Posted: 05 Jul 2005 18:33
The best occurance would be, uh, an Umlah out.Conrad Black could learn a thing or two from Umlah
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https://www.financialwisdomforum.org/forum/viewtopic.php?t=489
The best occurance would be, uh, an Umlah out.Conrad Black could learn a thing or two from Umlah
... a subsidiary of ROI agreed to buy Brooklin for $25.1-million, topping a rival $22.1-million bid. ROI directly invested $12.1-million, close to 25 per cent of its assets under administration at that time and contrary to the terms of the fund's prospectus that limit its exposure to 10 per cent of net assets, the lawsuit claims.
Gould alleges ROI and John Sterling, the company's co-founder and chief executive officer, bought Brooklin "for more than fair market value" in order to protect ROI's initial investment, to claim an additional $1.4-million in "improper" expenses, to protect the fund's investment profile and, finally, to secure the compensation of ROI's senior management. The take-home pay of Mr. Sterling and Fernando Cipriano, co-founder and chief operating officer, hinges on the fund's assets under administration. ...
How soon will the other provinces, never mind the feds, follow suit?The Ontario government is axing its 15-per-cent tax credit for labour-sponsored funds, dealing a severe blow to the recovering sector...
"This is a wakeup call for funds with subpar performance," he said. "Financial advisers will be forced to look at the investment merits of the offering, not just the tax credit." [Doh! You mean they didn't do that before? ...bylo]
David Gamble, a spokesman for the Department of Finance, said the federal government is "monitoring developments" in Ontario but that no changes have been made at the federal level.
Bylo Selhi wrote:And now the coup de grace: Labour funds reel as Ont. axes tax creditHow soon will the other provinces, never mind the feds, follow suit?The Ontario government is axing its 15-per-cent tax credit for labour-sponsored funds, dealing a severe blow to the recovering sector...
"This is a wakeup call for funds with subpar performance," he said. "Financial advisers will be forced to look at the investment merits of the offering, not just the tax credit." [Doh! You mean they didn't do that before? ...bylo]
David Gamble, a spokesman for the Department of Finance, said the federal government is "monitoring developments" in Ontario but that no changes have been made at the federal level.
Hung out to dry
Thursday, September 01, 2005
Dale Jackson
TORONTO (GlobeinvestorGOLD) — The finance industry is raising a big stink over this week's Ontario government decision to cut the 15-per-cent tax credit on labour sponsored funds, saying it will hurt the venture capital market. For the retail investors trapped in these money-losing dogs of funds - well, you're on your own.
Financial advisers have been plowing unsuspecting investors into labour funds since they were introduced in 1991. It must have seemed like a good idea at the time. When they were first launched, investors received a tax rebate of up to 20 per cent from each of the two senior levels of government. A few years later, the rebate was reduced to 15 per cent from each level of government.
...The average management expense ratio (MER) on a labour sponsored fund is 4.6 per cent a year, compared with 2.6 per cent for the average Canadian equity fund.
... Most of those managers are also being paid handsomely to lose money. Over the past five years, the average labour-sponsored fund has lost more than 9 per cent each year. As a comparison, the BMO Nesbitt Burns Canadian Small Cap index has risen over 11 per cent annually during the same period of time. ...
Sooo, the venture capital markets are going suffer eh? And what about that 5% that the managers are going to miss? They not going to suffer? Start looking for a real job fellas.TORONTO (GlobeinvestorGOLD) — The finance industry is raising a big stink over this week's Ontario government decision to cut the 15-per-cent tax credit on labour sponsored funds, saying it will hurt the venture capital market. For the retail investors trapped in these money-losing dogs of funds - well, you're on your own.
The days of reckoning could be coming for those of you invested in labour-sponsored investment funds (LSIFs). My advice is to run for the cash-me-out hills--now! ASAP! Dilly-dalliers who hang on may have to fight over the illiquid and possibly worthless asset scraps in their funds' portfolios...
It would also help to sell while funds are still flush. Many have 20% or more in cash and short-term securities, ready for your redemption call. (Attention, fee cheapskates: That makes a 6% MER more like 8% on the fund's actual investments. On the other hand, if a fund has less than 10% cash, I wouldn't even finish reading this article. I'd dial my adviser now.) Once that cash is used up to pay off early redeemers, the fund will likely have to sell its most liquid--i.e., best--public investments, then the private ones. This will lead to a "new," lower asset value. Redemptions will accelerate. Post-1997 investors who bail early will get the double whammy: They'll lose on the asset value and their tax credits. But if they hang on, only the fund holdings that suck will remain, and the fund will be marked down to market before you can blink.
My thoughts exactly! I think this has just been a great tax rip off.The days of reckoning could be coming for those of you invested in labour-sponsored investment funds (LSIFs). My advice is to run for the cash-me-out hills--now! ASAP! Dilly-dalliers who hang on may have to fight over the illiquid and possibly worthless asset scraps in their funds' portfolios...
Could you elaborate please. (Or did the creation of the detailed rebuttal wear you out? )BruceCohen wrote:I too was puzzled by a number of Steiner's other comments.
1. As Smelly pointed out, Ontario’s phase-out is years away. (I wonder how a Stephen Harper govt would view the federal LSIF credit given their stand against corporate handouts in the last campaign)Could you elaborate
This is a fair point since Ontario went from "it's gone really soon" to "it stays as is for 3-4 years but then it's gone completely in 5-6 years". They've flip flopped and now the finance minister who made that decision is gone.BruceCohen wrote:1. As Smelly pointed out, Ontario’s phase-out is years away. (I wonder how a Stephen Harper govt would view the federal LSIF credit given their stand against corporate handouts in the last campaign)Could you elaborate
Agreed. Plus, when performance perks up - not necessarily in general but on an individual fund basis - that may help keep funds more liquid.BruceCohen wrote:4. I question whether all LSIF investors should bail now. The DSC plus tax credit repayment would take quite a chunk out of the proceeds.
Here's what he wrote...BruceCohen wrote:5. Steiner suggested that this is the time to invest, but did not say in what. As I’ve noted in this thread and others, the LSIF program has structural flaws. (FWIW, I hold one LSIF – Vengrowth II – bought outside my RRSP in 2001 but wouldn’t put in any more money.)
He's saying, I think, that it's a good time to invest in non-LSIF venture capital pools since the LSIFs will be dumping their investments to traditional venture pools as investors head for the exits. At least that's his take on it as a venture capitalist.Steiner wrote:The bright side of all this? I'd bet that the real venture funds that are left will make a pile as the LSIF venture capitalists head for the hills. The time for you to invest is, like, right now.
There are thousands of people who don't even sell when they can. Ask the LSIF companies. One once gave us a list of our clients who could sell without clawback. Since we research this and recomend redemption whenever we meet with clients, these people were "customers" not clients that haven't been in to see us in many years so there isn't much we could do or felt motivated to do beyond sending letters (which we did).BruceCohen wrote: 4. I question whether all LSIF investors should bail now. The DSC plus tax credit repayment would take quite a chunk out of the proceeds.
What happened to disclosing an author's credentials underneath the article so we know who he is and what his biases are? In this case I think Dougie's sittin' on a big crate of sour grapesBruceCohen wrote:Smelly, Doug Steiner is a "real" venture capitalist who has invested his own money in creating and seeding small companies that later went public or were sold.
According to the LSIF guys we met with last week (disclosure, they bought me and a couple of dozen other advisors lunch), they actually met with Daulton and Greg over the weekend after the announcement. Greg had no clue of the what an LSIF was or about any of the benefits. Daulton being from Ottawa where they know a bit about High Tech and the importance of venture capital (and his brother being an MP fom Ottawa and another brother involved in Ottawa city council) made it an easy sell. Post-poning was Daulton's way of helping Greg save face. But it's dead.DanH wrote: This is a fair point since Ontario went from "it's gone really soon" to "it stays as is for 3-4 years but then it's gone completely in 5-6 years". They've flip flopped and now the finance minister who made that decision is gone.
The industry will lobby, hard, to get this reversed.
Retrocom sued by union pension fundRetrocom Growth Funds Inc., a troubled labour-sponsored fund that has halted redemptions, has been hit with a $2-million lawsuit from an institutional investor.
The legal action, filed by the Sheet Metal Workers Local 30 Pension Trust Fund, is more bad news for the Toronto-based fund. In December, a flood of redemptions forced the $50-million fund to freeze its assets. Then, earlier this month, it warned its estimated 21,000 investors that its shares are expected to plunge.
"It has come to the attention of the fund that a significant reduction to its net asset value will be required as a result of the annual independent valuation of the fund's investments," Retrocom said in a Jan. 19 statement. In addition, the labour-sponsored fund (LSF) delayed until Feb. 28 the release of its audited financial statements for the year ended Aug. 31, 2005.
AFAIK, Retrocom is the only LSIF with meaningful union investment. The fund is sponsored by one or more building trades unions and part of its mandate is to invest in construction projects. It was set up at a time when Ontario's construction industry was dead. The sponsoring unions kicked in real money -- not the nominal $1 -- in order to help it kick-start building projects.patriot1 wrote:Why would a non-taxable entity such as a pension fund invest in an LSF anyway? What's the whole story?
If you sell at a loss, the capital loss for tax purposes is reduced by the amount of tax credits you received. I don't know any trick concerning triggering a capital gain.....mentioning capital gain and LSIF in the same sentence seems to be an oxymoron.smelly wrote:Who can tell the class how/when you generate a capital gain or loss on the redemption of a LSIF? This is a trick question.