About Us Main

Media Contacts

Jessica Galehouse (North America)
+1 (434) 951-5376
jessica.galehouse@cfainstitute.org

 

Caroline Bretsen (Fleishman-Hillard Canada)
+1 (416) 645-3657
caroline.bretsen@fleishman.ca

 

CFA Charterholders More Confident Today Than One Year Ago In The Ability Of A Minority Government To Have A Positive Impact On Capital Markets

 

View the results (PDF)

 

Toronto, ON, January 22, 2007 – One day before the anniversary of Canada’s last Federal election, almost twice as many CFA charterholders across Canada are confident that a minority government can have a positive impact on capital markets as compared to one year ago, according to a survey of investment professionals in Canada who hold the Chartered Financial Analyst® (CFA®) designation.

 

When asked in 2005 if they believe that a federal minority government has a detrimental impact on Canadian market performance, 44%of CFA charterholders polled said yes. By contrast, when asked one year later in 2006 if a federal minority government has had a detrimental impact on market performance, an overwhelming 84% of respondents said no. 

 

“There was tremendous uncertainty in the fall of 2005, and the market hates uncertainty,” says Marg Franklin, CFA, Partner, KJ Harrison & Partners Inc. “The last time we had seen a Federal minority government in Canada was in 1979, and that was only for a short period of time.”

 

She adds: “This helps to explain what CFA charterholders were thinking in the fall of 2005: the policy uncertainty associated with a minority government created a negative outlook in terms of capital markets. Given the unlikely future of the then-governing Liberal party, and an unclear Conservative fiscal platform, CFA charterholders were apprehensive about the ability of a minority government to effect change and positively impact capital markets.”

 

The change in sentiment this year over last says that the expectations the market has on minority governments to facilitate healthy market activity have been met, and that CFA charterholders in Canada no longer believe that a minority government signals instability for capital markets.

 

The purpose of the CFA Institute survey was to obtain CFA charterholders’ outlook for the investment market and advice for Canadian investors in 2007. The survey was conducted from October 30, 2006 through November 16, 2006. A similar survey was conducted in the fall of 2005. CFA Institute is the global, non-profit professional association that administers the Chartered Financial Analyst (CFA) designation. There are 10,977 members in Canada, and 12 local societies across the country.

 

Other survey findings included:

 

  • When asked what one thing they would get their clients to do in 2007, the most number of charterholders said:
    • Focus on long-term vs. short-term returns (44%)
    • Other responses included:
      • Stop chasing historical returns/focusing on ‘hot’ stock tips (21%)
      • Less emphasis on commodity/oil/gas markets as part of investment plan (21%)
      • Invest more often/allocate more from payroll to savings (8%)
      • Other (6%)

 

  • When asked in an open-ended question about the most important consideration for Canadian investors in making decisions about their portfolios for 2007, 29 percent of respondents said diversification/asset allocation, down from 42 percent in 2005. (See the chart on page three of the results (PDF) for a complete breakdown of responses, and a comparison to 2005 survey results.)

 

  • In an open-ended question, respondents were asked to identify one for each of the political, economic and social trends that will have the greatest impact on the performance of Canadian investors' portfolios in 2007. The most common responses were:
    • Political: Federal election (25%)
    • Economic: Commodities - price; supply/demand (30%)
    • Social: Aging population / retirement of baby boomers (34%)

 

(See the chart on page three of the results (PDF) for a complete breakdown of responses, and a comparison to 2005 survey results.)

 

  • When asked where they see the 5-year Government of Canada bond yield going in 2007, the majority of respondents−33 percent−said they see it remaining relatively flat (plus or minus up to 25 basis points).

 

  • Sixty-four percent of respondents said they see the spread between corporate and government bonds widening in 2007. Eight percent said it would narrow, and 27 percent said it would stay about the same as the current spread. 

 

  • When asked about their overall outlook for the Canadian securities market for 2007, the majority of respondents, 55 percent, said they are somewhat more pessimistic (positive absolute returns but lower than 2006). This was less than the number of CFA charterholders who selected this response the year prior, when 67 percent of respondents said they were somewhat more pessimistic about the outlook for 2006 over 2005. In general, respondents’ outlooks for the year ahead is slightly more optimistic than it was in 2005. (See the chart on page five of the results (PDF) for a complete breakdown of responses, and a comparison to 2005 survey results.)

 

  • Fifty-eight percent of CFA charterholders expect much more or somewhat more volatility/instability in the equity market in 2007, compared to 28 percent who expect much more or somewhat more volatility/instability in the fixed-income market. Thirty one percent and 52 percent expect volatility/instability to stay the same in the equity and fixed-income markets, respectively. The remaining expect either somewhat or much less volatility/instability.

 

CFA charterholders have expertise in wealth management through extensive training and experience. The CFA Program trains them to assess a client’s overall financial needs and to execute a thorough examination of a client's risk on both a quantitative and qualitative level. Armed with an understanding of the client’s financial goals and risk tolerance level, and with a view to achieving portfolio diversification, CFA charterholders scan the global and local markets for investment opportunities using sophisticated financial tools and techniques to evaluate investments, employing a rigorous, multi-faceted approach to valuing individual securities and financial products. They select the most appropriate securities or investments to achieve wealth, and proactively monitor and modify investment strategies as appropriate. 

 

CFA Institute
CFA Institute is the global, non-profit professional association that administers the Chartered Financial Analyst® (CFA®) curriculum and examination program worldwide, publishes research, conducts professional-development programs, and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 88,000 members in 132 countries and territories, including the world’s 76,000 CFA charterholders, as well as 134 affiliated professional societies in 55 countries and territories.  In 2007, CFA Institute celebrates the 60th anniversary of the “founding of a profession.”