NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
TORONTO, Oct. 13, 2020 (GLOBE NEWSWIRE) — Caldwell Investment Management Ltd. (the “Manager”), the manager of the Fund, is pleased to announce that the board of directors of the Manager has approved a proposal to change the investment objective of the Fund (the “Proposal”), subject to unitholder approval. If approved, the change is expected to provide the potential for improved long‐term performance.
The proposed new investment objective of the Fund is:
The fundamental investment objective of the Fund is to generate long-term capital appreciation by investing primarily in the equity securities of Canadian and international companies.
The unitholder vote on the proposed investment objective change will take place on or about November 16, 2020 at 10am (EST) by conference call hosted by the Manager. If approved by unitholders of the Fund, the investment objective change will take effect immediately. In connection with the proposed investment objective change, the Fund will also undergo a name change to Caldwell North American Fund.
Corresponding changes will be made to the investment strategies to reflect the new investment objective. As part of the investment strategy changes, the Fund intends to commence the use of repurchase transactions and reverse repurchase transactions. As a result of the investment objective change, the fund type will also change from a balanced fund to a North American equity fund. The Fund’s risk rating is not expected to change as a result of the investment objective change.
A management information circular (the “Circular”) describing the Proposal is being prepared and will be mailed to unitholders of record as of October 16, 2020. The Circular will be available on SEDAR at www.sedar.com and posted on the Manager’s website at https://caldwellinvestment.com/. All costs and expenses associated with the unitholder vote will be borne by the Manager.
The Manager believes that the Proposal should provide unitholders with several benefits. Specifically:
In the Manager’s view, the fixed income asset class historically was capable in generating favourable returns allowing portfolio managers to add value by shifting between asset classes. However, as the Manager expects yields to stay below 1% for the foreseeable future, the Manager believes the opportunity for the fixed income class to be strongly accretive to overall returns no longer exists. Therefore, in the Manager’s view, investors wishing to incorporate the fixed income asset class into the portfolio will find the direct purchase of such assets more economical.
The Manager believes that a focused equity strategy provides increased opportunity for improved long-term performance through broadened investment diversification opportunities and the ability to draw more assets to the strategy, thus increasing economies of scale for the Fund.
About Caldwell Investment Management Ltd.
Caldwell Investment Management Ltd. is a Toronto-based portfolio manager and investment fund manager that offers mutual fund and pooled fund products to Canadian investors.
For additional information, please contact: Richard Faiella, Senior Vice President, at 1-800-256-2441
Index Funds or Stocks: Which is the Better Investment? – The Motley Fool Canada
Published
38 mins ago
on
April 18, 2024
By
Canadian investors might come across a lot of arguments out there for or against index funds and stocks. When it comes to investing, some might believe clicking once and getting an entire index is the way to go. Others might believe that stocks provide far more growth.
So let’s settle it once and for all. Which is the better investment: index funds or stocks?
Case for Index funds
Index funds can be considered a great investment for a number of reasons. These funds typically track a broad market index, such as the S&P 500. By investing in them you gain exposure to a diverse range of assets within that index, and that helps to spread out your risk.
These funds also tend to have lower expense ratios compared to an actively managed fund. They merely passively track an index rather than a team of analysts constantly changing the fund’s mix of investments. This means lower expenses, and lower fees for investors.
Funds also tend to have more consistent returns compared to individual stocks, which can see significant fluctuations in value. You therefore may enjoy an overall market trending upwards over the long term. This long-term focus can then benefit investors from the power of compounding returns, growing wealth significantly over time.
Case for stocks
That doesn’t mean that stocks can’t be a great investment as well. Stocks have historically provided higher returns compared to other asset classes over the long run. When you invest in stocks, you’re buying ownership of stakes in a company. This ownership then entitles you to a share of the company’s profits through returns or dividends.
Investing in a diverse range of stocks can then help spread out risk. Whereas an index fund is making the choice for you, Canadian investors can choose the stocks they invest in, creating the perfect diversified portfolio for them.
What’s more, stocks are quite liquid. This means you can buy and sell them easily on the stock market, providing you with cash whenever you need it. What’s more, this can be helpful during periods of volatility in the economy, providing a hedge against inflation and the ability to sell to make up income.
In some jurisdictions as well, even if you lose out on stocks you can apply capital losses, reducing overall tax liability in the process. And while it can be challenging, capital gains can also allow you to even beat the market!
So which is best?
I’m sure some people won’t like this answer, but investing in both is definitely the best route to take. If you’re set in your ways, that can mean you’re losing out on the potential returns which you could achieve by investing in both of these investment strategies.
A great option that would provide diversification is to invest in strong Canadian companies, while also investing in diversified, global index funds. For instance, consider the Vanguard FTSE Global All Cap Ex Canada Index ETF Unit (TSX:VXC), which provides investors with a mix of global equities, all with different market caps. This provides you with a diversified range of investments that over time have seen immense growth.
This index does not invest in Canada, so you can then couple that with Canadian investments. Think of the most boring areas of the market, and these can provide the safest investments! For instance, we always need utilities. So investing in a company such as Hydro One (TSX:H) can provide long-term growth. What’s more, it’s a younger stock compared to its utility peers, providing a longer runway for growth. And with a 3.15% dividend yield, you can gain extra passive income as well.
Former Bay Street executive leads push to require firms to account for inflation in investment reports – The Globe and Mail
Published
4 hours ago
on
April 18, 2024
By
While the average Canadian is fixated on the price of gasoline and groceries, inflation may be quietly killing their investment returns.
Compounded across many years, even modest inflation can deal a powerful blow to a standard investment portfolio. And investors commonly underappreciate the threat.
But a legend of the Canadian investment banking industry is trying to change that.
Tony Fell, the former chief executive officer of RBC Dominion Securities, is campaigning to require the Canadian financial industry to account for inflation in how it reports investment returns.
“I think they will find this very hard to argue against,” he said in an interview. “It’s a matter of transparency and reporting integrity. But that doesn’t mean it will happen.”
Mr. Fell made his case in a recent letter to the Ontario Securities Commission, arguing that Canadian investors are being misled. He has not yet received a response from the regulator.
Canadians with an investment account receive a statement at least once a year detailing how their investments have performed. For the most part, rates of return are calculated on a nominal basis, meaning they have no inflation component factored in.
A real return, on the other hand, accounts for the hit to purchasing power from rising consumer prices.
These figures, Mr. Fell argues, would give investors a clearer picture of how much they have gained from a given investment.
And since Statistics Canada calculates inflation on a monthly basis, the investment industry would already have access to the data it needs to make the switch to real returns. It would be very little trouble and no extra cost, Mr. Fell said.
Still, he said he expects the investment industry will resist his proposal. “The mutual-fund lobby is so strong, and nobody wants to rock the boat too much.”
He points to the battle to inform Canadians of the investment fees they pay. For 30 years, investor advocates have been pushing for improvements to disclosure.
One major set of regulatory changes, which took effect in 2016, required financial companies to disclose how much clients paid for financial advice.
But the reforms left out one major component of mutual-fund fees. The cost of advice is there, but many investors still don’t see how much they pay in fund-management fees, which amount to billions of dollars paid by Canadians each year.
Total cost reporting, which should finally close the fee-disclosure gap, is set to come into effect in 2026. “It’s outrageous,” Mr. Fell said. “That should have been done years ago.”
So, it’s hard to imagine the industry warmly receiving his proposal, or the regulators enthusiastically pushing for its consideration.
The OSC said it agrees that retail investors need to be attuned to the effects of inflation, which is where investment advisers come in. “Professional advice requires an assessment of risk tolerance and risk appetite in order for an adviser to know their client, including the effect of the cost of living on achieving their financial objectives,” OSC spokesman Andy McNair-West said in an e-mail.
And yet, Mr. Fell said, the need exists for more formal reporting of inflation-adjusted performance.
Inflation often goes overlooked by the industry and investors alike. It can be seen in the celebration of stock indexes at all-time nominal highs, which wouldn’t look so great if inflation were factored in.
The inflationary extremes of the 1970s provide a stark illustration. In 1979, the S&P 500 index posted a total return of 18.5 per cent – a blockbuster year until you consider that inflation was 13.3 per cent.
That took the index’s real return down to a lacklustre 5.2 per cent.
More recently, investors in Canada and the United States piled into savings instruments promising 5-per-cent nominal rates of return. But the rate of inflation in Canada averaged 6.8 per cent in 2022, more than wiping out the return on things such as guaranteed investment certificates, in most cases.
“A lot of people don’t connect those dots,” said Dan Hallett, head of research at HighView Financial Group. “Over 10 years, even 2-per-cent inflation really eats away at purchasing power.”
He worries, however, that reporting after-inflation returns may confuse average investors, many of whom still fail to understand the basic investment fees they’re paying.
All the more reason to get Canadian investors thinking more about inflation, Mr. Fell argues.
“The impact of inflation on investing is sort of forgotten about,” he said. “The only way I can think of turning that around is to highlight it in investors’ statements.”
Benjamin Bergen: Why would anyone invest in Canada now? – National Post
Published
5 hours ago
on
April 18, 2024
By
Capital gains tax hike a sure way to repel the tech sector
Published Apr 18, 2024 • Last updated 23 minutes ago • 4 minute read
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If there’s an uncomfortable economic lesson of the past few years, it’s this: The vibes matter.
As much as economists point to data, the reality in politics and policy is that public expectations and perceptions are important too. And from a business perspective, the vibes of the 2024 federal budget are rancid.
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The budget document’s title is “Fairness For Every Generation” and in practice, what that meant was a “soak the rich” tax hike on capital gains.
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You can see how this looked like good politics. In her budget speech, Finance Minister Chrystia Freeland said that only 0.13 per cent of Canadians with an average annual income of $1.4 million will pay higher taxes — hardly a sympathetic lot, at a time when many Canadians are struggling to pay for food and housing.
The problem is that the proposed capital gains tax hike won’t only soak a handful of rich Canadians as advertised. In its current design, it broadly punishes individuals and families of small business owners, tech entrepreneurs, dentists and countless others who have often spent decades trying to build their businesses for a potential once-in-a-lifetime capital gains event. Together, our analysis suggests that those people represent closer to 20 per cent of Canadians.
This tax proposal simply amounts to a systemic tapping on the brakes on the investment in a productive and prosperous future, being made by innovative, hardworking Canadians. And it does so at the very time Canada needs them to accelerate their investing.
But among the innovators and business leaders I talk to in the Canadian tech sector, this week’s budget was a chilling shock. There is a sincere and widespread belief that if something does not change, the budget will do widespread and irreparable damage to Canada’s tech sector.
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That’s why more than 1,000 CEOs have signed a public letter to Prime Minister Trudeau and Deputy Prime Minister Freeland at ProsperityForEveryGeneration.ca, calling on the government to stop this tax hike. Innovators understand what’s at stake.
Firstly, we are at a moment when capital is harder to access than at any time in the past generation. Higher interest rates and economic uncertainty mean that many high-growth companies with innovative products struggle to secure growth capital on favourable terms.
South of the border, we’re seeing strong growth, driven by significant government investment through strong industrial policy, alongside significant growth in bleeding-edge artificial intelligence applications. The U.S. is an exciting place to invest right now.
And capital is highly mobile. If Canada is seen as an unfriendly place to invest, due to high taxes, investors will simply take their money elsewhere, and propel the growth of promising tech companies in other countries.
What’s more, highly skilled talent is more mobile than ever before, and among innovative high-growth companies, stock options — subject to capital gains tax — are a key form of compensation.
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We’re not talking purely about CEOs and tech founders here either. The dedicated early players of a promising tech startup earn their stock options with sweat equity. Their dedication, taking a risk in the prime of their career, is often the key ingredient for the success of future innovation champions.
Innovators are intimately aware of these concerns, because this isn’t the first time the Liberal government has tried to tax stock options. Nearly a decade ago, they promised to hike taxes on stock options in their 2015 campaign platform, and it took years of public advocacy from tech leaders to help the government understand the potential unintended damage that a reckless tax hike could do on the ability to attract and retain talent.
All along the way, we were assured by the government that they knew what they were doing, and there was nothing to worry about. In truth, after many frank conversations, they changed course.
In the days and weeks ahead, I’m expecting to hear the same kind of thing again. Already we’ve heard from government officials pointing to the “Canadian Entrepreneurs’ Incentive” carve-out, which will soften the blow of higher capital gains tax rates overall. The details of this carve-out are not yet fully clear, and it’s possible that the government will tinker with the thresholds to help mitigate the damage of a tax hike on capital gains.
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But the reality is that without a significant change in messaging, the danger to Canada’s economy is real.
Capital gains are taxed at a different rate because they are taxes on investment. Every investment comes with risk; you are not guaranteed to make a profit. The tax code takes this into account.
If the vibes are off, and the global perception of Canada is that we’re not a place where the investment risk is worth it, because the federal government is just going to tax you to death, then we simply won’t see capital or talent flow to Canada.
Innovation and entrepreneurship are about hope. You fundamentally need to be an optimist to risk it all, and invest yourself in growing a business. Right now, Canada’s federal government is not sending a hopeful vibe. And the vibes matter.
Benjamin Bergen is president, Council of Canadian Innovators.
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