diversification

Insurance has a stable image, but it has always been highly competitive and volatile. That’s why we’ve said for some time that insurers are riskier than they look. For safety-conscious investors, right now we recommend just three Canadian insurance companies as buys: Manulife Financial, Great-West Lifeco and Sun Life Financial. MANULIFE FINANCIAL $39.51 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $399 billion. In the three months ended September 30, 2007, Manulife’s earnings rose 9.9%, to $1.1 billion or $0.70 a share, from $967 million or $0.62 a share a year earlier. Revenue rose 11.3%, to $9.4 billion from $8.4 billion. Manulife has raised its dividend 9.1%, to $0.24 from $0.22. The shares now yield 2.2%....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28.75 (Toronto symbol BA.UN: SI Rating: Above average) is the main provider of telephone services in Atlantic Canada. It also serves rural parts of Ontario and Quebec. As part of the deal that created Bell Aliant, the fund transferred the bulk of its wireless business to BCE. Without these operations, the fund now aims to spur growth by expanding the availability and capacity of its high-speed Internet service. Just 20% of Bell Aliant’s customers use its high-speed Internet service, so there’s plenty of room to grow. In the three months ended September 30, 2007, Bell Aliant earned $0.48 a unit from continuing operations in its second quarter. The fund took its present form on July 7, 2006, so it did not report earnings for the year-earlier quarter. But revenue on a pro forma basis, which assumes Bell Aliant began operations at the start of 2006, grew 1.6%, to $837.9 million from $825.1 million....

DUNDEE REIT $36.65 (Toronto symbol D.UN; SI Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 20.8 million; Market cap: $762.3 million) owns and operates 6.3 million square feet of office, industrial and retail properties. It now holds 40 office buildings and 37 industrial properties. The company is now focused on mid-sized urban and suburban office and industrial properties in western Canada. Earlier this year, it sold its Ontario, Quebec and Newfoundland properties to GE Real Estate for $2.4 billion. As part of the transaction, GE Real Estate bought $165 million of Dundee REIT units at $47.50 per unit. GE Real Estate now holds a 16% equity interest in Dundee REIT. Revenues were $39.6 million in the three months ended September 30, 2007, up 34.4% from $29.5 million a year earlier. The best measure of operating performance for a real estate company is cash flow. Dundee’s cash flow per share in the latest quarter was $0.58, up 3.6% from $0.56....

TEMPLETON EMERGING MARKETS FUND $25.25 (New York symbol EMF; CWA Fund Rating: Speculative) is a closed-end fund that invests in equities from emerging economies. The fund’s manager is Franklin Templeton. Templeton Emerging Market Fund provides broad geographic diversification. Although volatile, it provides access to fast-growing economies such as Brazil, China, India and others. The $418.1 million fund’s regional allocation is Asia (58.8%), Europe (19.1%), Latin America (18%) and the Middle East and Africa (4.1%). Asian country allocations are China (17%), South Korea (9.3%), Turkey (8.8%), Thailand (7.8%), India (5.3%), Taiwan (4.8%), Pakistan (2.4%), Hong Kong (1.8%) and Indonesia (1.6%). Europe comprises Russia (8.8%), Hungary (4.7%), Poland (3.1%), Austria (1.3%) and Sweden (1.2%). Latin America includes Brazil (15.2%) and Mexico (2.8%). The African country is South Africa (4.1%)....

Investing in regions or countries outside of Canada and the United States can entail above-average volatility and risk. But these areas can also offer vast potential growth. We still think that for most investors, the best way to invest in those regions or countries is through mutual funds, rather than individual stocks. And you can invest even cheaper by buying closed-end funds. Here are four closed-end funds trading on the New York Exchange at discounts to their net asset value. All four are buys....

MANULIFE FINANCIAL $39.07 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $426 billion. In the three months ended March 31, 2007, Manulife’s earnings excluding one-time items rose 10.8%, to $1.1 billion or $0.68 a share, from $952 million or $0.60 a share a year earlier. Revenue rose 2.6%, to $8.6 billion from $8.4 billion. Manulife has raised its dividend 10%, to $0.22 from $0.20. The shares now yield 2.3%. Manulife’s operations are diversified among life and health insurance, segregated mutual funds, and reinsurance. Its geographic diversification in the U.S. and Asia, including China, offers growth prospects....

Insurance has a stable image, but it has always been highly competitive and volatile. That’s why we’ve said for some time that insurers are riskier than they look. For safety-conscious investors, right now we recommend just three Canadian insurance companies as buys: Manulife Financial, Great-West Lifeco and Sun Life Financial. SUN LIFE FINANCIAL $50.16 (Toronto symbol SLF; SI Rating: Above-average) offers savings, retirement, pension and life and health insurance products and services to individuals and corporations. The company operates mainly in Canada, the U.S. and the UK, and also in Asia, China and India. It has assets under administration of $435 billion. In the three months ended June 30, 2007, Sun Life’s earnings rose 15.2%, to $590 million or $1.03 a share, from $512 million or $0.88 a year earlier. Revenue fell 27.8%, to $4.5 billion from $6.2 billion, due to new accounting rules for investments....

TD CANADIAN SMALL-CAP EQUITY FUND $33.61 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) invests in small to medium-sized companies located in Canada and other countries, that the managers feel offer either superior earnings growth or appear undervalued. It looks for sound companies that stand to benefit as the business and economic environment continues to improve. TD Canadian Small-Cap Equity Fund’s top ten holdings are ING Canada, 3.3%; Gildan Activewear, 2.6%; Industrial Alliance Insurance, 2.3%; Western Oil Sands, 1.8%; Canadian Western Bank, 1.7%; E-L Financial, 1.7%; CAE, 1.6%; Niko Resources, 1.6%; Q9 Networks, 1.5%; and Pason Systems, 1.5%. The $430 million fund is broken down by economic sector as follows: 19.6% in Energy, 16.7% in Basic materials, 16.5% in Financials, 14.0% in Consumer discretionary, 11.9% in Technology, 11.6% in Industrials, 5.7% in Health care, 2.1% in Consumer staples, and 0.5% in Utilities....

ALGONQUIN POWER INCOME FUND $8.43 (Toronto symbol APF.UN; SI Rating: Extra Risk) now has direct or indirect interests in 48 hydroelectric facilities — 4 in Ontario, 12 in Quebec, 13 in New York State, 13 in New Hampshire, 1 in Alberta, 2 in Vermont, 1 in New Jersey and 1 in Newfoundland. This represents total generating capacity of 140 megawatts. Algonquin also has interests in 5 co-generation plants, 17 alternative fuel plants (including wind, energy-from-waste, biomass and landfill gas), and 17 water reclamation and distribution facilities. Algonquin Power yields 10.9%. In the three months ended December 31, 2006, Algonquin Power’s revenues rose 5.5%, to $53.7 million from $50.9 million a year earlier. Cash flow per unit fell 14.3%, to $0.24 from $0.28. Algonquin continues to grow by acquisition. It’s now offering to acquire TSE-listed Clean Power Income Fund for $208 million, mostly in Algonquin units. Clean Power Income Fund has interests in 15 alternative power generating facilities located in Québec, Ontario, Alberta, British Columbia and four U.S. states. The plants use wind power, water power and biomass as fuel. All power is sold under long-term contracts....

MANULIFE FINANCIAL $39.22 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $414 billion, up 11.4% from $371.5 billion at the end of 2005. In the three months ended December 31, 2006. Manulife’s earnings rose 14%, to $1.1 billion or $0.70 a share, from $908 million or $0.56 a share a year earlier. Revenue rose 9.5%, to $9.2 billion from $8.4 billion. The shares yield 1.8%. Manulife’s operations are well diversified among life and health insurance, segregated mutual funds, and reinsurance. Its geographic diversification in the U.S. and Asia, including China, offers growth prospects....