Managed Money Reporter Newsletter — Issue 299, May/June 2017


Editors: Carl Spiess & Allan McGlade


Featured Articles



What is One Dollar Worth?

Carl Spiess

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA

This interesting piece from Natixis fund management asks the question "How much do you keep from various sources of income?". It varies greatly. You keep more of Return of Capital, Eligible Dividends or Capital Gains than Interest or Other regular income. And the more you earn, the higher your taxation goes on everything except Return of Capital.

We have several investment vehicles that work to generate return of capital which can help clients who are suffering from high marginal tax brackets while working or Old Age Security (OAS) clawback in retirement. If you've received your 2016 income taxes back now, please contact us for an investment taxation audit or a complete financial plan review.

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Home Trust GICs in the news

We are pleased to offer over 30 Guaranteed Investment Certificate (GIC) issuers to ensure we get the best rates for our clients who are looking for guaranteed investments. Recently, GIC issuer Home Trust was in the news.

Home Trust GICs are fully guaranteed to $100,000 per client account by Canada Deposit Insurance Corporation (CDIC). Many clients in short term Home Trust cashable GICs have redeemed and made other investments. Longer term GICs cannot be sold and we expect that clients who hold Home Trust (or any GICs) to be paid their full CDIC insured amounts upon maturity.

The last time a GIC issuer faced similar circumstances was in the mid-1990's. In fact prior to 1996, institutions faced difficulty quite regularly. CDIC's website has information.

Back then there was ultimately only a slight delay in clients receiving their principal and interest payments. But any uncertainty about your guaranteed investments is of course unnerving.

It is notable we are still able to offer new Home Trust GICs for investment and the rate they offer is 2.95% for a 5 year GIC — significantly higher than other issuers. For 20 years, it was common to assume all GICs were the same. Now for the first time in 2 decades, clients are interested in a review of the risk rating on each GIC issuer that we offer. We are pleased to provide rates and risk profiles for all 30 GIC issuers we have available and will work to ensure that no client exceeds the CIDC $100,000 limit per issuer.

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Fund news – Pimco – Clarington – Fidelity + Lower fees + More ETFs

Pimco Monthly Income

We added Pimco Monthly Income to our recommended list several years ago. The US version has also been growing, and is now the largest actively managed bond fund in the world.

20 Years of IA Clarington Canadian Small Cap

IA Clarington Canadian Small Cap, which is on our recommended list, just celebrated its 20th anniversary. Over its two decades, the fund has outperformed its benchmarks; the niche BMO Small Cap Index and also the broader S&P/TSX Composite Index. It has also done so with less volatility.

Fidelity Insights Fund

The Fidelity Insights Fund, managed by Will Danoff, that was launched to great fanfare in January has been performing well right out of the gate. See the pdfs, below, for our analysts view of the fund launch and Fidelity's point of view.

Lower Fund Fees

In the last 3 months, the following fund companies have introduced lower fee schedules on their funds: TD, RBC, Capital Group, Mackenzie, and Dynamic. Many of those funds are on our recommended list:

New ETF Choices

The following companies have recently introduced ETFs to their lineups: Mackenzie, AGF, Manulife (with Dimensional Fund Advisors). This continues to blur the line between the traditional view of mutual funds as active and expensive, and ETFs as passive and inexpensive as many of the new ETFs are in fact actively managed.

What this fund news means to you

The bottom line for our clients is that the tools we have available to build portfolios, (whether now lower cost funds or broader ranges of ETFs) will continue to grow and allow us to find performance and diversify. We will continue to research the newest investment options to provide the best recommendations for your situation. Please contact us if you would like more information.

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CSA Consultation paper on commissions

The Canadian Securities Administrators (CSA) have been considering introducing regulations to change how investments can be distributed in Canada. The Financial Planners Standards Council (FPSC) has provided a great set of comments for consideration. Allan, Andrew, David and I are FPSC members as we are Certified Financial Planners.

If you are interested in why there has been a steady shift to discussion of "fee based" accounts within the investment industry, this provides a good summary. It is interesting to note that well in advance of these proposed changes, our team now works with the majority of our clients on a "fee as a percentage of assets" basis. Please contact us if you have questions.

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Ontario Savings Bonds available until June 21st

Ontario Savings Bonds are available now as a safe guaranteed investment option. With the Canadian government announcing that Canada Savings Bonds will no longer be offered, we expect there may be a bit more interest in OSBs. But with rates at 1% for 3 years an 2.15% for 10 years GICs (see article above) will still likely be the more popular option.

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CASL express consent for emails

Under Canadian Anti-Spam Legislation (CASL), we have new limitations on how we can email you. You likely signed a CA160 form in the past or replied to an email from us recently giving us "express consent" to email you. If not, this may be the last email you receive from us which would make us sad.

If we don't currently have your consent, we will be trying to reach out personally to clients before June 30th to ensure we have the correct way to contact you. This script is part of that process:

Of course you can unsubscribe any time but if you want news and communication and don't hear from us electronically in the near future, these new CASL regulations may be the reason. If you think you may not have given your express consent for us to contact you, simply email us at spiessmcgladeteam@scotiawealth.com and we will send you the appropriate link to click to register your consent.

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Take Your Seat Canada – Photography Project

Recently the Scotia Contact Photography Festival, Scotia Photography Award and Hot Docs Festival wound up. Scotia Wealth Management is a lead sponsor of those great projects. Please visit our sponsorships page to find out more:

Scotia Wealth Management and the Spiess McGlade Team have been pleased to also participate in a smaller photography project called Take Your Seat Canada. This project, in conjunction with Canada 150 and the Trans Canada Trail, has commissioned 13 photos representing our country (one for each province and territory) and promotes the idea of getting out to live the life you intended.

Here is a photo of me "taking my seat" at the photography exhibit opening at Roy Thomson Hall on June 11th.

You can learn more about Take Your Seat at:

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Recommended Link of the Month

The Ontario Securities Commission runs a good website for consumers called Get Smarter About Money. They recently added an interesting blog post that talks about investor behavior and how it affects financial decisions. That post also links to a detailed paper on "Behavioural Insights: Key Concepts, Applications and Regulatory Considerations".

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T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

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