effect with the next scheduled operations during the week of March 16.1 The new pricing and maturity offerings will remain in place as long as appropriate to support the smooth functioning of U.S. dollar funding markets.

The swap lines are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.

Bank of Canada Gives Up on Commercial Paper & Bankers Acceptance Statistics

Saturday, January 12th, 2019

The Bank of Canada has announced (on 2018-11-13):

As of January 2019, the Bank of Canada will no longer publish the daily, weekly or monthly prime commercial paper (CP) or bankers’ acceptance (BA) rates. This decision has been taken after a thorough review of these rates and in keeping with the Bank’s policy of only publishing reliable data using appropriate sources and calculation methodologies.

The Investment Industry Regulatory Organization of Canada (IIROC) will start publishing for informational purposes only the 1- and 3-month transaction based BA rates on the same date. These new BA rates will be publicly available on the IIROC’s website on a delayed basis IIROC’s website.

The historical data for these rates will continue to be available on the Bank of Canada website at the Selected Historical Interest Rates page.

For further inquiries contact Bank of Canada at communications@bankofcanada.ca or IIROC Victoria Pinnington vpinnington@iiroc.ca

Naturally, given the secretive nature of the BoC, details of this review are not linked.

I also note their statement that:

The final publication of the “Selected Historical Interest Rates” package will be in January 2019, and on July 31, 2019 the page will be removed from the Bank of Canada’s website. After that date DSOCapitalMarkets@bankofcanada.ca will be pleased to respond to requests for publications.

Please note that you can find all the historical data through Statistics Canada’s CANSIM repository in tables 10-10-0122-01 and 10-10-0123-01, and data for the last ten years on the Canadian Interest Rates, Bond Yields, Treasury Bills and U.S. Interest Rates pages on our website. For a full mapping of the various time series and their new locations please refer to the attached document.

I have sent the following eMail to the Bank:

Sirs,

I understand from your website notice (https://www.bankofcanada.ca/2018/11/changes-to-publication-of-interest-rate-statistics/ ) that the BoC will no longer publish indicative CP or BA rates due to “the Bank’s policy of only publishing reliable data using appropriate sources and calculation methodologies” following “a thorough review of these rates”.

I have two questions regarding this policy change:
i) will this review be published, or is it available on request?
ii) I note that you continue to publish Series “V80691335: Conventional mortgage – 5-year”, claiming that it has not varied in the past five weeks from the nonsensical claim of “5.34%”, a figure that appears to be based on the commercial banks’ “posted rate”, which bears no relationship to actual rates in the marketplace (see, e.g., https://www.ratehub.ca/best-mortgage-rates/5-year/fixed ). Why do you consider the rates you publish to be ” reliable data using appropriate sources and calculation methodologies”?

Sincerely,

Well … I’ll give them a chance to answer. But I suspect that this termination of service is a disgraceful disservice to Canadians, and just another gift to Our Glorious Banks that will assist them to exploit their practical hegemony over the Canadian financial system for commercial purposes.

Update, 2019-1-17: I have received an answer from the BoC:

Good day,

Thank you for your email.

i) The Bank does not plan on releasing this review publicly.

ii) The methodology for calculating the Chartered Bank Interest Rates: Conventional mortgage – 5 year rate (weekly series V80691335 and monthly series V122521) published by the Bank of Canada is the statistical mode of 5-year mortgage rates posted by the Big Six Canadian banks. This rate is designated as a benchmark qualifying rate for the debt service ratio calculations in the mortgage approval process.

If the client’s analytical needs are better met by effective/charged interest rates, could you please point him to the ‘Interest rates for new and existing household lending’ table on the Banking and Financial Statistics web page: https://www.bankofcanada.ca/rates/banking-and-financial-statistics/interest-rates-for-new-and-existing-household-lending/

Kind regards,

Manulife Preferred Income Class Terminates

Saturday, May 12th, 2018

If one searches on SEDAR for “Manulife Preferred Income Class Apr 25 2018 16:25:30 ET Material document – English PDF 94 K” (as usual, the Canadian Securities Administrators prohibit me from linking to the document directly) one will find notification that Manulife Preferred Income Class has been terminated and merged into Manulife Dividend Income Class, effective as of the Close of Business, April 20, 2018.

There was a chaotic close in the preferred share market on April 20; it would be interesting to know if these two incidents were related!

The preferred fund had previously absorbed the poorly performing Manulife Preferred Income Fund, which was originally the AIC Preferred Income Fund.

According to the public document that I am not allowed to link to, “Manulife Preferred Income Class Mar 14 2018 14:27:09 ET Management information circular – English PDF 481 K”, the fund had 1,450 security holders and paid Manulife about $390,000 in management fees in 2017. According to another unlinkable document, “Manulife Preferred Income Class Jul 28 2017 07:55:29 ET Audited annual financial statements – English PDF 1191 K”, the NAV of the fund was about $27.2-million as of April 30, 2017.

Sic transit gloria mundi! As shown on the MAPF Performance Review for March, 2018 the fund was not a terrible performer (provided the absorbed fund is forgotten!) but was nothing special, returning +3.29% annualized in the three years to March, 2018, compared to +4.45% for the BMO-CM “50” Preferred Share Index and +2.76% for TXPR.

Toronto Rock Lacrosse: Instant Playoff Ticket Contest!

Sunday, April 30th, 2017

I have one pair of Toronto Rock Lacrosse playoff tickets to give away!

The Toronto Rock won their last regular season game:

The Toronto Rock (9-9) defeated the Buffalo Bandits (6-12) by a score of 19-15 and got the help they needed on Saturday night as the Vancouver Stealth defeated the New England Black Wolves in OT, meaning the Rock will now host the Black Wolves on Saturday, May 6 at 7pm at Air Canada Centre.

So I have an excellent pair of tickets for Saturday’s East Division Semi-Final at Air Canada Centre on Saturday, May 6 at 7 p.m. If you want them, entry deadline is 4pm, Monday May 1, which will allow me to post the tickets to the lucky winner in time for the 5pm pick-up time at my local post office box. Simply eMail me with your address if you want the tickets … preference will be given to clients and those who will be taking a kid who plays lacrosse to the game, but anybody can win. Determining the winner is not a mechanical scoring process, but it’s not completely random either! Let me know if I may announce your name if you win.

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

There will be more tickets next year!

Toronto Rock Lacrosse Tickets: Update #4

Monday, March 13th, 2017

I have no more pairs of Toronto Rock Lacrosse tickets to give away!

The fifth lucky winner, who got the tickets for March 25 against the Vancouver Stealth, was Jeremy Tabarrok.

Giveaways this year were:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

There will be more tickets next year!

Toronto Rock Lacrosse Tickets: Update #3

Saturday, February 25th, 2017

I have one more pair of Toronto Rock Lacrosse tickets to give away!

The games take place at the Air Canada Centre and the seats are very good. A decision regarding who gets tickets to the last home game (barring playoffs!) will be made on March 10. I will mail them to the lucky winner; while preference will be given to customers and those who tell me they’ve got a kid who plays lacrosse, anybody can win. If you win and don’t want your name publicized, that’s fine.

The third lucky winner, who got the tickets for March 3 against the New England Black Wolves, prefers to remain anonymous. The fourth winner, who will be attending the March 11 game against the Calgary Roughnecks, was Paul Bates.

The remaining ticket giveaway is:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

To try your luck at receiving a pair of tickets, just eMail me or comment on this post.

The next deadline is Friday, March 10 … if you want tickets to see the game against the Vancouver Stealth on March 25, contact me on or before that date!

Toronto Rock Lacrosse Tickets: Update #2

Saturday, February 4th, 2017

I have three more pairs of Toronto Rock Lacrosse tickets to give away!

The games take place at the Air Canada Centre and the seats are very good. Just tell me which ones you would like. A decision regarding who gets tickets will be made two weeks before each game and I will mail them to the lucky winner; while preference will be given to customers and those who tell me they’ve got a kid who plays lacrosse, anybody can win. If you win and don’t want your name publicized, that’s fine.

The second lucky winner was Fed Sanchez, who got the tickets for the Rock’s 18-10 blowout over Buffalo.

The three remaining ticket giveaways are:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

To try your luck at receiving a pair of tickets, just eMail me or comment on this post.

The next deadline is Friday, February 17 … if you want tickets to see the game against the New England Black Wolves on Mar 3, contact me on or before that date!

Toronto Rock Lacrosse Tickets – Update #1

Monday, January 16th, 2017

I have four more pairs of Toronto Rock Lacrosse tickets to give away!

The games take place at the Air Canada Centre and the seats are very good. Just tell me which ones you would like. A decision regarding who gets tickets will be made two weeks before each game and I will mail them to the lucky winner; while preference will be given to customers and those who tell me they’ve got a kid who plays lacrosse, anybody can win. If you win and don’t want your name publicized, that’s fine.

The first lucky winner is Charles Chiu, who will shortly receive the tickets to the January 28 game against the Rochester Knighthawks.

The four remaining ticket giveaways are:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

To try your luck at receiving a pair of tickets, just eMail me or comment on this post.

The next deadline is Friday, January 20 … if you want tickets to see the game against the Buffalo Bandits on February 3, contact me on or before that date!

FPSC Releases Projection Assumption Guidelines for 2016

Wednesday, July 13th, 2016

OK, so this doesn’t have much to do with preferred shares. But it is such a basic part of portfolio planning and so little known that I really should give it its own post. I mentioned last year’s version on May 25, 2015.

The Financial Planning Standards Council has announced:

and Institut québécois de planification financière (IQPF) have released updated unified Projection Assumption Guidelines for financial planners across Canada. Developed in 2015 by a committee of actuarial and financial planning professionals and updated annually, the Guidelines aid financial planners in making medium and long-term financial projections that are free from potential biases or predispositions.

The 2016 updates were completed with extensive feedback from financial planners across Canada and financial firms from across industry sectors. Based on feedback, additions incorporated into the 2016 Guidelines include:

  • •Rate of return assumption guidelines for foreign developed market equities (including U.S. market and EAFE market equities) and emerging market equities, as well as rate of return assumption guidelines for short-term investments, Canadian fixed income and Canadian equities
  • •Margins within which financial planners may deviate from the rate of return assumption guidelines, with explanation for how to apply the margins
  • •Additional explanations for the rate of return assumption guidelines referenced in footnotes, as well as in the body of the report
  • •Updated life expectancy information

The Projection Assumption Guidelines for 2016 are the following:

Inflation rate: 2.1%
Return rates
Short term: 3.0%
Fixed income: 4.0%
Canadian equities: 6.4%
Foreign developed market equities: 6.8%
Emerging market equities: 7.7%
YMPE or MPE growth rate 3.1%
Borrowing rate: 5.0%

To ensure full transparency and replicability, the Guidelines are drawn from four publicly available data sources: the Canada Pension Plan, Quebec Pension Plan, Willis Towers Watson portfolio managers’ survey, and historical data (based on the DEX 91-day T-bill index S&P/TSX, the DEX Universe Bond™ [Canadian bonds] index, the S&P/TSX [Canadian equities] index, the S&P 500 [U.S. equities] index, the MSCI EAFE [Europe, Australia, Far East] index and the MSCI Emerging Markets index).

“Updates to the Projection Assumption Guidelines ensure that financial planners are equipped with the current information to make financial projections,” says Joan Yudelson, FPSC Vice President of Professional Practice, “allowing them to project their clients’ progress toward meeting their life goals and provide appropriate financial planning advice to address any gaps.”

The 2016 Guidelines are in effect as of June 30, 2016. Full detail on the 2016 unified Projection Assumption Guidelines can be found here.

I must say, a nominal return of 4% for Fixed Income looks very optimistic, given that long Canadas yield 1.65% and long corporates are about 3.7%! The main document states that:

The Guidelines were set by combining assumptions from the following sources (each weighted at 25%):
  • assumption used in the most recent QPP actuarial analysis, weighted as follows: 50% of the medium-term assumption (2013 to 2022) and 50% of the long-term assumption (2023 and later)
  • assumption used in the most recent CPP actuarial report (2019 and later)
  • result of the Willis Towers Watson annual portfolio managers’ survey, weighted as follows: 50% of the medium-term projection (year to year) and 50% of the long-term projection (year to year)
  • historic returns over the 50 years ending the previous December 31st (adjusted for inflation) or dating back to inception of the index

The historical component is based on the DEX 91-day T-bill index S&P/TSX, the DEX Universe Bond™ (Canadian bonds) index, the S&P/TSX (Canadian equities) index, the S&P 500 (U.S. equities) index, the MSCI EAFE (Europe, Australia, Far East) index and the MSCI Emerging Markets index.

… and ….

The fixed income assumptions used in the most recent QPP and CPP actuarial reports have been adjusted to account for the opportunity of the QPP and CPP to buy and hold fixed income securities for significantly longer than the typical holding period of individuals. A margin of 0.75% is therefore deducted from the QPP and CPP actuarial assumptions to convert the long-term fixed income assumptions into a more relevant fixed income assumption for individual financial planning.

This does not fill my heart with comfort. Using historical returns as an input for fixed income projections is not an endeavor I would recommend to my friends (it can be justified with equities). Perhaps somebody would like to defend the 4% projection in the comments?

The actual document has material of further interest, including portfolio guidelines:

Portfolio return assumptions based on asset allocation
Investor profile: Conservative Balanced Aggressive
Short term: 5% 5% 5%
Fixed income: 70% 45% 20%
Canadian equities: 25% 40% 35%
Foreign developed market equities 0 10% 25%
Emerging market equities 0   15%
Gross return before fees 4.55% 5.19% 6.05%
Assumed fees 1.25% 1.25% 1.25%
Net return after fees 3.30% 3.94% 4.80%