Every now and then I see a complaint about high fees in group RRSP accounts. For instance, the fees shown by Manulife for its programme …. well, let’s just say they are not institutional-type fees. There should definitely be something of an increment for group RRSPs, as there is bookkeeping and there will be services to the individuals concerned … but I, personally, would be enormously pissed off if I worked for a big company and my pension account was paying anything close to this.
In the States, Jerome Schlichter is doing something about it:
Mr. Schlichter’s firm, Schlichter Bogard & Denton LLP, has secured $334 million in settlements for clients since 2010. Two years ago, it won a case before the Supreme Court, which ruled that employers with 401(k) plans have an ongoing duty to monitor the investments they choose.
Mr. Schlichter, 68 years old, said retirement plans previously didn’t receive watchdog treatment from regulators or anyone else. “Nobody’s bonus depended on how the 401(k) plan was managed,” he said.
Last year, law firms filed more than 25 fee cases against 401(k)-type plans, according to Groom Law Group in Washington. That includes 14 from Mr. Schlichter’s firm against employers including elite universities. The complaints allege, in part, that the plans failed to bargain for lower fees.
Meanwhile, there is speculation that we may be headed for interesting times:
Broad financial conditions are as accommodative now as they were in early 2015, the point of maximum Fed stimulus, according to a closely watchedGoldman Sachs index, which measures the combined impact of movements in interest rates, stock prices and the value of the dollar.
…
“If we decide that we need to tighten financial conditions and we raise short-term interest rates and that doesn’t accomplish our objective, then we’re going to have to tighten short-term interest rates by more,” New York Fed President William Dudley told The Wall Street Journal last year.It is still too early to say whether officials will raise rates more aggressively than planned. Still, Harvard University economist Jeremy Stein, a former Fed governor, said because financial conditions are so loose after three rate increases, the Fed is less likely to back away from its plan to keep raising rates, even in the face of low inflation.
… and there was a moderately hawkish speech by Carolyn A. Wilkins, Senior Deputy Governor of the Bank of Canada:
In 2015 and 2016, the starkest effects of the drop in oil prices on GDP were in business investment. Firms in the oil and gas sector cut capital spending in half, shutting down oil rigs and cancelling investment plans. Investment in the rest of the economy was also subdued, in part as a result of the weakness in non-commodity exports, especially last year. The economy kept growing, thanks to household spending, and activity was concentrated in regions where the energy sector was not as important.
Today, as we move past the adjustment to lower oil prices, we are seeing the economy pick up. A couple of weeks ago we got the national accounts data from Statistics Canada for the first quarter of this year. It was pretty impressive, with growth at 3.7 per cent. And the figures show business investment growing again. This is in large part because capital expenditures in the oil and gas sector have bounced back.
…
We also see a broadening when it comes to growth across industries (Chart 4)
…
Jobs in goods-producing industries are now on the rise, and the share of sectors adding workers is growing.Some sectors stand out. The technology sector has been creating a lot of jobs, many of which are very well paid. Other sectors that have seen strong job growth include finance and insurance, health care and education.
As sources of growth become more diverse, gains in employment are spreading across the country (Chart 5).
…
Our judgment on the appropriate stance of monetary policy will continue to be based on the outlook for inflation and on the full range of risks—both upside and downside—to that outlook. An important aspect of our inflation assessment is that the economic drag from lower oil prices is now largely behind us. And the 50 basis point reduction in our policy rate in 2015 has facilitated this adjustment. As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required.
The speech has been tied to a rise in the loonie:
The Canadian dollar extended gains after Wilkins’s comments, appreciating 0.9 percent to C$1.3350 per U.S. dollar at 2:04 p.m. in Toronto, the steepest increase since March and the biggest advance among Group-of-10 peers on Monday. The gain helped turn the loonie’s year-to-date loss against the greenback into a gain.
As early as January, Governor Stephen Poloz had been talking about the possibility of another rate cut, after lowering the key rate twice in 2015 to 0.5 percent.
Swaps trading suggests investors are placing an 11 percent probability of a rate increase next month, and a 56 percent chance by the end of this year. On Friday, those probabilities were 5 percent and 30 percent. The central bank hasn’t raised interest rates since 2010.
The comments also sparked a sell-off in Canada’s federal government bonds, pushing the yield on two-year notes up seven basis points, the steepest rise since December, to an almost three-month high of 0.81 percent. The rate on five-year securities rose above 1 percent for the first time in three weeks.
The five-year ended the day at 1.05%, a sharp rise from Friday’s 0.96% – which may have been behind today’s preferred share market gain.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.7796 % | 2,145.7 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.7796 % | 3,937.2 |
| Floater | 3.66 % | 3.70 % | 78,527 | 17.98 | 3 | 0.7796 % | 2,269.0 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1651 % | 3,045.7 |
| SplitShare | 4.73 % | 4.28 % | 70,550 | 1.52 | 5 | -0.1651 % | 3,637.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1651 % | 2,837.9 |
| Perpetual-Premium | 5.27 % | 4.28 % | 71,332 | 0.09 | 25 | -0.0031 % | 2,798.1 |
| Perpetual-Discount | 5.06 % | 5.06 % | 97,598 | 15.31 | 12 | 0.1975 % | 3,014.9 |
| FixedReset | 4.48 % | 4.09 % | 196,577 | 6.53 | 95 | 0.5748 % | 2,313.0 |
| Deemed-Retractible | 4.97 % | 5.06 % | 118,565 | 6.25 | 30 | 0.1524 % | 2,907.4 |
| FloatingReset | 2.51 % | 3.00 % | 48,324 | 4.38 | 10 | -0.0607 % | 2,531.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| SLF.PR.J | FloatingReset | -2.87 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.91 Bid-YTW : 9.47 % |
| RY.PR.H | FixedReset | 1.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 21.13 Evaluated at bid price : 21.13 Bid-YTW : 3.93 % |
| MFC.PR.I | FixedReset | 1.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.50 Bid-YTW : 5.46 % |
| BIP.PR.A | FixedReset | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 22.73 Evaluated at bid price : 23.52 Bid-YTW : 4.76 % |
| MFC.PR.G | FixedReset | 1.08 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.30 Bid-YTW : 4.97 % |
| TD.PF.B | FixedReset | 1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 20.97 Evaluated at bid price : 20.97 Bid-YTW : 3.98 % |
| BAM.PF.H | FixedReset | 1.14 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.55 Bid-YTW : 3.45 % |
| MFC.PR.J | FixedReset | 1.15 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.05 Bid-YTW : 5.54 % |
| MFC.PR.F | FixedReset | 1.22 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.81 Bid-YTW : 9.04 % |
| TD.PF.E | FixedReset | 1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 22.52 Evaluated at bid price : 23.21 Bid-YTW : 4.10 % |
| BAM.PR.K | Floater | 1.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 12.96 Evaluated at bid price : 12.96 Bid-YTW : 3.69 % |
| SLF.PR.I | FixedReset | 1.26 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.58 Bid-YTW : 5.32 % |
| TRP.PR.D | FixedReset | 1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 20.71 Evaluated at bid price : 20.71 Bid-YTW : 4.16 % |
| BAM.PF.G | FixedReset | 1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 22.45 Evaluated at bid price : 23.03 Bid-YTW : 4.28 % |
| TD.PF.D | FixedReset | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 22.27 Evaluated at bid price : 22.75 Bid-YTW : 4.10 % |
| SLF.PR.H | FixedReset | 1.44 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.01 Bid-YTW : 7.07 % |
| BAM.PR.T | FixedReset | 1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 19.15 Evaluated at bid price : 19.15 Bid-YTW : 4.42 % |
| TRP.PR.E | FixedReset | 1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 21.07 Evaluated at bid price : 21.07 Bid-YTW : 4.12 % |
| CU.PR.I | FixedReset | 1.51 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-12-01 Maturity Price : 25.00 Evaluated at bid price : 26.27 Bid-YTW : 3.00 % |
| MFC.PR.N | FixedReset | 1.57 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.64 Bid-YTW : 6.41 % |
| MFC.PR.L | FixedReset | 1.63 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.01 Bid-YTW : 6.75 % |
| MFC.PR.M | FixedReset | 1.72 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.69 Bid-YTW : 6.44 % |
| MFC.PR.K | FixedReset | 1.77 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.16 Bid-YTW : 6.57 % |
| CU.PR.C | FixedReset | 1.87 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 21.24 Evaluated at bid price : 21.24 Bid-YTW : 3.98 % |
| GWO.PR.N | FixedReset | 2.51 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.90 Bid-YTW : 8.88 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CM.PR.O | FixedReset | 197,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 21.11 Evaluated at bid price : 21.11 Bid-YTW : 4.02 % |
| CM.PR.R | FixedReset | 197,259 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 23.16 Evaluated at bid price : 25.01 Bid-YTW : 4.26 % |
| CU.PR.C | FixedReset | 176,700 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 21.24 Evaluated at bid price : 21.24 Bid-YTW : 3.98 % |
| SLF.PR.G | FixedReset | 153,100 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.00 Bid-YTW : 8.94 % |
| MFC.PR.R | FixedReset | 115,710 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-03-19 Maturity Price : 25.00 Evaluated at bid price : 25.66 Bid-YTW : 4.24 % |
| TD.PR.T | FloatingReset | 107,900 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.34 Bid-YTW : 2.80 % |
| TRP.PR.E | FixedReset | 107,700 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-06-12 Maturity Price : 21.07 Evaluated at bid price : 21.07 Bid-YTW : 4.12 % |
| There were 41 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| RY.PR.M | FixedReset | Quote: 21.97 – 22.29 Spot Rate : 0.3200 Average : 0.1978 YTW SCENARIO |
| W.PR.K | FixedReset | Quote: 26.10 – 26.48 Spot Rate : 0.3800 Average : 0.2653 YTW SCENARIO |
| TRP.PR.G | FixedReset | Quote: 22.87 – 23.23 Spot Rate : 0.3600 Average : 0.2555 YTW SCENARIO |
| BAM.PR.X | FixedReset | Quote: 16.01 – 16.34 Spot Rate : 0.3300 Average : 0.2305 YTW SCENARIO |
| TD.PR.Y | FixedReset | Quote: 25.00 – 25.23 Spot Rate : 0.2300 Average : 0.1422 YTW SCENARIO |
| BNS.PR.E | FixedReset | Quote: 26.97 – 27.17 Spot Rate : 0.2000 Average : 0.1148 YTW SCENARIO |