Author of the article:
The Logic
Aleksandra Sagan
VANCOUVER — The chief executive of B.C.’s new $500-million strategic investment fund knows she has a tough job ahead of her. “It’s definitely going to be a bumpy road, and we’re not going to be able to please everybody,” Jill Earthy said in an interview this week with The Logic . “We recognize that—but we’re definitely going to do our best.”
InBC Investment Corporation, which Earthy leads, has a mandate that goes beyond just closing B.C.’s tech funding gap. Though it’s independent, the provincial government created it to pursue a “triple-bottom-line” approach that focuses not only on financial returns, but also on environmental, economic and social impact.
InBC CEO Jill Earthy predicts “a bumpy road” ahead as she helps lay out the strategic direction of the organization’s $500-million strategic investment fund. She expects to announce the incoming chief investment officer by the end of March with the first investment to be made by early fall.
That means Earthy, and the organization’s soon-to-be-appointed chief investment officer, have a lot to do—and with an eager local tech community already knocking on the door for funding, there’s clearly some urgency.
“I think we may not make everybody happy right out of the gates, right?” she said. “We’re not going to be able to provide funding to everybody who needs it.”
Legislated into existence last year by the province’s NDP government, InBC’s policies and programs must enhance public services and affordability, help with Indigenous reconciliation, tackle equity and anti-racism, fight climate change and strengthen the economy, according to the mandate letter Innovation Minister Ravi Kahlon sent to board chair Christine Bergeron last May .
Earthy—who started in her new role on Dec. 13 after holding the top post at WeBC, a non-profit that boosts women entrepreneurs in the province—knows InBC won’t be able to do it all at once.
The organization is close to announcing its chief investment officer, who will craft the fund’s investment policy and be responsible for investment decisions, starting to deploy capital as early as this summer, Earthy said. The search is down to the final candidates, with a decision likely by the end of March and the person in place before the end of May. They will immediately start working on an investment-policy statement, which will define how the fund decides where to put its money—though it will be an evolving document.
Earthy has worked with the existing team—so far InBC has a staff of six, including three seconded from their government roles—to get that document started, but the CIO will “put their own lens on” it. The document will further outline the organization’s triple-bottom-line approach, she said, and look at asset allocation, specifying where the fund will start investing.
“Are we going to start potentially looking at investing in funds first? Are we going to dive into direct investments out of the gate?” Earthy said, asking questions she acknowledged she couldn’t yet answer. As it goes, the fund may also look at other mechanisms, such as a loan program or debt product, to help fill the gaps in the ecosystem.
The organization has already been fielding calls from both companies and funds seeking investment. “I think that’s fantastic,” said Earthy. InBC’s staff is gathering information from them to share with the incoming CIO.
Earthy expects the team to choose an initial area of focus and suggested some areas where she thinks the fund can have an immediate impact. “There’s still a gap that exists between the seed [fundraising round] and Series A” in the province’s tech funding ecosystem, she said, which could be a “key opportunity for us to zero in on.”
She also said she wanted InBC to map the different sources of capital and support available to B.C. companies along each step of their growth trajectory to identify other gaps it can help fill with capital or partnerships. Earthy suggested it could partner with organizations such as Innovate BC, a Crown agency focused on growing the province’s tech sector, and provide funding once startups graduate out of the programs offered by those groups.
There’s also pressure to prove InBC’s model—one that hinges on being inclusive and funding a more diverse group of entrepreneurs than traditional programs—can work. “We have a lot to prove,” she said. “We want to demonstrate that an inclusive approach to capital can be very effective. You don’t have to compromise returns for impact.”
Once the investment policy is finalized, the CIO will look to hire an investment team of eight or nine people, and Earthy expects InBC’s team to grow from its current six to over 20 within the next 18 months.
As for “the question everyone’s asking”—when will the fund announce its first investment? In the interview, Earthy was cautiously optimistic, initially saying late summer, then hedging. “If it happens earlier, that’s a great thing. But, just to be realistic, I’d say early fall.”
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Currently sitting in sixth on Forbes’ Real-Time Billionaires List, Berkshire Hathaway co-founder, chairman and CEO Warren Buffett is a first-rate example of an investor who stuck to his core financial beliefs early in life to become not only a success but a once-in-a-lifetime inspiration to those who followed in his footsteps.
One of the most trusted investors for decades, the 93-year-old Buffett isn’t shy to pontificate on his investment philosophy, which is centered around value investing, buying stocks at less than their intrinsic value and holding them for the long term.
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He’s also quite vocal on investments he deems worthless. And one of those is Bitcoin.
Over the past decade, it’s been clear that the crypto craze isn’t something Buffett wants any part of. He described Bitcoin as “probably rat poison squared” back in 2018.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said in 2018. And his stance hasn’t wavered since. According to Benzinga, Buffett believes that cryptocurrencies aren’t a viable or valuable investment.
“Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” Buffett said at the Berkshire Hathaway annual shareholder meeting in 2022.
Although the Oracle of Omaha has his misgivings about the unpredictable investment, does that mean crypto is doomed as an investment? Not necessarily.
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Bitcoin bulls argue that while it’s not government-issued, cryptocurrency is as fungible, divisible, secure and portable as fiat currency and gold. Because they occupy a digital space, cryptocurrencies are decentralized, scarce and durable. They can last as long as they can be stored.
Crypto boosters continue to predict massive growth in the coin’s value. Earlier this year, SkyBridge Capital founder and former White House director of communications Anthony Scaramucci told reporters that Bitcoin could exceed $170,000 by mid-2025, and Ark Invest CEO Cathie Wood predicts Bitcoin will hit $1.48 million by 2030, according to Fortune.
“They really don’t understand the concept and the whole history of money,” Scaramucci said of crypto critics like Buffett on a recent episode of Jason Raznick’s “The Raz Report.” Because we place a value on “traditional” currency, it is essentially worthless compared with the transparent and trustworthy digital Bitcoin, Scaramucci said.
Currently trading around the $66,000 mark, Bitcoin is up nearly 50% in 2024. This means it’s massively outperforming most indexes this year, including the S&P 500, which is up about 6% in 2024.
Although Berkshire Hathaway has invested heavily in Bitcoin-related Brazilian fintech company Nu Holdings, which has its own cryptocurrency called Nucoin, it’s possible Buffett will never come around fully to crypto, despite its recent surge in value. It’s contrary to the reliable investment strategy that has served him very well for decades.
“The urge to participate in something where it looks like easy money is a human instinct which has been unleashed,” Buffett said. “People love the idea of getting rich quick, and I don’t blame them … It’s so human, and once unleashed you can’t put it back in the bottle.”
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This article originally appeared on GOBankingRates.com: Warren Buffett Predicts ‘Bad Ending’ for Bitcoin — Is It a Doomed Investment?
(Bloomberg) — Ping An Insurance (Group) Co.’s profit dropped 4.3% in the first quarter as stock-market declines and falling bond yields eroded investment returns.
Net income fell to 36.7 billion yuan ($5 billion) in the three months ended March 31, from 38.4 billion yuan a year earlier, the Shenzhen-based company said in a filing to the Hong Kong stock exchange Tuesday.
Operating profit, which strips out one-time items and short-term investment volatility, fell 3%.
China’s stock market rout at the start of the year and lower bond yields have weighed on insurers’ investment returns. They hurt profit even as more customers seek to buy savings products. Co-Chief Executive Officer Michael Guo said last month that profitability will recover after a 23% drop in net income last year.
“China’s macroeconomy gradually recovered in the first three months of 2024, but there were still challenges,” the company said in a statement, citing weak domestic demand. “In response to volatile capital markets and declining treasury yields, Ping An continued to pursue long-term returns through cycles via value investing.”
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Net investment yield of insurance funds dropped to 3%, the statement said, down from 3.1% a year earlier. Real estate investments fell to 4.2% of the 4.9 trillion yuan portfolio, from 4.6% the year earlier.
The CSI 300 Index slumped as much 7.3% this year through the start of February, before government intervention fueled a rally.
New business value, which gauges the profitability of new life policies sold, rose 21% in the first quarter. That followed a 36% jump last year as the company’s efforts to improve the productivity of life agents started to bear fruit. NBV per agent jumped 56% from a year earlier, the statement said.
Ping An shares rose 3% to HK$33.00 in Hong Kong trading on Tuesday, trimming the year’s loss to 6.7%.
(Updates with company comment in fifth paragraph, more details afterwards)
©2024 Bloomberg L.P.
Two brown Adirondack chairs on a wooden pier with a yellow canoe. Across the calm water is a brown cottage nestled among green trees. Canada flag is waving on a pole.flyzone/iStockPhoto / Getty Images
New rules for taxing capital gains mean quick decisions are required for cottages that families have owned for decades, and investment properties as well.
Until June 24, you can sell a second property or cottage and pay tax on just half your capital gain, however much it is. After that date, the recent federal budget proposes to increase the inclusion rate on capital gains greater than $250,000 to two-thirds. Capital gains of this size can easily be envisioned in the property market after the massive price gains of the past 10-plus years.
“From now until June, we might be seeing some hasty sales to bypass the increase in capital-gains tax for those people who have held a property for long enough to realize that gain above $250,000,” said Diana Mok, adjunct professor at the University of Western Ontario and an expert on real estate finance.
But maybe you don’t want to rush into anything. Historically, the capital-gains inclusion rate has many times been adjusted up and down. The rate went from half to two-thirds in the late 1980s and then up to three-quarters from 1990 to 1999. In 2000, it was chopped back to two-thirds and then again to 50 per cent.
The next opening for a change would be after the next federal election, which is expected by fall of 2025 unless the minority Liberal government falls earlier. People may want to hold on to secondary properties until after that election. “I think this is a huge reason that people will be focused on the Conservative Party,” said Lani Stern, broker and senior vice-president of sales at Sotheby’s International Realty Canada.
Mr. Stern said he’s advising clients to sell only if they already had plans to do so. The federal government’s budget documents suggest there’s an expectation of a bulge of capital gains-generated tax revenue in general this year as people try to get ahead of the higher inclusion rate.
A capital gain is the difference between the purchase price of a home, stock or other asset and the sale price. The inclusion rate is the portion of the gain that is taxable. Currently, the 50-per-cent inclusion rate on a $500,000 capital gain means a taxable gain of $250,000.
The taxable amount of a $500,000 gain under the new rules would be $291,750. That’s $125,000, or 50 per cent of $250,000, plus $166,750, which is 66.7 per cent of the other $250,000 portion of the $500,000 gain.
Your margin tax rate would determine how much tax you actually pay on these gains.
Draft legislation for the new capital-gains rules has yet to be issued. But John Oakey, vice-president of taxation at Chartered Professional Accountants of Canada, said he believes it will be possible for capital gains to be split on the sale of properties co-owned by spouses. Each spouse would be able to report up to $250,000 in capital gains at the 50-per-cent inclusion rate.
The higher inclusion rate was billed in the budget as a way of targeting high-net-worth individuals, but middle-class families could be caught up as well in selling family cottages bought decades ago at a fraction of their current value. A principal residence can still be sold tax-free, but the gain on a cottage or investment property is taxable.
“Whether/when to transfer cottages to the next generation is a perennial question for many Canadians,” Andrew Guilfoyle, partner at Chronicle Wealth, said by e-mail. “The time crunch could make this much more difficult to execute versus simply realizing capital gains in an investment account of public stocks, as there will be legal documents and valuations needed.”
Prof. Mok sees the impact of the higher capital-gains inclusion rate being felt more by long-term investors than those who are flipping properties. “I could hardly see even the hottest market in Canada, such as Toronto, gaining $250,000 within a year or two,” she said.
Longer-term real estate investors will adjust to the higher tax rate, Prof. Mok predicted. Her thinking on this is influenced by what happened in Toronto after the introduction of a municipal land-transfer tax in 2008. Some observers thought house prices would cool down or fall, but that never happened. Similarly, people will adjust to the new capital-gains tax rate.
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