Managed Money Reporter Newsletter — Issue 132, January 1998 1998


Editors: Carl Spiess & Allan McGlade



Making This Year's RRSP Investments

By John Zufelt, Director

Market Outlook

Despite recent equity market volatility, stocks are favoured to offer the best returns in 1998. Diane Urquhart, ScotiaMcLeod's Head of Equity Research, believes the TSE 300 index could achieve a level of 7,600 by year-end or an increase of 22% from current levels. Long bonds at 6% still offer 5% real growth above inflation (currently .9%). Historically, this has indicated good value and we continue to offer guaranteed stripped bonds on the back page.

Guaranteed Growth Funds

New products now available to purchase for your ScotiaMcLeod RRSP accounts are G.I.F. Funds (Guaranteed Investment Funds). These are mutual funds that guarantee your principal amount invested. The holding period is ten years and you can lock in profits. You may also make your RRSP account creditor proof. Recently, these funds have added top named managers and fund companies such as Jerry Coleman (currently at Harbour Funds, formerly at Ivy Funds), AGF, Dynamic, Elliott & Page, Fidelity, GT Global, O'Donnell, Talvest, and Trimark. M.E.R.'s are slightly higher, but the guarantee is attractive. Call us for details or recommendations.

AIC Advantage Fund Reopens

AIC Advantage Fund is opening up for this RRSP season only! This top-performing fund has been closed since Sept. 30th 1996 much to the disappointment of many investors. We find the fund attractive with the recent drops in markets and drop in fund company share prices. Advantage Fund offers a lower M.E.R. than Advantage II.

AIC Advantage Returns
1yr.3yr.5yr.10yr.
43.3%46.1%35.1%21.9%

Past performance does not guarantee future performance. Also, this fund is a higher risk fund.

Bissett, Sceptre Now Available

The increasingly popular (but still lesser known) fund companies of Bissett & Sceptre are now available through us as well. Please call for information.

Recommended Funds

Here at the MFR group we analyze funds for both performance and risk. We favour funds that offer above average returns, lower risk and good long-term management. By way of example, Harbour Fund is recommended for growth investors even though it is a new fund. This is because of Jerry Coleman's past track record (at a different fund company) and the fact that his new fund is 33% in cash and able to buy new stocks as the market corrects.

We'd be happy to fax you a copy of our latest "Your Investment Options" which contains our current recommendations. As always, feel free to call (416-863-RRSP or 1-800-387-9273) or e-mail us for specific recommendations tailored to your portfolio.

Trimark Performance Scrutiny

Trimark has become the 2nd largest fund company in Canada. This past year many of their Canadian funds are suffering from holding a 5% position of Gold certificates. At this time, we would not be sellers of your Trimark holding, but like anything, you should diversify into different funds.

RRSP Loans at Prime

Again this year, we are pleased to offer Scotia-bank RRSP loans at prime rate. Act quickly!.


Attention RRSP Investors

Turn $109,994 into $425,000

Rates 100% Guaranteed by the Government

Coupon Value at Maturity Now you can eliminate all worries about the stock market or where interest rates are going by buying Government Coupons (Strip Bonds) which are ideal for RRSP's RRIFs and Pension Rollovers. These coupons come in maturities from 1 to 30 years. You buy them at a discount to their maturity value (much like a treasury bill.) In the above example, each coupon costs only $258.81 and matures August 6, 2020 at $1,000.00.

If your RRSP buys 425 coupons for $109,994.25 they are government guaranteed to mature at $425,000 with no need to worry about CDIC insurance! We have thousands of other coupons available to meet your individual needs. Some Examples are:

IssuerPrice
(Subject to Change)
Maturity ValueYield to MaturityMaturity Date
Ontario$812.73$1,0004.77%June 8, 2002
British Columbia$574.32$10005.41%June 9, 2008
Manitoba$406.18$10005.89%July 22, 2013
Ontario Hydro$258.81$10006.08%August 6, 2020

To demonstrate the effect of compounding, select various Strip Coupons that mature in different years:

Current Value of RSP/Current Price of CouponxValue of Coupon at Maturity=Your Retirement Nest Egg

Example from top of page: $109,994.25 divided by $258.81 times $1,000 equals $425,000.

FeaturesYou receive guaranteed reinvestment rate protection and compounding of your money. Unlike locked-in investments, Strip Coupons can be sold (subject to market conditions)before maturity.
SecurityBearer Coupons are a direct obligation of the Federal or Provincial Government and are free of credit risk regardless of quantity purchased (no $60,000 limit).
ActionCall us now for a quote on our best rates, tailored to exactly match your retirement and investment goals. This is a free, no-obligation quotation.

Do You Have a Non-Performing RRSP?

If you find yourself with a RRSP that you are dissatisfied with, it can easily be transferred to any of the best RRSP funds. If you would like further information on your current RRSP or a second opinion on improving its performance, please e-mail us or call us at 863-7777 or 1-800-387-9273.

 



Contact Us

T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

ScotiaMcLeod is a division of Scotia Capital Inc., member of CIPF.

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