Managed Money Reporter Newsletter Editors: Carl Spiess & Allan McGlade

Issue 206 May 2004

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Featured Articles

• Investment Process - Our Client Commitment
• Market Update
• Index Fund Update
• Fund News
• Staff Profile - Christopher Kelly
• Recommended Site of the Month
   

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Investment Process - Our Client Commitment 

For many years, myself (Carl Spiess) and your investment team has had a history and philosophy page, describing our investment process and style.

Recently, ScotiaMcLeod has documented an even more formalized process for all advisors to follow, and incorporated financial plans to an even greater degree. We feel this process fits well with and builds upon the existing investment process we have offered to you in the past. The process is an iterative one, where we continue to review and monitor goals. We help you achieve peace of mind by providing trusted advice and personalized solutions to meet your financial goals. We are committed to acting in your best interests, offering advice and service designed to exceed your expectations. Here are the pillars of our process (click on each link for more):

Outstanding Client Service
Providing superior service by putting your needs first.

Personalized Financial Solutions
Delivering proactive advice with an integrated approach.

Disciplined Investment Philosophy
A long-term approach to investing while managing risk.

Team of Experts
Assembling specialists to provide quality advice.

Our Advisory Process
Graphically, it looks like the chart on the right; A systematic, proven process that keeps your finances on track.

ScotiaMcLeod's website has more information, and the recent issue of ScotiaMcLeod Exchange (.pdf 200k) had a good summary and was included in all our clients March statements.

If this all seems a bit boring, consider the following quote:  "Investing should be dull. It shouldn't be exciting. Investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas"  Paul A. Samuelson, Nobel Laureate in economics from "The Lazy Person's Guide to Investing"

Next month, we will be discussing the process we use to pick funds for our recommended list.

Market Update - By Allan McGlade

The month of April saw the equity and bond markets give back some of the gains investors experienced over the past twelve months. Unfortunately May, so far, has not been kind to us either. The good news is we do not expect this trend to continue for much longer.

Our view is that the recent pullback in the Canadian and global equity markets is a short term correction. The TSX is down by roughly 10% in the past couple of months which is always disheartening. Keep in mind though, even after this correction, the TSX is still 30% higher than it was a year ago. We believe that the recent pullback is offering an excellent opportunity for investors who are on the sidelines to get invested.

For the first time in a long time, you may have noticed on your most recent statement that the market value of your bonds dropped. This is due to speculation that the US Federal Reserve will shortly begin to raise interest rates to cool the growing economy.  We expect that short term interest rates may continue to rise for the foreseeable future, and may drive up yields on longer bonds, which will impact the value of the bonds you hold. We are not overly concerned about this as government bonds, and strip bonds in particular, (see market value example) will eventually rise to their maturity value. So today's drop in value will always turn into tomorrow's gain. For new money, we are recommending a laddered approach with a heavier weighting into shorter terms and the remainder being invested in longer terms that match future cash flow needs.

As always, your particular situation and target asset allocation will guide our recommendations. Please give us a call at 1-800-387-9273 or email us if you would like a review.

Index Fund Update

In 2000, we added information to our site about the index funds we have available.  We then updated the information on Exchange Traded funds shortly after that.

We just updated our Index Fund page with the following paragraph:

Interestingly, while there are many proponents of index funds, there are also many who point out that the world would make no sense if absolutely everyone invested passively in index funds and there were no active investors.  The efficient market hypothesis suggests that security prices reflect all known information.  If that were so, no one could ever profit by buying one undervalued security and selling an overvalued one because the current prices already reflect complete and true value.  Essentially the efficient market hypothesis says that if you saw a $10 bill lying on the sidewalk, you wouldn't pick it up, since if it was really there, someone else would have picked it up already.  We believe that active managers can identify market opportunities and act on them.  In fact, the active investors buying and selling action actually creates the market in which index funds can then exist.

See our Index fund page for more information and the pros and cons of index funds for your portfolio.

Fund News

Bill Kanko Leaves Trimark (again)

Recently, Bill Kanko, manager of the Trimark Fund and Trimark Select Growth Fund has chosen to pursue other interests.  We are not recommending a change on the Trimark funds, as Kanko's move actually marks the second time that he has left the Trimark organization.  His history with Trimark began nearly 20 years ago, when he was a member of the Trimark Investment Management Inc. team between 1985 and 1994.  Kanko left Trimark in August 1994 to found his own Toronto-based firm, Bluewater Investment Management Inc.  and then Kanko rejoined Trimark in May 1999.  Most importantly, the Trimark Investment Management philosophy remained in tact during his absence, and we will monitor to ensure that it continues to under the new managers who will be replacing him.  Please click here for a recent Morningstar article about the changes.  We will be monitoring the funds and report to our clients if we feel a change is required in the future.   

Additionally, AIM recently merged 5 smaller funds into larger funds to help streamline their fund lineup.  See AIM/Trimark website for more information.

Ethical Funds Capping 3 Funds

The Ethical Funds Company announces that, effective April 22, 2004, the Ethical Global Growth Fund, Ethical US Special Equity Fund, and Ethical European Equity Fund will be closed to new purchasers. The funds will officially close June 28, 2004, see ethical funds link to find out more.

Elliott & Page Merging 5 Funds

Elliott & Page is scheduled to proceed with mergers involving five fund mandates on May 21, after receiving investor and regulatory approval earlier this month.  For details on the funds being merged, see this E&P Manulife website link:

Talvest Merges 6 Funds

Talvest's proposal to merge six Talvest funds was completed as scheduled on May 7, 2004 after receiving unitholder and regulatory approval. 

We are pleased when these kinds of fund mergers happen, as it can help with operating efficiencies, achieve higher economies of scale and ensures that the new larger funds get the best managers and most attention, all good news for investors.   

Staff Profile - Christopher Kelly

Christopher Kelly has been with ScotiaMcLeod since July 2000 and joined our team in January 2003.  He has quickly assumed a number of important roles, including client account administration, account transfer wizard, CCPC shares specialist and new issues administration.

Christopher graduated from Trent University with a Bachelor of Administrative Studies, and completed a Marketing Management Diploma from Humber College. He has successfully completed the Canadian Securities Course (CSC) and Conduct and Practices Exam (CPH). In his spare time, Christopher enjoys playing golf, softball and hockey.

Note, while Christopher is a newer member of your investment team, of the five Team members working for Carl Spiess in 1994 (see Issue #90 of this newsletter), four are still working together ten years later to help provide you with consistent and highly personalized service on your account.

Mutual Fund Reporter Recommended Website of the Month 

Fidelity recently introduced a separate website called "Getting good advice" http://www.gettingadvice.ca/   We think it reconfirms the benefits of working with a qualified advisor, and are pleased to answer any questions you have on your accounts and investments.