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Investment in renewable energy favoured over oil and gas, but regional differences persist, poll finds –



A majority of Canadians favour more investment in renewable energy such as wind, solar and hydrogen over oil and gas, with divisions evident based on political affiliations, location and age, according to a new poll.

The online survey conducted by the Angus Reid Institute found that 54 per cent of Canadians surveyed say investing in renewables should be the priority in Canada. Only 12 per cent said oil and gas investment should be the focus, while 34 per cent favoured investing in both equally.

“You do see a majority of Canadians really talking about wanting to trend in a direction of alternative energy sources,” said Shachi Kurl, president of the Angus Reid Institute.

“So wind, solar, hydrogen technology, but in many cases that tilt doesn’t totally exclude an awareness of and a desire to also continue investing — at least to some extent — in the exploration of and production of oil, gas and non-renewables.”

The vast majority of respondents across the country wanted to see more investment in solar (84 per cent) and wind (77 per cent) specifically, but regional differences were significant.

Beyond insight into the investment concerns of respondents, the poll also examined priority concerns when it came to the country’s energy policy.

Across Canada, 31 per cent of respondents said energy independence should be a top priority, followed by 27 per cent who stressed protecting the environment and 21 per cent who picked renewable energy.

Economic growth was cited by only 11 per cent of those polled as a top concern, tied with stability of supply.

Regional and political differences were stark in the findings. 

Different regions, different views

In Alberta, 46 per cent of respondents favoured investing in oil and gas and renewables equally, while 33 per cent would prefer to focus on renewables alone. Twenty-one per cent of Alberta respondents want the focus to be on oil and gas alone, second only to Saskatchewan at 28 per cent.

Fifty-three per cent of respondents in Ontario support investing only in renewables, while 34 per cent favour both renewables and oil and gas equally, and 13 per cent want the focus to be only on oil and gas.

A recent survey found that 46 per cent of respondents in Alberta favoured investing in oil and gas and renewables equally, while 33 per cent would prefer to focus on renewables alone. Twenty-one per cent of Alberta respondents want the focus to be on oil and gas alone. (Jason Franson/The Canadian Press)

Quebec has the highest support for investment only in renewables at 67 per cent.

Those regional differences also played out when it comes to priorities, with more respondents in the Prairie provinces citing energy independence as a top concern, while the rest of Canada all chose renewable energy as the top issue.

“This is the discussion and this is the tension or the push and pull between where the country is saying it wants to go and the extent to which some parts of the country may be a little bit more alive to the fact that, well, we can’t get there yet — or if we get there, there are going to be some trade-offs,” Kurl said. 

The political factor

The views of those who vote for the Conservative Party of Canada were found to be out of step with supporters of other parties.

Only 18 per cent of respondents who vote for the party said they would prioritize investing in renewables, with 53 per cent favouring equal investment in both oil and gas and renewables.

Climate-change activists and a few counter-protesters supporting the oil and gas industry gather for a march and rally with Swedish climate activist Greta Thunberg outside the Alberta Legislature in Edmonton in October 2019. (Dave Chidley/The Canadian Press)

For the Liberals, 71 per cent of supporters surveyed said they favour investment in renewables. That number was higher for the New Democratic Party (78 per cent) and the Green Party (86 per cent).

Conservative voters also overwhelmingly prioritized energy independence, while the other parties’ supporters were  heavily concerned about renewable energy and protecting the environment.

When it came to the age of respondents, the breakdown was fairly clear, with older Canadian respondents more in favour of oil and gas — or a mix of investments — versus a greater focus on renewables for those under 55.

The survey was conducted between June 2 and 7, weeks before a heat dome settled over Western Canada and shattered record temperatures across provinces. The heat wave also stressed energy infrastructure as power grids worked to keep up with demand.

The survey was conducted using a randomized sample of 4,948 Canadians who are members of the Angus Reid Forum.

Online surveys do not have a margin of error that can be accurately calculated. For comparison purposes only, a probability sample of this size would carry a margin of error of plus or minus two percentage points, 19 times out of 20.

WATCH | N.S. town aims to become Canada’s 1st net-zero emissions community:

Antigonish, N.S., wants to become Canada’s first net-zero emissions community. It already gets 84 per cent of its energy from renewable sources including wind and solar, which it plans on expanding. 1:58

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Goldman and DWS prepare bids for NN Investment Partners – Financial Times



Goldman Sachs Asset Management and Germany’s DWS are preparing bids for NN Group’s investment management arm as consolidation in the industry gathers pace.

The Dutch insurer said in April it was considering a sale of NN Investment Partners, which has €300bn in assets under management.

The deadline for final binding offers is Monday. GSAM, which has more than $2tn in assets under supervision, and Frankfurt-based DWS are still in the sale process and preparing bids, said people familiar with the situation.

The deal price is in the region of €1.4bn, one of the people said. NN Group, GSAM and DWS declined to comment.

UBS Asset Management, Janus Henderson and US insurer Prudential Financial are among those to have previously registered their interest. All three declined to comment.

Investment managers globally are embarking on mergers and acquisitions designed to shield profits from rising costs and falling fees, while seeking to tap into fast-growing markets such as passive investing, private assets and ESG, and open up new distribution channels.

“The competitive environment for traditional active asset managers has intensified and a smaller group of larger players are now dominating the institutional segment,” said Vincent Bounie, senior managing director at Fenchurch Advisory, a specialist investment bank for financial services.

“It has become complicated to grow and very difficult to have a profitable business, in particular if you have undifferentiated plain vanilla products.”

Asoka Woehrmann, chief executive of DWS, which is majority owned by Deutsche Bank, told shareholders at the €820bn group’s annual meeting last month that it wanted to be “an active player” in industry consolidation. It is seeking further scale to challenge rival Amundi for supremacy in Europe.

Meanwhile for insurance companies, a prolonged period of low interest rates and higher capital requirements under Solvency II rules is prompting groups to weigh up where they allocate their capital, Bounie said. “For many of them, subscale asset management divisions are no longer core activities and there will probably be more divestments.”

NN Group, which is based in The Hague, came under pressure last year from activist hedge fund Elliott Management to improve returns and streamline its operations. It said in April it was considering options including a merger, joint venture or a partial divestment of the division.

NN Investment Partners has about 950 employees. Of its €300bn in assets under management, two-thirds is managed on behalf of its insurance parent company with the remaining third run for external investors.

The division’s range of funds covers fixed income, equity, multi-asset and alternative investment strategies. It has a strong position in ESG investing, notably in areas such as green bonds, impact equity and sustainable equity.

Additional reporting by Ian Smith in London

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Condo Smarts: Existing buildings can be good investment – Times Colonist



Dear Tony: We are retiring this year and considering downsizing to a condo. We have started looking at both new and existing properties around Vancouver and Victoria, but we encounter challenges with both options.

New developments are often available only through presales and the time periods for completion would require us to sell, rent until the property is ready, and with few assurances of completion dates would require us to move twice with no guarantees how the properties would be managed or how fees would be structured for long term operations.

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Existing buildings are more attractive; however, we find most properties are sold within days of listing, and there appears to be more of a concern by realtors to keep strata fees low rather than looking at the age of the buildings and the long-term maintenance to protect owner investments.

Are there any standards or consumer rules we might consider following? As new buyers into a condo lifestyle we would like to avoid a sinking investment.

Karyn and Jerry W.

There are many existing buildings and communities that are an excellent investment. They are easily identified by reviewing the financial reports, investments, a depreciation report completed by a qualified consultant or reserve planner, and by reviewing the minutes of the strata corporation to identify how they address maintenance, planning and funding for the future.

While every building has different amenities, staffing and servicing requirements, an annual budget that identifies all the service contracts for maintenance and operations is a significant asset. An active use of the depreciation report to plan for future renewals and major maintenance components is a healthy indication of a well managed property.

Low strata fees are problematic for strata corporations as they often indicate a community dependent on special levies. Special levies require a 3/4 vote of owners at general meetings and many owners vote against a special levies generally due to affordability issues. The result of failed special levies is deferred repairs that will only rise in cost and damages, and the potential for court actions or CRT orders.

There is also a direct link between low strata fees, deferred maintenance and renewals, and higher risks for insurers. This results in higher insurance rates and deductibles for strata corporations.

Buyers should always request copies of depreciation reports, any engineering and environmental reports, minutes of annual meetings, the bylaws and rules of the property, copy of the strata insurance policy, and a Form B Information Certificate, which will also identify any courts actions or decisions against the strata corporation. Read all documents and discuss any issues with your realtor and lawyer. This should help separate the well managed buildings vs the buildings at risk.

New construction in some ways is easier to manage as the strata corporation is enabled to make the right decisions that will impact funding and future operations. Owners can have a direct effect on their investments by joining and supporting the newly formed strata council and making decisions that ensure a well funded and planned operations plan.

Strata fees for new properties often start low in the first year as there are service contracts included with the new construction that are included in the warranty period and some developers will entice buyers with low costs. Plan on an increase of fees once all units are occupied and the strata corporation is fully serviced for operations and maintenance.

This may be impacted by insurance costs, staffing, and consulting for warranty inspections, legal services and the management of warranty claims, the commissioning of a deprecation report, and operational requirements.

Every building, which consists of endless components, will have failures. The effective management and planning of those issues when they arise is the true test of a well managed property. Product failures and installations are often beyond anyone’s control; however, a well funded property will also be able to respond without a significant crisis for owners.

Tony Gioventu is executive director of the Condominium Home Owners Association.

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Investing inside a corporation: what you need to know – MoneySense



FPAC responds:

Congratulations on your successful retirement! At a stage when most people are focussed on decumulation, you’re asking about establishing an approach for long-term, tax-efficient investing inside your corporation. Let’s walk through these important considerations:

Investment decisions: robo-advisor or DIY—and ETFs or bank stocks?

A robo-advisor is a great choice for automated, tax-efficient and low-cost investing. A robo-advisor will be able to set you up with a portfolio of low-cost, widely diversified ETFs. Regular rebalancing, quarterly reporting and ease of use will make this option attractive if you are looking for a hands-off approach. Most of the leading robo-advisor platforms in Canada will help you set up a corporate account. 

If you’re comfortable being a little bit more hands-on, you might consider implementing a multi-ETF model portfolio. This approach will require you to open an account at a brokerage and do some regular investment maintenance, including allocating cash, reinvesting dividends and rebalancing

Alternatively, you could also consider implementing an asset-allocation ETF solution. These “all-in-one” ETFs are available in different stock/bond allocations to suit your risk preferences, and they are globally diversified. 

You mention tax-efficiency being important to you. Broad index-based ETFs track an underlying market index. The stocks and bonds in these indices do not change often, so there isn’t a lot of buying and selling of stocks—also known as “turnover”—happening inside of your ETFs. A portfolio with low turnover will not stir up a lot of unwanted capital gains in years that you don’t want to take money out of your accounts, and less turnover means less tax payable year-to-year, leaving more of your money working for you. All in all, tax efficiency is a huge benefit of an index fund ETF approach to investing, especially if you’re investing inside of a corporation. 

You also mentioned bank stocks as an alternative. I can understand the appeal of this approach, as buying stocks of Canada’s large financial institutions has proven to be an effective strategy over the past several years. Unfortunately, the past performance of any investment strategy does not tell us much about its performance in the future. And, in the case of bank stocks, your investment will be very concentrated on a single sector, in a single country. This approach to investing carries risks that can be easily diversified away by using broad, globally diversified index-based ETFs. (In fact, Nobel Prize laureate Harry Markowitz famously called diversification “the only free lunch in investing.”)

Understanding the ins and outs of corporate investing

Investing inside of a corporation can be complicated. A corporation is taxed differently than an individual in Canada. As individuals, we are taxed based on a progressive income tax system, meaning higher amounts of income are taxed at higher rates. In your case, if you are earning (or realizing) a lower income in retirement, your last dollar of income is likely taxed at a lower rate than it was while you were working. When you combine lower tax rates with other benefits that the tax system provides to seniors—such as pension income splitting and age credits—it is possible that you will not be taxed at the high end of the marginal tax table in retirement. 

Passive investment income generated inside a corporation, on the other hand, is taxed at a single flat rate of around 50% in Ontario, or close to the highest marginal tax rate. Passive income tax rates are so high because the Canada Revenue Agency (CRA) doesn’t want us to have an unfair tax advantage by investing our portfolios inside corporations.

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