Managed Money Reporter Newsletter — Issue 190, December 2002

Editors: Carl Spiess & Allan McGlade

Featured Articles

Season's Greetings 

To our many clients and subscribers, we would like to thank you for the opportunity to serve you over the last twelve months.  We wish you and your family all the best for the coming year.  In lieu of physical holiday cards this year, a significant contribution was made to the United Way from your investment team at ScotiaMcLeod.  Do visit our recommended Site of the Month to learn more about Scotia's involvement in our communities.

There is some encouraging market news as we head into the holidays.  According to Morningstar, in November, 95% of funds increased in value, even those in the embattled technology sector.  Hopefully, December will continue the trend.  Please accept our warm regards for the holidays.

Annual Labour Funds Report

Once the holidays are over, we as Canadians will be right into the thick of RRSP season again.

While advertising and hype will likely be down from recent years' levels, the fact remains that the RRSP will still be the best place for Canadians to get a tax break.  

And the second best place to get tax savings?  Well, Labour Sponsored Investment Funds (LSIFs) will again be worth considering.

The major labour funds from companies like Vengrowth are still there and the longest running fund Working Ventures is now being run by Growthworks, managers of the Working Opportunities funds.  Sector specific funds like E2 that specialize in areas like alternative energy are attracting interest, as are new funds run by experienced teams like the Lawrence Enterprise Fund.  Finally, two balanced funds will be available that promise a tax break today and full repayment of your capital 12 years later.

We have updated our special LSIF information section with several key articles.

Please contact us to determine if LSIFs are right for you this year, and for recommendations on specific funds.

Bond Quiz: Rates Fall, My Bond Fund's Value Will...

In both Canada and the US recently, a majority of investors failed to correctly answer quiz questions about basic investment topics.  One of the questions that tripped up many people had to do with interest rates.  In case you are asked the question in the near future, please note that there is an inverse relationship between interest rates and bond prices.

For example, if rates fall further, bond prices or a bond fund's value will increase.  For a quick example on how stripped bonds fare in rising or dropping interest rate environments, please see our Stripped Bond Market Value Example, part of our Bonds Page in our Investor Learning Centre.  (Note, Canada Savings bonds are a simpler kind of bond, and have a fixed rate, and do not fluctuate in value.)  At this time, rates of over 6% are available on longer term government bonds.

Recommended Reading - The Sterling Report

This month, we suggest you read CI Fund's Sterling Report.  Bill Sterling, who manages the CI Global Fund, writes about Iraq, Oil and the Economy in his 2003 outlook.  The views are very American in nature, but answer questions we are often asked about the future and the looming war in particular.  

Like any outlook for the future, he admits that they will not be 100% accurate.  He does make a good point in a quote though that "It is far better to foresee even without certainty than not to foresee at all." The document is also available as .pdf file.

News - RRSP Limits Rising?

The Investment Funds Institute reports that the House of Commons Finance Committee in their pre-budget report in November 2002 is looking at raising RRSP limits to $19,000.  Please view the full IFIC report here, and stay tuned for details should this good news indeed come to pass.

Staff Profile - Carl Spiess, Director

Over the last year, we have profiled several of our team in an effort to provide a more personal face to the names on your statements.

As a Director of ScotiaMcLeod, the editor of the Mutual Fund Reporter for the last 12 years, and the first name on your monthly statements, you likely know a great deal about Carl's opinions on the market.  Here is a bit more about him personally.

Carl graduated from System's Engineering in 1989 and earned his MBA in 1990.  For the last 9 years he has been a member of the firm's chairman's council, which recognizes the top 5% of ScotiaMcLeod advisors.  Carl was one of the first members of ScotiaMcLeod's private client advisory board, which works to promote client interests at the firm.

Carl is responsible for overall asset allocation and investment direction on client accounts.  His team of 9 are always available to help answer questions and meet with you regarding your account.

Carl is married to a fellow engineer and has 3 children.  Carl has been involved with several not-for-profit organizations over the last decade.  Recently, Scotiabank chose to highlight his volunteer efforts with one, the Georgian Bay Land Trust.  (see recommended site link, below).

For more information about Carl and the rest of your team, please visit the About Us section of the website.

Mutual Fund Reporter Recommended Website of the Month 

Scotiabank has always prided itself in its community involvement.  The Bank's website has a special section on its efforts to promote volunteerism.

Recently, the Bank of Nova Scotia chose to profile Mutual Fund Reporter editor Carl Spiess' contributions to land conservation in Ontario, along with the efforts of 11 other Scotiabank volunteers across Canada.  View the Link outlining Carl's charitable efforts here. 

It is a pleasure to work for an organization that, while still being highly financially responsible, recognizes the importance of community involvement and volunteerism.  All the best for you and your community for 2003.


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