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CANADA’S NEWS SOURCE FOR FINANCIAL PROFESSIONALS
JANUARY 2020
24 PAGES
DSC ban without Ontario? BY JAMES LANGTON
investor advocates got a
surprise gift late last year when the Canadian Securities Administrators (CSA) declared that it will make 2020 the year of the ban on deferred sales charge (DSC) mutual funds.
The CSA promises to intro- duce rule changes this year that will effectively eliminate DSCs by banning the payment of upfront commissions to dealers from fund companies — except in Ontario.
The regulator also plans to outlaw the practice of discount brokers receiving trailer fees,
> TURN TO ONTARIO / PAGE 6 TAXES
Corporate- class funds offer tax benefits
BY RUDY MEZZETTA
toronto-based Horizons ETFs Management (Canada) Inc. is helping Canadian individ- ual unitholders of ETFs make use of a special election under the Income Tax Act (ITA) that allows them to transfer their ETFs on a tax-deferred basis into Horizons’ corresponding new corporate- class fund. Horizons recently
> TURN TO HORIZONS / PAGE 6
REGULATION
INSIDE
NEWS
A NEW DECADE The investment industry is beginning the 2020s from a position of strength. PG. 1
NEW RULES The CSA’s plans for the new year include bans on both the sale of DSC funds and the collection of trailer fees by discount brokers. PG. 1
BONDS The process of returning to normal interest rates will be slow as yields on bank deposits have been cut. PG. 10
BYB: OUTLOOK 2020
THE YEAR TO COME Despite looming storm clouds, global financial fundamentals are sound. PG. 14
EXPANDING MARKET Will mutual fund dealers be able to sell ETFs in 2020? PG. 15
PLANNING Financial planning business models are evolving to include more collaboration with other professionals. PG. 16
NEW PRODUCT Liquid alts underperformed the index in their first year, but that was to be expected. PG. 18
GREEN ENOUGH? Any investment can call itself green. But what does green actually mean? PG. 20
FOCUS ON PRODUCTS
HOME SECTOR Some active portfolio managers of Canadian equity funds have achieved robust returns. PG. 21
INSIGHT
EDITORIAL Canadian regulators are finally taking action on issues raised in 2012. PG. 22
QUEBEC CITY Some politicians had left the scene only to make a comeback years later. PG. 22
NEWSMAKER
JAIME HOGGE
Gillian Riley, CEO of Tangerine Bank, is one of the few women to lead a bank in Canada. The Women’s Executive Network has called her “a force in the Canadian banking industry.” (See page 8.)
The industry’s top-line growth has continued steadily since 2014
BY JAMES LANGTON
at the dawn of a new dec-
ade, the Canadian investment industry is leaving behind a tumul- tuous period for the global econ- omy and financial markets. The industry enters the coming decade in a position of strength, and with greater focus on retail investors.
WWW.INVESTMENTEXECUTIVE.COM
According to the latest data from the Investment Industry Association of Canada (IIAC), investment industry combined operating profits topped $7 bil- lion for the 12 months ended Sept. 30, 2019, up by 40% from five years ago.
These record profits come on the heels of consistent revenue growth over the past decade. Total industry operating revenue is just shy of the $23-billion mark (for the year ended Sept. 30), up from less than $15 billion for the year ended Sept. 30, 2009.
In the immediate aftermath of
the global financial crisis of 2008- 09, industry revenue dipped, and it took several years to recover to pre-crisis levels. Since the indus- try regained that lost ground (in about 2014), top-line growth has continued steadily.
Against this backdrop of ris- ing revenue and profit gains, the Canadian investment industry also has experienced significant contraction over the past decade.
For example, in 2009, there were more than 200 investment dealers operating in Canada.
> TURN TO INDUSTRY / PAGE 4
INDUSTRY
A strong start to a new decade
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