Managed Money Reporter Newsletter Editors: Carl Spiess & Allan McGlade

Issue 202 January 2004

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Featured Articles

• RRSP Special Issue
• Fund Assets Hit Record Levels
• 2004 Economic Outlook
• Privacy Policy
• Due Dilligence
• Fund News
• Recommended Site of the Month
   

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RRSP Special Issue

We are now well in to the busy RRSP season.  We have to admit, that the general tone of clients, fund managers, and the members of your Investment Team, is very much more positive than last year.   According to a November 2003 Gallup Poll, investor optimism is at its highest level in almost two years.  We are seeing large new contributions from people who may have taken an RRSP holiday over the last few years.

ScotiaMcLeod continues to offer the widest range of investment choices to clients:

• Mutual Funds
• Best Rate GICs, Bonds and Canada and Ontario Savings Bonds
• Individual Stocks and Income Trusts
• Managed Account Programs
• Labour Sponsored Funds

The current run up in markets, has rewarded equity investors nicely, but actually makes it harder for us to simply recommend more equities for clients.  The recent growth may have pushed you overweight in stocks.  Also, for many clients, being a year closer to retirement, means that we need to be more conservative.  We will be pleased to review your overall asset allocation, and provide a recommendation appropriate for your situation. Contact us for a review of your portfolio.

To make contributing a lump sum easy for you, please use the investment order form. Clients with ScotiaMcLeod online access, can also contribute online from their Scotiabank account.  Many clients will take advantage of a low interest RRSP loan at prime from Scotiabank.

Click here for a convenient guide to RRSPs, with a review of the various contribution rules and strategies. We look forward to helping you with your RRSP decisions this year.  

Fund Assets Hit Record Levels

While the press has made frequent mention of fund redemptions, The Investment Funds Institute of Canada (IFIC) numbers show a different picture (see chart).  Updated figures continue to show a positive trend in amounts invested in mutual funds.  The reality is that funds still provide the simplest way to get diversification and professional management, with convenient small investment amounts and services like Pre-Authorized Contributions.

Most clients have been contributing through the year taking advantage of Dollar Cost Averaging.  This meant that during the lows of March and April of last year, clients were buying low.  If you don't have payroll deduction or a systematic plan, we'd be pleased to help set up a regular plan for you to help for next year. Contact us for more information.

Recommended Reading - 2004 Economic Outlook

Warren Jestin's global outlook is now online, along with a broad range of other reports from the Scotia Economics group.  Of particular interest is the January 5th Special Report on Household Balance sheets, showing the increasing levels of personal debt, decreasing savings, yet increasing overall net worth of North America.

Privacy Policy

On January 1st, new regulations came into place to protect your privacy.  For some industries, this meant changes to how client information is stored.  At ScotiaMcLeod and Scotiabank, we have always been security conscious, and thus our existing tight privacy policies have been reaffirmed by the new rules.

Due Diligence

Fidelity - Bruce Johnstone

Bruce Johnstone, Senior Investment Strategist for Fidelity Investments, outlined his views on global market forces for first quarter of 2004, based on his 3 pillars in a conference call:

• Corporate earnings: Strong
  They are above expectations and likely to continue that way.
• Interest, inflation & liquidity: Potential problems
  Inflation is low but inflationary pressure is building. Rates may go up.
• Security valuations: Neutral
  The markets have done well recently but as a result, stocks are not cheap.

As always, diversification remains key in taking advantage of the benefits while minimizing the risks of market forces. 

CI - Bill Sterling & Kim Shannon

Bill Sterling, CI Global Fund, actually hedging 2/3 of the portfolio against further rise in the Cdn$, as that has recently hampered returns for most US and global funds.  That strategy helped to drive CI Global to a first quartile performance last year.

Kim Shannon, manager of CI Canadian Equity Fund and CI Investment Fund (the longest running fund in Canada) reinforced her value investment style.  She also outperformed last year, despite refusing to own Nortel due to its high price/earnings ratio.

Fund News

New Bissett Income Trust and Dividend Fund

For some time, the popular Bissett Income Fund has been closed to new investors.  However, Bissett has now introduced the Bissett Income Trust and Dividend Fund.  This fund invests in income trusts and dividend paying common shares, which gives you the benefits of both with a target asset mix of 60% income trusts and 40% dividend-paying equities.  Co-Lead Managers are the proven existing income and equity fund managers, Leslie Lundquist and Juliette John.  

So if you'd like to invest in income trusts but have concerns over the depth of the income trust market, you might want to consider this fund.  It allows the fund managers to be a little choosier about the income trusts in which they invest since they can also round out their portfolio with dividend paying equities.

Mutual Fund Reporter Recommended Website of the Month 

CCRA's TIPS Online is no longer available.  This service allowed investors to check their RRSP room online. This link offers some other ways to check your RRSP room, including their good touch tone phone service, but the simplest way to check your room is simply to look at your 2003 notice of assessment (attached to your income tax refund from April 2003).

http://www.cra-arc.gc.ca/eservices/tipsonline/menu-e.html