asset management

Meta Description: Exchange-traded funds (ETFs) give investors a low-fee way to match market indexes, and these two ETFs are the cream of the Canadian crop.

ISHARES S&P/TSX 60 INDEX ETF $21.90 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 7.8%; TD Bank, 7.1%; Valeant Pharmaceuticals, 5.6%; Bank of Nova Scotia, 5.4%; CN Railway, 4.8%; Suncor Energy, 3.6%; Enbridge, 3.6%; Bank of Montreal, 3.5%; BCE, 3.2%; Manulife Financial, 3.1%; Canadian Natural Resources, 2.9%; Trans- Canada Corp., 2.8%; Brookfield Asset Management, 2.7%; CIBC, 2.6%; and CP Rail, 2.5%.

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Gluskin Sheff + Associates, $27.25, symbol GS on Toronto (Shares outstanding: 31.7 million; Market cap: $839.5 million; www.gluskinsheff.com), is a Toronto-based wealth management firm that serves high-net-worth individuals and institutional investors. It has around $8.2 billion in assets under management. In August 2014, the company acquired Blair Franklin Asset Management Holdings, which specializes in fixed-income investments and has $635 million in assets under management. In the three months ended December 31, 2014, Gluskin earned $27.2 million, or $0.93 a share, down 54.9% from $60.3 million, or $2.10, a year earlier. Revenue fell 42.7%, to $69.3 million from $120.9 million....

Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

BANK OF MONTREAL $76 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 647.0 million; Market cap: $49.2 billion; Price-to-sales ratio: 3.0; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.bmo.com) earned $1.04 billion in its fiscal 2015 first quarter, which ended January 31, 2015. That’s down 3.9% from $1.08 billion a year earlier. Per-share earnings declined 5.0%, to $1.53 from $1.61.

Earnings from Canadian retail banking (47% of the total) rose 3.5% as low interest rates continued to spur loan demand. The U.S. retail banking division (16%) saw its profits rise 3.6% as higher loan volumes offset the additional funds it set aside to cover potential bad loans.

The wealth management division’s earnings (17%) rose 2.2%. Lower earnings from this business’s insurance operations offset the contribution from recently acquired U.K.-based wealth manager F&C Asset Management. However, the trading division’s earnings (20%) fell 19.9%, mainly due to lower trading volumes and underwriting fees.

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Acadian Timber, $18.23, symbol ADN on Toronto (Shares outstanding: 16.7 million; Market cap: $302.0 million; www.acadiantimber.com), supplies forest products in Eastern Canada and the northeastern U.S. Acadian owns and manages 1.1 million acres of timberland in New Brunswick and Maine. It also manages 1.3 million acres of Crown-licensed forests. That brings its total acres under management to 2.4 million, making the company the second-largest timberland operator in New Brunswick and Maine. It also owns and operates a forest nursery in Second Falls, New Brunswick....

TD (see page 31) and Bank of Nova Scotia are our top picks among Canada’s big five banks right now, due to their wide international exposure. But we still like the prospects of Royal Bank, Bank of Montreal and CIBC. All three are well positioned to weather any downturn in the Canadian economy. They also trade at attractive multiples to earnings and continue to raise their dividends. ROYAL BANK OF CANADA $76 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $106.4 billion; Price-to-sales ratio: 3.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) recently said it would buy City National (New York symbol CYN)....

AGRIUM INC., $144.38, Toronto symbol AGU, hit a new all-time high of $145.07 this week after reporting better-than-expected quarterly earnings. It also raised its outlook for 2015. In the three months ended December 31, 2014, Agrium’s earnings gained 4.1%, to $0.77 a share from $0.74 a year earlier (all amounts expect share price in U.S. dollars). These results exclude unusual items, mainly losses on contracts the company uses to lock in foreign exchange rates and commodity prices. On that basis, the latest earnings easily beat the consensus estimate of $0.60 a share. Revenue fell 5.7%, to $2.7 billion from $2.9 billion. That’s because Agrium had to cut production at its Vanscoy potash mine in Saskatchewan to complete a major expansion. An unplanned outage at its Redwater, Alberta, plant also slowed nitrogen-fertilizer output. Sales at its retail stores, which sell fertilizer and seeds to farmers, declined 2.1%....

The Blackstone Group LP, $36.61, symbol BX on New York (Shares outstanding: 520.5 million; Market cap: $21.5 billion; www.blackstone.com), is a global alternative asset manager and provider of financial advisory services. The company’s alternative asset management businesses include managing corporate private equity funds, real estate opportunity funds, hedge funds, mezzanine funds, senior debt funds and closed-end mutual funds. Mezzanine financing is a mixture of debt and equity financing that private companies use to fund expansion. Mezzanine debt gives the lender the right to convert the debt to equity if the borrower defaults. It typically entails less due diligence by the lender, and the borrower puts up little or no collateral....

TIM HORTONS INC., $96.97, Toronto symbol THI, shareholders will vote on the friendly takeover offer from BURGER KING WORLDWIDE INC., $34.81, New York symbol BKW, on Tuesday, December 9, 2014. If the deal is approved, Tim Hortons investors will have a number of options: They can sell their shares on the Toronto exchange and receive the current trading price of $96.97 (less brokerage commissions). If they don’t do that, they can opt for one of the three choices below by notifying their brokers no later than 5:00 p.m. ET on Tuesday, December 9, 2014....