Over 800 people attended the Investment Funds Institute of Canada's annual conference last month. The creation of the new Mutual Fund Dealers Association dominated much of the discussion. But other topics were discussed.
u The Investment Funds Institute of Canada (IFIC) will not name a new chairman next month, as had been planned. Instead, IFIC's current chairman, Jacques Daoust will continue in that position until next year. Daoust, who is executive vice president of Laurentian Bank of Canada, was named to the IFIC position at a special meeting in June. His appointment followed the premature resignation of then-chairman Dax Sukraj, president of Toronto-based adviser, Keybase Financial. Sukraj resigned after questions arose about his company's assumption of Provident Financial Services' business after that company failed.
u Quebec has decided to retain control of its financial services industry through the creation of a single financial-services bureau, responsible for regulating the distribution of financial products and services.
Like the Mutual Fund Dealers Association (MFDA), the board's primary mandate will be to protect the interests of investors. The establishment of the board, approved in June by the Quebec Legislature, also is intended to foster the growth of Quebec's fund industry. At the end of June 1998, mutual fund assets in Quebec accounted for 13.5 percent of industry assets nationwide, according to an Ernst & Young study.
The proposed restructuring will simplify the regulatory system for financial services, said Jean St. Gelais, associate deputy minister in Quebec's Ministry of Finance. The new regulations are likely to take effect in the next 18 months, at about the same time the new MFDA begins operating.
u The fact that mutual funds with guaranteed returns, so-called segregated funds, and funds without guarantees are regulated differently is inhibiting the growth of segregated funds, industry officials say. Nevertheless, segregated funds are growing five to ten times faster than the mutual fund business, says Oliver Murray, vice president, distributor relations and administration with Trimark Investment Management Inc. And, there appears to be considerable potential for continued growth.
"With a total discretionary asset pool in Canada of about $1.4 trillion, and $420 billion of that invested in mutual funds, that leaves a whole whack of money invested in traditionally more guaranteed products than mutual funds," said Murray. Currently, there is almost $20 billion invested in segregated funds by retail investors. That is less than 10 percent of what is invested in mutual funds.
Murray identifies three main target groups for segregated funds: Older Canadians nearing retirement who want to guarantee their investments; risk-averse clients, including GenXers, who have had difficulty finding jobs; and small-business owners or directors of charitable organizations.
u The Investment Funds Institute of Canada is hoping to widen its scope beyond representing just mutual fund companies, says Jacques Daoust, the IFIC's chairman. Daoust says portfolio managers, pension funds, labor-sponsored investment funds, wrap accounts and segregated funds are all potential future IFIC members.
u IFIC's conference coincided with the launch of the group's redesigned website, www.ific.ca. The site is written in both English and French and has links to related websites of regulators and IFIC members. Previously, IFIC shared a site with the Canadian Institute of Financial Planning and was largely devoted to statistics.