Monthly Debrief April 2024
Our Monthly Debrief video is a summary of all the information that we would like to share with you in an effort to provide an update.
Leanne (00:02):
Hello and welcome to April's monthly debrief. My name is Leanne Mamchur and this is all the information that I've read, listened to or heard in person throughout the month. Now, before we jump in, I just wanted to share a couple of things. We actually took a nice little trip to Edmonton over the last month and my daughter got a little coloring set and found a new canvas. So I thought that was kind of funny. And actually on the day that I'm recording it, this is what it looks like outside of my house and so not springy that you would expect in April, but nevertheless. Alright, let's jump in. So this monthly debrief, I'm going to be going over some of the expectations that are listed and analyzed in the CIBC's 2024 long-term annualized capital market expected return report. Now you can see authors here and every year CIBC does a great job of putting this paper together and it is going to be attached to this month's update email just in case you wanted to read it in full.
(01:18):
Now let's jump in to a little bit on market update first. And so this is what it has looked like. And as you can see, it's very, very much straight up, which is nice to see. And then this is if you're looking at it on a month-to-month basis, so you can see right upside here on top of my head how much of an increase that we've seen and what that has meant for the capital markets. All right, so let's jump into this report. One of the things that was very prevalent was that expectation over the next 10 years. So this report is basically an expected view over the next 10 years. So it's long-term in its perspective and we are expecting that there are strong investment tailwinds and so they have some of the potential drivers, strong technology, energy transition, elevated infrastructure needs, geopolitical risks and continuing and that type of thing.
(02:24):
The supply of savings also is going to help our equity markets perhaps because there's just a little bit less available. And so we have an aging population and we also have our fiscal. And so that's the governments running deficits, especially down in the US. And so we are going to expect potentially strong markets, stronger markets over the next 10 years. And also over the next 10 years, economic growth may be above average due to some of that stronger investment demand. Alright, so let's take a look at what that actually looks like as far as an annualized expectation in terms in percentage terms over time. So you can see the various markets here and I'm just going to step out of the way so you can see some of these other alternatives. And these are the expected rates of return over a 10 year period.
(03:24):
And so some really nice ones, something to point out would be if you're looking at the emerging markets, not including China as well as our international markets and Canadian markets and US is also quite positive in the expectation as far as return. Alright, so turning to fixed income yields are expected to continue to be attractive, but not necessarily the same levels as we saw in 2010, meaning that they're going to be a little bit higher than we saw in that decade and so likely closer or more similar to the right at the millennial and the next 10 years after that. And so it's going to potentially be slightly above policy target. There is also what the expectation is, is that there may be limited downside for policy rates. And so when we're talking about policy rates, these are central bank policies. And so then our central bankers are potentially, we're expecting stronger economic growth and there's a little bit more tolerance for higher inflation to persist and it's quite circumstantial.
(04:42):
So what we've been seeing is that potentially there's too much of a cost otherwise, so they don't necessarily want to hamper growth at this particular juncture significant enough to bring it back to target. So maybe they're going to allow a little bit more tolerant and that's likely going to create a little bit more financial stability for us, albeit a little bit higher inflation. So this is what the chart looks like for expected fixed income returns over that 10 year period according to CIBC capital markets. And so that's kind of a little chart for you there. All right, now turning our attention to the other asset category, which is alternatives. There's some expectation for private credit, private equity, private core real estate and private infrastructure. So that is also there for you in this report. And then in inflation, economic growth, GDP and rates. So this is a big chart, so I'm going to just stay out of the slide for a bit here.
(05:51):
(07:00):
And so if you have interest in why that might be, take a look at the report. Now I'm going to turn the attention to tax considerations. And there's some really positive news in this front in the sense that sometimes when policy is made, there's some unintended consequences. And so CRA actually announced that we're going to be exempt from trust reporting requirements for 2023. So the expectation is that they're going to kind of look at this and see and further clarify some of the guidance on the filing requirements, that type of thing. But this is really welcomed news because it was catching Canadians and potentially unintendedly. And so then we might see some new legislation. Alright, so I've attached two events to this update that you could attend. The first is the discussion on the federal budget. So we're going to have a federal budget coming out here right away.
(08:05):
And we have our very own Jamie Golombek as well as Avery going to be coming on April 18th at 2:00 PM Mountain Standard time. And they're going to be reviewing what that looks like. Some of the speculation and the potentials. And the source here is just from an article that I read in the investment executive. Now some of the potentials that have been talked about is we might see a revised or we might see some alterations to the alternative minimum tax. There again was an unintended, potentially unintended consequence in that there's some concerns from the charity section or a sector and that it may discourage or some of these new rules may inadvertently discourage some large donors from making significant donations, which some of the charities in Canada really, really rely on those large donors. And so recall that some of the rule in the new a MT rule, they were only going to allow 50% of the receipt to be included and 30% capital gains as opposed to prior to that, which is a hundred percent of the receipt included and 0% inclusion for those in kind donations.
(09:34):
(10:40):
There's discussion about the RRSP contribution amount, the maximum amount permitted to go into your RRSPs to be changing. And also maybe the age of conversion. People are living a lot longer. And so there's a chatter about potentially seeing that age of having to convert into an income stream, your registered plan to age 75 perhaps. And then this was an interesting one, but I actually quite like it is just maybe there might be a, listen, let's rewrite the whole thing and let's rip the whole shebang apart and start over. And I don't know, it's probably very quiet unlikely that that's would happen because there's not a lot of political appetite for it. But I think that would be quite lovely to see if they did rewrite the tax code here in Canada because quite complex and that would really help us a lot. Alright, and so the final thing I wanted to invite you to was a presentation that we are going to be hosting as part of CIBC Family Office on April 17th at 2:00 PM Mountain Standard Time.
(11:57):
And so cybersecurity and fraud and things like that are really on the upswing and we want to ensure that you continue to protect yourself against criminals in this space. And so we're going to have Chief Information Security Officer Joe, come on and talk about this area for you. So if you have interest and if you would like to join, you're most welcome to and the link to enroll is in the email. Alright, so that's it for the monthly debrief. I know that this was a little bit different than my norm, but I hope you enjoyed it and happy reading if you would like to read the rest of the Capital Markets Review. Alright, here's the disclaimer.
Introduction to Corporate Philanthropy
Introductory to a 3-part series that provides an overview of the tax benefits of charitable giving. Email leanne.mamchur@cibc.com for the full series.
[On screen: CIBC PRIVATE WEALTH
Corporate Philanthropy
Strategically Giving Back
from the desk of
Leanne M. Mamchur, CFA, CFP, FMA ]
[On screen: Leanne M. Mamchur presents with a warm and engaging demeanor. She has shoulder-length dark hair with glasses and is dressed in professional attire, suggesting a businesslike and approachable manner. ]
LEANNE M. MAMCHUR: Hi. Today we get to talk about one of my near and dear topics, which is philanthropy. I know I say that word not quite right, but giving back. Basically, strategically giving back. To stretch your dollars longer and further than you could otherwise do. There's strategy behind it. First off, I think that anybody's listening to this is already doing great because they're thinking about corporate philanthropy and philanthropy in general. I think that we can all give so much back to each other and society and those less fortunate.
I feel as though that's a very good start in the right direction. I wrote an article related to this, and it's called Corporate Philanthropy, Strategically Giving Back. The reason why I wanted to write the article was to give people the concept or idea of trying to expand what they're already intending to do through creative ideas. With Canadian law or the Canadian revenue agency, there's some incentives already built in, especially for corporations, if they were to consider to do charitable donations. Let's dive in.
[Text on screen: CIBC PRIVATE WEALTH
Giving Back to the Community
• • Important objective
• • Both time and money
• • Benefits to humanity
• • Improves donor's quality of life ]
LEANNE: Giving back to the community. This is just the intro video, but basically, it's such an important objective for so many people and so many private clients that I work with. It just fills the bucket of joy within their heart. They give both, it's not just money side, they also are so generous on giving their time and as well as their money. Then they are part of the boards, they're part of fundraising campaigns. They're part of events, they're coordinating events. They're doing all sorts of wonderful things for the community, and I very much applaud them.
[Text on screen: CIBC PRIVATE WEALTH
Improves Donor's Quality of Life1
• • Greater contentment, joy and community
• • Conversation around gifting – enhance family bond ]
LEANNE: They're also sharing. They're sharing their hard-earned money with ventures and charities that are important to them. It's a huge benefit to humanity in having that ability, but it also very much improves the donor's quality of life. It's interesting because there's an article written about how much it improves the donor's quality of life. They get joy from the act of giving. Sometimes somebody might give you a present for your birthday, and you feel bad about it, but you have to just remember that they are getting joy from the ability to gift you something.
That goes the same way for charity and so greater contentment, joy and they also have a sense of community. You can't underplay, especially over these last two years. I'm recording this in 2022, but the last two years of isolation and COVID, and all the trauma that that has caused, the sense of community is very important. To get that back is huge. The other thing I guess would be the improvement of a donor's quality of life in the way that it changes a family and it changes a family dynamic if you want it to.
Some people really like to be anonymous in their donations and don't share anything with the family, but other people really want it to be a lasting legacy. Then they create that ability so that kids can be part of the conversation or nieces or nephews or whomever in the family, and then it creates these family values that just don't exist without this type of structure and strategy. I shouldn't say that they don't exist because they probably, they might in the background, but it just enhances them, I guess, more than anything.
[Text on screen: CIBC PRIVATE WEALTH
World's Major Philanthropists
• • Bill and Melinda Gates
• • Warren Buffett
• • Oprah Winfrey
• • Michael Jordan
• • Serena Williams
• • J.K. Rowling (Harry Potter)
• • Jeff Bezos (former CEO of Amazon) ]
LEANNE: You get an enhancement of family values through this process. Some of the world's most famous philanthropists are listed here on the screen. I'm sure you recognize lots of these names. One of the things that I was noticing when I was researching this, was where are all the Canadians in that list? I know that. I know certain families, and on the private client side that are incredibly generous with their funds and their time. I encountered an article written by Dene Moore, and I know that it's not Demi Moore from Ghost, which is one of my favorite movies.
[Text on screen: CIBC PRIVATE WEALTH
Where are the Canadians?
Article written by Dene Moore for Canadian Family Offices2
• • Quiet way
• • Request for anonymous donation
• • Tend to make donations over time
• • I.e.: Rogers Family Foundation, Weston Family Foundation, etc. ]
LEANNE: Anyways, so Dene Moore for the Canadian Family Offices, or wrote an article for the Canadian Family Offices. It outlines how Canadians are just a little bit more anonymous in their donations, and you get just as much pleasure for being anonymous to being loud. We're more doing our donations in a quiet way. Sometimes when we're doing a donation to a certain charity, people request anonymous donations and so they don't want their family foundation named. They don't want themselves named. You have that ability to stay anonymous but still be giving back.
Other people want to use their donation as a representation of what they would like other people to do in the corporate side. By not being anonymous, sometimes they're trying to encourage others to follow suit. I myself have set up a family foundation, and my husband and I, and I feel as though that it's a really great thing to share because I think that more people could do that type of thing. I'm less on the quiet side, I suppose, even though that I am full-fledged Canadian from Saskatchewan.
Then I feel as though that there's all sorts of different ways of doing it but good examples are Rogers Family Foundation, the Weston Family Foundation here in Canada. Canadians are extremely generous with both their time and their money. The majority of private clients get to a stage, and especially if they're very, very successful. They typically get to a stage where they're almost compelled or called to give back.
[Text on screen: CIBC PRIVATE WEALTH
Corporate Philanthropy
Short Three-Part Series
• • Tax Benefits of Corporate Charitable Giving
• • Strategically creating a Family Foundation
• • Advantages of using Life Insurance Policies ]
LEANNE: It's almost like an inner drive that they have through their success that they want to share, which is lovely. It's beautiful. With corporate philanthropy, I broke this topic into three separate series, so that if you wanted to just watch one or you just have limited time, you could just click play and just hear about one specific topic. I wanted to break it down just a tad, but these are the three parts that I'll be talking about in the next three videos.
It's the tax benefit of corporate charitable giving, the strategy of creating a family foundation or the consideration of doing that, and the advantage of using life insurance policies in a corporate sense to again, enhance what you are able to give. With that, I'm going to turn to notes and references and then followed by a disclaimer slide. I hope that you'll join me in the next three series as I go through and delve into the topic a little bit more. Thank you.
[Text on screen: CIBC PRIVATE WEALTH
Notes and References:
Notes:
1 - https://link.springer.com/article/10.1007/s10902-020-00242-8,
Lawton, R.N., Gramatki, I., Watt, W. et al. Does Volunteering Make Us Happier, or Are Happier People More Likely to Volunteer? Addressing the Problem of Reverse Causality When Estimating the Wellbeing Impacts of Volunteering. J Happiness Stud 22, 599–624
(2021). https://doi.org/10.1007/s10902-020-00242-8
2 - https://canadianfamilyoffices.com/philanthropy/biggest-canadian-philanthropists-give-in-a-more-quiet-way
Biggest Canadian philanthropists 'give in a more quiet way'
Author of the article: Dene Moore • Canadian Family Offices
Publishing date: Aug 05, 2021 ]
[Text on screen: CIBC PRIVATE WEALTH
Disclaimer:
CIBC Private Wealth Management consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. Insurance services are available through CIBC Wood Gundy Financial Services (Quebec) Inc. In Quebec, insurance services are available through CIBC Wood Gundy Financial Services (Quebec) Inc.
“CIBC Private Wealth Management" is a registered trademark of CIBC, used under license. "Wood Gundy" is a registered trademark of CIBC World Markets Inc.
Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.
The views of Leanne Mamchur do not necessarily reflect those of CIBC World Markets Inc. The information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.
"CIBC Private Wealth Management" consists of services provided by CIBC and certain of its subsidiaries, through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. ("CAM"); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. ("WMI"). CIBC Private Banking provides solutions from CIBC Investor Services Inc. ("ISI"), CAM and credit products. CIBC Private Wealth Management services are available to qualified individuals.
If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor. ]