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CEO leaving AIMCo in wake of investment losses – CBC.ca

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Kevin Uebelein, CEO of the Alberta Investment Management Corporation (AIMCo), is leaving the organization by the end of June, 2021.

Uebelein, who has held the top AIMCo post since 2014, has agreed with the board to “begin now the process of CEO leadership transfer,” AIMCo spokesperson Denes Nemeth said in an email Tuesday.

“AIMCo remains in very capable hands with Kevin continuing at the helm until that date and he has the full support of the board and management as he continues to advance the many priorities before us,” Nemeth wrote.

AIMCo, a provincial corporation, manages the investment of several provincial government funds, including the Heritage Savings Trust Fund. It also invests money in the pension funds of more than 300,000 Alberta public sector workers.

AIMCo has been under scrutiny since the spring, when investment managers lost more than $2 billion on a risky investment strategy. The losses prompted AIMCo’s board to order an external review, and the corporation pledged to improve.

Nemeth said AIMCo’s board is immediately starting an international search for a new CEO, and will consider candidates inside and outside the organization.

Uebelein hasn’t indicated his future plans, he said.

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Investment fees you don’t realize you’re paying – Sentinel & Enterprise

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When it comes to investing, there are some things you can’t control. However, the one thing all investors can control is how much they pay in fees.

Numerous studies and surveys over the years have consistently demonstrated that when it comes to investment fees, most investors are unaware of two things: how much they are paying, and how they are paying for it.

One of the biggest reasons most investors are unaware how much they are paying is due to the fact that the vast majority of financial advisers and all mutual-fund fees are automatically deducted from their accounts.

Financial adviser fees

One of the most common methods of compensation for fee-only and fee-based advisers is based on the number of assets they have under management. When it comes to being compensated for their services, more than 95% of financial advisers choose to have their management fees automatically deducted from their client’s accounts. The problem with this “out of sight, out of mind” compensation arrangement is that a financial adviser’s fees are reducing the returns of a portfolio you are paying your adviser to grow.

The industry average asset management fee is 1.1%. At Capital Wealth Management, our asset management fee is 0.5%; however, unlike most financial advisers, we never deduct our management fee from our client’s accounts. Every quarter we mail our clients a detailed invoice that allows them to write a check from a separate outside account, earning little to no interest for our asset-management services, thus keeping more money in their account to grow for retirement.

Mutual-fund fees

An additional fee that investor’s have is that associated with investing in mutual funds. Every mutual fund has fees and, similar to most financial advisers, all mutual funds automatically deduct their fees from their shareholders’ accounts. The average stock mutual fund has an expense ratio of about 1%. At Capital Wealth Management, approximately 75% of our clients’ assets are invested in index funds, which have an average expense ratio of 0.1%.

Both fees combined

Mutual-fund fees combined with any fees deducted from an account to pay for a financial adviser’s management fee can significantly reduce the rate of return an individual investor can earn over time. The average financial adviser’s fee of 1.1% and mutual-fund fees of 1% combine for a total pf 2.1% in annual fees deducted from an account.

At Capital Wealth Management, the total fees deducted from our clients’ accounts is 0.1%, for a difference of 2%. How much can this 2% difference in fees make?

Say two individuals each have the same starting portfolio value of $500,000, and earn the same average annual return (before fees) of 8% over 10 years. Portfolio A’s financial adviser and mutual-fund fees of 2.1% are automatically deducted from his account. Portfolio B chooses to pay his financial adviser’s feefrom a separate outside account rather than having it deducted from his account. As a result, the only fees deducted from Portfolio B are the mutual-funds fees of 0.1%. The results after 10 years:

Portfolio A’s total fees: $136,657; Portfolio B’s total fees: $7,201.

Portfolio A’s average return after fees: 5.7%; Portfolio B’s average return after fees: 7.8%.

Portfolio A’s ending value: $873,007; Portfolio B’s ending value: $1,068,721.

Portfolio B ends up with $195,714 more than Portfolio A. The $129,456 of savings in fees allows an additional $66,258 of earnings to compound. This additional 22% of savings is due entirely to Portfolio B’s lower fees.

The fact is that high fees reduce investment returns, and it’s important for all investors to understand what investment fees they’re paying, and how they are paying for them.

Martin Krikorian, is president of Capital Wealth Management, a “Fee-Only” registered investment adviser at 9 Billerica Road, Chelmsford. He is the author of the investment books, “10 Chapters to Having a Successful Investment Portfolio” and the “7 Steps to Becoming a Better Investor.” He can be reached at 978-244-9254, Capital Wealth Managements website; www.capitalwealthmngt.com, or via email at, info@capitalwealthmngt.com.

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Guggenheim Partners prepares to dip investment fund’s toes into Bitcoin – Cointelegraph

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An SEC filing on Friday indicates that the next Wall Street institution to take a public position in Bitcoin may also be among the largest yet: the $275 billion financial services firm Guggenheim Partners. 

The Guggenheim filing allows the Macro Opportunities fund to purchase GBTC, a publicly-traded Bitcoin investment vehicle from Grayscale, at an indeterminate point in the future. 

“The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”),” the filing reads.

According to independent ratings firm Morningstar, the Guggenheim Macro Opportunities fund currently has $5.3 billion in assets under management and sports a four-star rating “based on risk-adjusted returns out of 270 Nontraditional Bond funds.”

Guggenheim describes the overall fund strategy for the institutional-grade shares (ticker: GIOIX) as a product of the investment team’s “highest-conviction ideas.” If the fund were to take the full 10% stake in GBTC, it would be worth north of $500 million.

The filing also notes a long list of potential investor risks associated with cryptocurrencies, which it refers to as “digital assets designed to act as a medium of exchange.” Risks include lack of cryptocurrency exchange regulation, GBTC’s historical “significant premium” to net asset value, and uncertainty regarding tax laws and regulations, among others.

This preparatory move by Guggenheim appears to be part of a cascading series of investments indicating increased acceptance of Bitcoin among major financial institutions. In August, business intelligence firm Microstrategy purchased nearly 40,000 Bitcoin, leading to a parabolic move in share price. Likewise, financial services firm Square, Inc bought $50 million in Bitcoin in October.

This rolling snowball of institution interest may quickly become an avalanche, as noted by one prominent voice in crypto journalism: 

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This Is Where Healthcare Leaders Are Investing Their Money – Forbes

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2020 has certainly highlighted the value that a strong healthcare system can provide for a community. Moreover, due to the Covid-19 pandemic, healthcare systems and patients worldwide have turned to more creative solutions in order to deal with crises, deliver care when needed, and innovate as necessary.

Throughout this time, funding and investment in the healthcare industry has by no means slowed down. In fact, the need for innovation in a coronavirus pandemic-driven, socially isolated world has provided even more inspiration for investors to put their money into avenues which can provide viable solutions.

Famed consulting firm PricewaterhouseCoopers and CB Insights recently published a report highlighting the latest trends in venture capital funding for healthcare related industries. These key findings indicate where investors are focusing the majority of their time and efforts, and hence likely portray where the healthcare industry is moving.

Location

In terms of “dollars raised,” the report indicates that Silicon Valley, New England, North Central, San Diego, and the New York Metros are the top 5 regions for healthcare. In Q3 of 2020, Silicon Valley raised nearly $2.5 billion, with New England raising $1.9 billion. But this statistic is not entirely surprising, given the sheer amount of capital and technology talent that’s present in the Silicon Valley area. As some of the world’s largest technology companies are so heavily invested in healthcare, this makes sense. Furthermore, Silicon Valley has always been a “startup” hub, with executives easily transferring their talents from one firm to another, seeking to develop the next innovation. New England is no different, given that it is home to some of the largest pharmaceutical and biomedical innovation companies in the world.

Sectors

On a similar note, biotechnology is the leading subsector in healthcare investments. In Q3, investors poured nearly $3.9 billion into this subsector, marking an astounding 38% increase from Q2 2020, which raised $2.8 billion. The push for new innovation in biotechnology has never been more prevalent—ranging from new ways to develop and test treatments, to novel technological tools and interfaces for healthcare. The second heaviest area of investment was medical devices and equipment, with nearly $892 million raised.

Deals

The largest healthcare deals in Q3 2020 were the following:

a.    Bright Health—Value of Deal: $500 Million

b.    Tizona Therapeutics—Value of Deal: $300 Million

c.    Village MD—Value of Deal: $275 Million

d.    Freenome—Value of Deal: $270 Million

e.    Thrive Earlier Detection—Value of Deal: $257 Million

f.     Recursion Pharmaceuticals—Value of Deal: $239 Million

g.    Instil Bio—Value of Deal: $170 Million

h.    Kronos Bio—Value of Deal: $148 Million

The last three of these, Recursion Pharmaceuticals, Instil Bio, and Kronos Bio are all listed as biotechnology companies, yet again driving the point that biotechnology leads the healthcare investments realm.

Overall, this report provides a very pragmatic yet illuminating picture of where investors are placing their money and time. Indeed, 2020 has truly ignited a fire in many to continue to innovate to solve some of healthcare’s toughest challenges. However, given the cyclical nature of healthcare, and the fact that new technology continues to drive forward medical innovation as quickly as it can get developed, these trends are by no means stagnant. Rather, as with any legitimate industry that fosters growth, healthcare will inevitably continue to undergo dynamic transformation in the coming decades.

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