It is a truism that capital markets attract individuals of high net worth. Recent studies of the shareholder base of Canadian public securities exchanges, for instance, note that close to one-half of all individual investors have a household income of $75,000 or over and are employed in executive, managerial and professional occupations. According to the Investment Funds Institute of Canada, even the household incomes and occupations of investors in popular mutual funds are only slightly more representative of the working population.Endnote 49
A key objective of labour-sponsored investment funds is to offer middle and lower- income Canadian individuals and households a new investment opportunity. As fund shareholders, persons of average means can augment their retirement savings as a supplement to industrial and public pensions. Alternatively, persons for whom employment is the main source of earnings can also create an investment income stream. Of course, such outcomes are made possible only by tax incentives which lower costs and cushion risks. This is a crucial point since few individual investors, rich or poor, will likely otherwise choose the venture capital market.
Labour-sponsored funds observe this priority in assorted ways. The primary way is strategic shareholder recruitment of union members affiliated with the sponsor. Canadian unions today represent 37.5 percent of the non-agricultural paid labour force or approximately four million workers in all. The national labour movement is a ready source of non-traditional investors and estimable savings, if adequately tapped.
This is recognized by the leading funds which have sponsoring labour centrals with especially large membership lists. Taken together, the Fonds de solidarité, Working Ventures, Working Opportunity and the Crocus Fund have, via the four respective sponsors, potential access to an investors pool of over one million organized Canadian workers.
At present, there are two basic approaches to recruiting organized workers. The first, forged by the Fonds de solidarité, is doubtless the most successful method. Each year, the fund launches large-scale sales campaigns using volunteer union agents and resources to reach workers in union and workplace settings. In an arrangement with the Commission des valeurs mobilieres du Québec, the operation of this sales force - which numbered over 2,000 active volunteers in the 1995 RRSP season - is officially exempt from the usual rules and procedures for soliciting and subscribing investors in the province. Rather, the Fonds de solidarité itself undertakes the training of representatives for share distributions, subject to monitoring by Québec regulators.
This technique has been adopted with modifications by labour-sponsored funds in co- operation with securities commissions in Manitoba, Ontario and New Brunswick and has come to be known, outside of Québec, as sales through "restricted licensing."