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Showing posts from October, 2017

Does Canada Have All The Answers?

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On Thursday, The Brookings Institution will host an event in Washington, Fixing the U.S. retirement system – does Canada have the answers?:
In recent years, Canada has significantly expanded and improved its retirement income and pension system. The Canada Pension Plan (CPP), which provides Canadians with income security in the case of retirement or disability, has been expanded, and its defined benefit plans for government employees has managed to avoid many of the funding problems plaguing comparable U.S. plans. The country is also making advances in expanding coverage to moderate-and-lower income Canadians. But there’s still work to be done, particularly in improving efforts to target policies to low-to-moderate income workers.

How was Canada able to achieve this expansion, and is there anything in the Canadian experience that Americans can use to advance retirement system reforms in the United States? On November 2, the Retirement Security Project at Brookings will host an event …

Is Passive Investing Taking Over?

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Eric Platt of the Financial Times reports, Vanguard’s Jack Bogle predicts passive investing takeover:
Passive investing could eventually account for 90 per cent of the equity market, according to Jack Bogle, founder of Vanguard and pioneer of the index-based investing that has upended the asset management industry.

Passive investment of stocks through mutual or exchange traded funds that simply track an index — and charge investors much smaller fees — accounts for 47 per cent of the assets managed by the US fund industry, posing a severe challenge to active managers who take higher fees with the promise of beating the returns of major indices.

“As a long-term investment strategy, I don’t think the index fund has any competition at all,” Mr Bogle told an audience at the Ivy League clubhouse for Cornell University in Midtown Manhattan this week.

“There must be some limit somewhere with how much indexing there can be without [reducing] the efficiencies of the market,” he said. “[But] if …

As Good As It Gets?

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Evelyn Cheng of CNBC reports, Tech shares are this bull market’s most important stocks right now:
Technology is the most important industry for stocks today, indicating that blowout earnings from giants such as Microsoft could be good for the market.

Shares of Google parent Alphabet, Microsoft and Intel soared nearly 6 percent or more in Friday trading after reporting solid quarterly earnings that came in well above Wall Street's expectations. The stocks are among the largest in the S&P 500 by market capitalization. In fact, the technology sector overall has the largest weighting in the index at 23.2 percent, according to a Sept. 29 fact sheet.

The high weighting and strong performance heading into earnings season have tied the S&P 500's performance closely to that of technology stocks, especially over the last three months. During that time period, tech had the highest correlation to the S&P at 0.87, according to Kensho, a quantitative analytics tool used by hedge…

Canada's National Pension Hub?

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At the beginning of the month, the Global Risk Insitute put out a press release, National Pension Hub to develop insights into challenges facing Canada's pension industry:
The Global Risk Institute in Financial Services (GRI) today announced the creation of a National Pension Hub (NPH) that will serve as a Canadian centre for pension knowledge and research. The purpose of the NPH is to provide pension and income security research that, among other things, will lead to innovative solutions to pension design, governance and investment challenges.

To date, more than a dozen organizations have joined the NPH, including major pension plans, accounting firms, consultancies and public corporations, as well as a number of individual opinion leaders in the field of pensions. Additional members are being recruited, including governments and companies associated with pension plans. The NPH will be administered by the GRI.

“The diversity of our membership in the National Pension Hub is one of …

Bill Morneau's Pension Conflict?

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Steven Chase and Robert Fife of the Globe and Mail report, Liberals defeat NDP motion to close conflict-of-interest loophole:
The Trudeau Liberals used their parliamentary majority Tuesday to defeat an NDP motion on closing a loophole that allowed Finance Minister Bill Morneau to retain close control over a significant stake in his family company even as he ran a department with power to affect the fortunes of Morneau Shepell.

The Liberals also continued to dodge questions on whether Mr. Morneau recused himself from internal discussions on Bill C-27, legislation that opposition parties say could be expected to benefit Morneau Shepell, one of four major firms in Canada's human-resources and pension-management sector.

As The Globe and Mail first reported last week, Mr. Morneau ran the Finance Department for nearly two years without putting his substantial assets into a blind trust – as Justin Trudeau did for his family fortune, a move that the Prime Minister holds up as the gold sta…

America's Dangerous Dual Economy?

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Abby Joseph Cohen, a senior investment strategist at Goldman Sachs, wrote a comment for Yahoo Finance, The last 8 years of labor market improvement have been disturbingly uneven:
The deep recession triggered by the financial crisis technically ended in the summer of 2009. Despite eight years of economic growth, the labor market improvements have been disturbingly uneven.

Several factors are contributing to the wide range of outcomes which, in turn, have led to stark contrasts in how different groups of consumers and business owners view the current economic environment. I’ll briefly discuss only three of the factors: education, technology and geography. This last category can also be described as “location, location, location” and hasn’t received adequate attention from policymakers.

Declines for high-school educated Americans

Even before the financial crisis, some workers and their families were falling behind, with an ever-widening gap in household incomes linked to level of educati…