I NVEST WITH
CONFIDENCE.
ASSUMPTION LIFE
I S S U E 1 0 , V O L U M E 1 - 4 th Q u a r t e r 2 0 07
Economic
Indicators
THIS MONTH...
Page 1
• Economic Indicators
• Financial Markets
Bonds, on the other hand,
had a very strong month and are
Page 2
now back into positive territory as
• Investment Funds’
the crisis increased expectations
Performance
of lower interest rates. The U.S.
Federal Reserve did hold the
Page 3
• Financial Planning
Fed funds rate in check at their
& You
August 4th meeting, citing
inflation as their primary concern.
Page 4
However, on August 17th,
• Announcing New
Investment Funds
after most liquidity indicators
• Market Index
showed a considerable amount
Performance Chart
of stress in the system, the
Fed lowered another key rate,
the discount rate, in order to provide some much needed relief
to credit markets.
Financial Markets
August saw the subprime crisis continue to spread to other credit
and equity markets creating a high level of risk aversion in global
financial markets. Needless to say, it was a difficult period for
equities even with a significant rebound in the latter part of the
month. Despite the decline in August, the S&P/TSX still remains
in positive territory for the year, outperforming both U.S. and
EAFE markets.
UPDATES
Assumption Life is expanding its family with
12 new funds. (see last page)
The Fund Managers now believe the Fed may have to ease the
Fed funds rate by as much as 75 basis points while The Bank
of Canada should stay on hold for the rest of the year.
Even though U.S. GDP growth may now decelerate, as low
as 1% for a short period of time, we still do not believe the
housing/sub-prime issue will trigger a recession. Most likely the
Fed will respond with lower rates to offset the tightening that
occurred due to the liquidity crisis. Clearly, the Fed does not
want a recession at this stage of the business cycle given that
the U.S. economy is operating below potential, inflation is
falling, and the housing market is weak. They strongly believe
that Congress, the Fed, and other world central banks, will bring
confidence back into the credit markets in the near future.
There were no changes to asset mix in July with our balanced
portfolios remaining overweight in equities. Our short term
view has changed somewhat in that we anticipate increased
volatility. The Fund Managers expect it will take several months
for the impact of the liquidity crisis to clear but markets should
at some point start to focus on recovery after digesting all of
the negative news. Over the mid to long term, they still view
equity markets as attractive; earnings are rising while inflation
is generally well contained and should keep falling with
recent events.
All major equity Markets decreased in value during the month
of August except the SCM Universe Bond Index that indicates
0.1%. The S&P/TSX -0.1%, the S&P 500 -2.9% and the MSCI
EAFE had a return of -1.3%.
ASSUMPTION LIFE
I S S U E 1 0 , V O L U M E 1 - 4 th Q u a r t e r 2 0 07
Investment Funds’ Performance as of August 31, 2007
1 Month %
Funds Name
ASSUMPTION LIFE FUNDS
0.83
Assumption Balanced Fund - A
0.72
Assumption Balanced Fund - B
0.74
Assumption Balanced Fund - C
2.37
Canadian Equity Fund - A
2.26
Canadian Equity Fund - B
2.28
Canadian Equity Fund - C
-1.53
U.S. Equity Fund - A
-1.65
U.S. Equity Fund - B
-1.63
U.S. Equity Fund - C
CI FUNDS
Canadian Bond Fund - A
1.38
Canadian Bond Fund - B
1.36
Canadian Bond Fund - C
Global Balanced Corporate Class Fund - A
Global Balanced Corporate Class Fund - B
Global Balanced Corporate Class Fund - C
Global Managers® Corporate Class Fund - A
Global Managers® Corporate Class Fund - B
Global Managers® Corporate Class Fund - C
Harbour Growth & Income Fund - A
Harbour Growth & Income Fund - B
Harbour Growth & Income Fund - C
Synergy American Fund - A
Synergy American Fund - B
Synergy American Fund - C
FIDELITY FUNDS
Canadian Opportunities Fund - A
Canadian Opportunities Fund - B
Canadian Opportunities Fund - C
European Fund - A
European Fund - B
European Fund - C
Focus Health Care Fund - A
Focus Health Care Fund - B
Focus Health Care Fund - C
Focus Technology Fund - A
Focus Technology Fund - B
Focus Technology Fund - C
Overseas Fund - A
Overseas Fund - B
Overseas Fund - C
True North® Fund - A
True North® Fund - B
True North® Fund - C
MONTRUSCO BOLTON FUNDS
Canadian Equity + Fund - A
Canadian Equity + Fund - B
Canadian Equity + Fund - C
Can. Small Cap. Equity Fund - A
Can. Small Cap. Equity Fund - B
Can. Small Cap. Equity Fund - C
E.A.F.E. Equity Fund - A
E.A.F.E. Equity Fund - B
E.A.F.E. Equity Fund - C
Fixed Income Fund - A
Fixed Income Fund - B
Fixed Income Fund - C
Global Equity Fund - A
Global Equity Fund - B
Global Equity Fund - C
T-Max Fund - A
T-Max Fund - B
T-Max Fund - C
TSX 100 Momentum Fund - A
TSX 100 Momentum Fund - B
TSX 100 Momentum Fund - C
3 Months %
YTD %
1 Year %
3 Years %
5 Years %
Inception
-1.30
-1.76
-1.71
-2.05
-2.36
-2.31
-1.49
-1.83
-1.78
-0.55
-1.56
-1.42
1.68
0.81
0.96
-4.21
-5.09
-4.95
4.83
3.30
3.53
9.88
8.49
8.72
9.94
8.43
8.66
7.14
5.67
5.90
15.15
13.69
13.93
2.88
1.46
1.68
6.73
5.39
5.61
12.72
11.41
11.65
-0.30
-1.19
-0.98
5.40
3.58
3.81
10.24
8.48
8.67
-3.96
-5.42
-5.22
-0.02
-0.09
-0.87
-1.04
-0.16
-0.43
2.28
2.01
2.85
2.57
3.01
2.67
1.38
-0.48
-0.59
-0.57
-0.89
-1.00
-0.98
1.83
1.73
1.75
0.05
-0.06
-0.04
-0.03
-3.46
-3.77
-3.72
-4.66
-4.97
-4.92
-2.44
-2.72
-2.67
-4.57
-4.87
-4.82
-0.90
-5.88
-6.67
-6.54
-5.32
-6.13
-5.99
2.11
1.32
1.47
-3.51
-4.32
-4.19
-0.21
7.48
6.12
6.34
8.31
6.94
7.17
8.28
7.03
7.25
11.03
9.63
9.86
2.23
5.37
4.03
4.25
6.75
5.39
5.62
13.31
11.99
12.23
N/A
N/A
N/A
2.79
4.93
3.60
3.82
5.38
4.04
4.26
10.02
8.74
8.97
N/A
N/A
N/A
2.89
-3.65
-0.73
-0.52
-1.14
-0.85
-0.64
9.19
7.87
8.10
N/A
N/A
N/A
0.23
0.12
0.14
-0.23
-0.33
-0.32
0.56
0.44
0.46
0.90
0.79
0.80
1.73
1.62
1.64
1.77
1.67
1.68
-2.62
-2.93
-2.88
-2.97
-3.28
-3.23
-4.41
-4.73
-4.68
2.91
2.56
2.62
-3.31
-3.62
-3.57
-0.51
-0.83
-0.77
4.77
3.88
4.03
4.86
3.97
4.12
-5.92
-6.75
-6.62
0.21
-0.68
-0.54
-4.15
-4.96
-4.83
7.35
6.44
6.59
12.28
10.86
11.10
26.49
24.89
25.15
1.03
-0.30
-0.09
16.50
14.97
15.21
16.28
14.81
15.06
20.48
18.96
19.21
15.22
13.75
14.00
21.12
19.58
19.83
3.25
1.88
2.10
7.21
5.79
6.02
N/A
N/A
N/A
20.59
19.06
19.31
14.67
13.21
13.45
12.12
10.70
10.93
0.63
-0.71
-0.49
6.84
5.42
5.65
N/A
N/A
N/A
16.12
14.64
14.88
10.28
10.84
11.07
4.89
3.28
3.52
-3.27
-4.38
-4.17
-9.00
-5.92
-5.72
14.79
13.34
8.18
9.13
10.26
10.50
2.37
2.23
2.25
2.07
1.95
1.97
-0.62
-0.74
-0.72
1.31
1.31
1.33
-1.08
-1.19
-1.18
0.27
0.20
0.21
3.86
3.72
3.74
-2.04
-2.42
-2.37
-2.92
-3.25
-3.19
-5.87
-6.20
-6.15
-0.10
-0.09
-0.03
-4.77
-5.10
-5.05
0.66
0.56
0.61
6.07
5.66
5.71
1.19
0.15
0.30
5.55
4.62
4.77
-8.57
-9.41
-9.28
-1.30
-1.26
-1.12
-7.71
-8.56
-8.43
1.75
1.28
1.40
17.45
16.25
16.41
9.40
7.73
7.96
14.39
12.88
13.12
3.23
1.81
2.03
-0.75
-0.70
-0.49
4.45
3.02
3.23
2.66
2.23
2.44
34.17
32.12
32.40
15.75
13.98
14.22
20.59
19.00
19.25
4.37
2.94
3.16
1.96
1.73
1.94
3.83
2.40
2.62
1.85
1.38
1.58
34.54
32.48
32.76
15.23
13.62
13.87
19.21
17.64
17.89
3.64
2.27
2.49
2.99
2.87
3.09
2.05
0.94
1.16
1.65
1.18
1.38
24.69
22.71
22.97
9.98
12.06
12.30
13.76
16.19
16.43
2.30
-1.35
-1.14
4.49
3.17
3.39
-0.43
-2.90
-2.69
2.14
1.09
1.29
15.93
17.84
18.09
A - No-load contract established prior to 2002
B - No-load contract established since 2002
C - Back-end load contract established since 2002
The information folder contains important information on the funds. Read it carefully and consult your investment representative before investing. Except for any guarantee applicable upon
death or maturity, any fraction of the premium or any amount allocated to a segregated fund is invested at the subscriber’s risk. Their value may increase or decrease according to market
fluctuations of fund assets. Information on performance reflects past returns and does not guarantee future returns.
I NVEST WITH
CONFIDENCE.
Financial planning & you.
Denis Losier,
President and CEO, Assumption Life
Private Equity:
The Investment
World’s Rising Star
If you’ve been reading the business
section of your newspaper over the last
year, you’ve probably noticed a recurring
subject: private equity. Recently there has
been a lot of talk about the possible sale
of BCE Inc., the largest telecommunications
company in Canada, to a group of private
equity firms. And in May, the news
that Chrysler, the third largest American
carmaker, had been sold to a U.S.-based
private equity group made headlines.
Although private equity has been
consistently evolving in the United States
over the past few decades,
Canada’s market is fairly new, with most
investors and fund managers entering
this asset class during the last
10 to 15 years. Today, with investment
amounts reaching new records—
$9.2 billion in 2005 in Canada and US
$110 billion in 2004 in the United
States1—private equity is considered
an alternative asset class for investors.
1
In general terms, private equity
represents investments in private
companies, typically in equity securities
issued by those companies. These types
of investments can be made at different
stages of the life cycle of the company.
Investments made at the development
stage are referred to as venture capital,
whereas the hot-off-the-presses deals
we hear about are usually buyouts of
companies that are already well
established in their industry and have
an interesting potential for return on
investment. If the company bought was
public, it becomes private and therefore
will no longer be listed on the stock
exchange, thus reducing the investment
options of equity mutual fund
managers and individual investors
with stock portfolios.
The advantages associated with private
equity are surely in great part responsible
for its rising popularity over the years.
When a company is listed on the stock
exchange, it incurs various business and
compliance costs. A private company
doesn’t have all those obligations.
It doesn’t have to meet analysts’
expectations on a quarterly basis or give
guidance, which can sometimes have
a negative impact on stock prices, so its
managers have more time and money to
focus on growth. That, in part, explains
the better return that has been seen over
many years in the private equity sector
compared to publicly traded stocks.
So why doesn’t everybody invest in
private equity funds? The main reason
is simply accessibility. Typically, to be
able to invest in a private equity fund,
the minimum investment required varies
from $5 million to $50 million and more.
That is why it is mostly institutional
investors who participate in these funds.
However, although individual investors
may not have such amounts available
for investment, they may be exposed
to private equity indirectly.
Kensington Capital Partners, http://kcpl.ca/private_equity/market_growth
The big pension plans have taken notice
of the potential of private equity and
have started to include this asset class in
their portfolios. The Canada Pension Plan
Investment Board, the Ontario Teachers
Pension Plan, the Caisse de dépôt et
placement du Québec, and the Ontario
Municipal Employees Retirement System
(OMERS) all have investments in private
equity funds that may benefit their
members. We are also starting to see
private equity firms that offer private
equity funds that are more accessible to
the retail market. One Canadian outfit
offers a fund with a minimum investment
requirement of $25,000, a far cry from
$5 million! Another way for individuals
to participate in the growth generated by
private equity firms is to buy their stock
on the stock market. Canada’s largest
private equity firm, Onex Corporation,
is listed on the Toronto Stock Exchange.
We have not seen the last of the
headlines about private equity firms
buying large corporations. With large
amounts of money already available
in private equity funds just waiting to
be invested, company buyouts will
continue. Just as real estate, private
equity is considered an alternative
asset class that investors should
explore to see if it fits in their overall
investment strategy.
Denis Losier is President and CEO of Assumption Life.
He prepared this article in collaboration with Marc André
Castonguay, marketing and financial planning specialist
with Assumption Life.
ASSUMPTION LIFE
I S S U E 1 0 , V O L U M E 1 - 4 th Q u a r t e r 2 0 07
Adding More Zest to Our Already
Spicy Selection of Funds.
At Assumption Life we’re spicing things up with 12 new funds for you! From international to small
cap funds, our diversified mix is what you need to complete your portfolio. AGF has been added
to our list of well-known fund managers, so now you can access even more of the best!
So, spice up your portfolio with the funds that suit your investment style!
Call your financial advisor today to learn more.
OUR 12 NEW FUNDS
• Assumption/Fidelity NorthStar® Fund
• Assumption/CI Synergy Global Corporate Class
• Assumption/Fidelity Monthly Income Fund
• Assumption/CI Global Small Companies
• Assumption/Fidelity Canadian Asset Allocation Fund
• Assumption/AGF Dividend Income Fund
• Assumption/Fidelity American Disciplined Equity® Fund
• Assumption/AGF US Value Class
• Assumption/CI Signature High Income
• Assumption/AGF Global Financial Services Class
• Assumption/CI American Value
• Assumption/AGF International Stock Class
MARKET INDEX PERFORMANCE as of August 31, 2007
Index
Dow Jones ($ CDN)
YTD
-2.84%
1 year
11.63%
3 years
1.75%
5 years
0.88%
10 years
2.92%
MSCI EAFE ($ CDN)
Nasdaq ($ CDN)
-2.29%
-2.55%
13.79%
13.50%
13.98%
4.26%
11.03%
6.00%
5.45%
2.21%
S&P 500 ($ CDN)
S&P/TSX
-5.79%
5.83%
7.71%
13.14%
2.31%
17.70%
1.75%
15.62%
2.23%
7.53%
Source - Globefund.com
Call us today. 1-800-455-7337