GrowthWorks and Seamark Asset Management Agree to Merger Plans

GrowthWorks Capital Ltd. and Seamark Asset Management Ltd. announced plans to execute a share swap which will result in a new publicly traded company to be called Matrix Asset Management Inc. The new company will control about $3 billion in assets, $2 billion of which comes from Seamark.

The deal is subject to the approval by the shareholders of the two companies, regulatory authorities and the TSX.

David Levi, founder, president and CEO of GrowthWorks said “We already have support agreements from 53 per cent of the shareholders of Seamark, and 74 per cent of from the shareholders of GrowthWorks supporting it.”

Earlier this year GrowthWorks purchased Mavrix Funds Management for $2.2 million, not to be confused with the newly formed company Matrix Asset Management Inc.

There had been lots of speculation that Seamark was a takeover candidate due to a high number of redemptions and the loss lost of some clients earlier this year.

According to Mr. Levi, Seamark shareholders will end up with 25 per cent of Matrix, while GrowthWorks shareholders will wind up with 75 per cent.

Under Matrix, the Seamark unit will continue with the institutional fund management business and GrowthWorks will work on the venture capital side.

Current plans are for Mr. Levi to become president and CEO of the merged company while current Seamark CEO Brent Barrie will retain his position and Seamark founder, Peter Marshall will serve on the board with both Mr. Levi and Mr. Barrie.

It will be interesting to watch the progress of this new company in the upcoming year. It is not often two companies, on opposite ends of the continent, merge to form one. GrowthWorks is Vancouver-based and Seamark is Halifax-based.

Stay on track,

The Hoss
Next Hoss Cents Free Financial Money Magazine Post: Nov.15, 2009
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Finding the Best Mutual Fund

Asset Allocation

From the Hoss's Mouth

Research has shown that asset allocation is the single most important investment decision an investor makes. What is asset allocation? Hoss Cents Free Financial Money Magazine's definition is as follows:

The structuring of your investment portfolio with different asset categories using stocks, bonds or cash.

There is no specific asset mix that is perfect for each investor. The wise investor knows what his/her investment objectives are, what the time horizon is for achieving those objectives, and what risk they are prepared to take (also known as risk tolerance) .

Time Horizon - Your time horizon is the length of time in months, years, or decades you have to achieve your financial objective.

Risk Tolerance – How much risk you are prepared to take to achieve your financial goal. Are you an aggressive investor prepared to purchase risky investment for greater potential returns or are you a conservative investor, one who wants to preserve your original investment?

A rule of thumb used by many financial advisers is that the total percentage of fixed income held in your portfolio should approximately equal your age. In other words, if you are 45 then 45% of your portfolio should be fixed income. If you are 20 then 20% is fixed income. This is a good tool to start you on an investment path which includes an asset allocation strategy.

Hoss Cents Free Financial Money Magazine provides a slight modification to this asset allocation rule. First, assess your risk tolerance on a scale of one to ten. One being the most conservative investor, and ten being an investor willing to take extreme risks. Now combine the two factors of age and risk tolerance in the following manner: If your risk tolerance is 5, make no adjustment to the rule of thumb. For every number higher than 5, reduce the fixed income component by 5%. For every number lower than 5, increase the fixed income percentage by 5%.

Look at some examples provided by Hoss Cents Free Financial Money Magazine :

Risk tolerance of 7 and age 45. Fixed income component would be 35%: 45 (age) minus 10% (5% for each number above 5)

Risk tolerance of 7 and age 20. Fixed income component would be 10%: 20 (age) minus 10%

Risk tolerance of 2 and age 45. Fixed income component would be 60%: 45 (age) plus 15% (5% for each number below 5)

Risk tolerance of 2 and age 20. Fixed income component would be 35%: 20 (age) plus 15%

For those of us who do not have the time or the inclination to go out and purchase individual stocks and bonds, a simpler and easier method is to buy mutual funds or exchange traded funds. They provide an excellent method of diversifying your portfolio.

The Hoss hopes he has helped you in determining an asset allocation that will enable you to reach your investment objectives. Remember, all investments have some risk and you could lose some or all of your money.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: May 24, 2009
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Money Market Funds

From The Hoss's Mouth

Money Market Funds are featured in today's Hoss Cents Free Financial Money Magazine. Money market funds are a safe hitching post to park your cash. Income or growth potential is very low but in times of unstable stock markets they are a good place for your money.

Money Market Funds are appropriate for the investor who wants liquidity, stability of capital, and an interest income higher than savings accounts. If you and your financial adviser have determined that you have a very low risk tolerance level, a MMF would be perfect for you.

When shopping for a Money Market Fund, you and your financial adviser should consider no-load funds only. The returns on money market funds do not vary much, so The Hoss cannot see any advantage to purchasing a commission-based Money Market Fund. Also, closely review the fund's expenses, which are outlined in the prospectus.

The investment objectives of most money market funds are to preserve capital and provide a steady level of income for the investor. It is the intention of the fund company to maintain the per unit price at a constant level, usually ten dollars, but the prospectus may contain a clause that states there is no guarantee that the unit price will not fluctuate.

Money market funds usually invest in a well diversified portfolio of short term securities such as, government or government guaranteed treasury bills (T-Bills), asset-backed commercial paper, certificates of deposit, and bankers acceptances. The funds are conservatively managed, and the average term to maturity varies, but never more than 364 days.

Distribution of interest earned is paid monthly and can be deposited directly into your bank account, paid by cheque, or reinvested in units of the fund. Most fund companies will automatically reinvest in units of the fund unless otherwise directed by the investor.

To sum up, you will not make a large return from a money market fund, but your money is relatively safe and can be accessed quickly.

Stay on track,

The Hoss

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Cash Investments

From The Hoss's Mouth

This issue of Hoss Cents Free Financial Money Magazine is about cash investments. Investing in cash or cash equivalents is like betting on the favorite in a race. It gives you your best odds on making a profit, but provides a relatively low rate of return compared to other types of investments. The Hoss will get his binoculars out and take a close look at each of the various types of cash investments.

• Interest Yielding Bank Account: Very low risk and a very low rate of return. Provides easy access to your money.

• Savings Bond: A loan you make to the government, usually for a period of a year or more. They can be purchased from banks, credit unions, trust companies and investment dealers. They usually provide a fixed rate of return for each year to maturity. However, some have a variable rate of return dependent on market conditions, and they have a minimum guaranteed rate. Cashability varies, as some must be held to maturity, others can be redeemed at predetermined intervals, and some allow redemption at any time. Savings bonds are guaranteed by the issuing government; and given their taxation powers, there is little or no risk of default. A relatively safe cash investment.

• Treasury Bill (T-Bill): A short-term loan (less than a year) you make to the government. They are sold by investment dealers and come in large denominations. You buy T-Bills for less than their maturity value. The difference between your cost and the value at maturity is your profit, or if you prefer, interest. As with savings bonds, there is little or no risk of default. Although T-Bills are not redeemable before maturity, they can be sold back to the investment dealer, but this will mean a lower rate of return for you.

• Guaranteed Investment Certificate (GIC): A financial institution's certificate of deposit. GIC investment terms usually range from 30 days to 10 years and are sold by banks, credit unions and trust companies. Most provide a fixed rate of return to maturity, but some are based on the performance of a stock market index. This type of GIC provides an opportunity for higher interest, but also could result in little or no profit at all. In most cases, the issuer guarantees the GIC, and an insurance agency, such as the Canada Deposit Insurance Corporation, may insure the principal up to a certain limit. Consequently, it is unlikely (but not impossible) that you will lose the principal on this cash investment.

• Money Market Fund: Available only as a mutual fund, and as such, must be purchased through registered dealers. You may wonder why The Hoss chose to list a mutual fund in the Cash or Cash equivalent grouping. Simply put, it's because Money Market Funds invest in short-term fixed income securities and are usually redeemable at any time. The Hoss will provide in-depth information about Mutual Funds in a later post.

This completes today's issue about cash investments. It's time for The Hoss to put the binoculars away and return to the barn for some oats.

Stay on track,

The Hoss

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