A match made in Heaven

When Amvescap Plc, the world's fourth-largest independent asset management company with more than $500 billion in assets under management took aim at Trimark Investment Management Inc., they did it in order to acquire one of Canada's best-established mutual fund brands and expand their Canadian market presence. And while the proposed buyout of the Trimark family by the parent of AIM Funds Management Inc. looks like it could get off on the right foot, investors want to know more about the long-term implications of the deal.

"Trimark has one of the most respected and trusted brands in the industry," says Jade Hemeon, Vice-President of Communications for Trimark. It was not surprising that people came a'knocking. Trimark was not exactly for sale, but there had been discussions and many possibilites for mergers. "Amvescap came up to the plate and made the right offer," Jade says.

Pending regulatory approval and votes in favour from both companies' shareholders, the new, combined fund family should be better and stronger than the individual parts. "There are many good aspects of this deal that would benefit investors," she says.

"AIM and Trimark funds can complement each other very well. Both families have strengths that fit together very well." So far, it seems like it would be a match made in heaven. The Trimark staff is excited about the deal and is looking forward to joining the larger organization of Amvescap, which also includes the AIM and Invesco funds in the U.S. Trimark, which manages over $25 billion in Canada, is much larger than AIM but the new parent company's financial backing could go a long way towards propelling the new entity to newer heights. "They have extremely strong financial resources as well as international strength and experience."

The 800 employees at Trimark and the 200 at AIM would work together in expanding advertising efforts, developing new products, enhancing the technological infrastructure of the company and perhaps attracting certain key people to grab even more market share.

But when it comes down to it, investors want to know: how is this going to affect my investments?

The most significant point for investors, according to Jade, is that the new combined family will give unitholders a much wider range of choices. "They will have a choice of complementary investment styles," she says. Trimark funds will continue to invest in the style that they are known for, based on picking attractively priced stocks and doing a lot of homework, but they will be complemented by growth and momentum-style investing offered by AIM. "Some styles can be out of favour at times," Jade says, "so this will allow investors to switch between styles according to their needs."

This would have come in handy two years ago when Trimark funds started to lose steam (and investors). Value-oriented funds in general, and Trimark's in particular, underperformed the high-growth oriented funds at other families, resulting in large redemptions and some management changes. In the past year, Trimark has been busy assembling a stronger investment team with high-profile names, like Bill Kanko, Kiki Delaney and Heather Hunter, which has started to pay off. Investors should be happy to know that the key people involved are planning to stay together.

Bob Krembil, company founder and overseer of the equity management team, stands to make a sizeable financial profit if the deal goes on but he is still committed to stay. "He could very easily retire anytime, quite comfortably," Jade says, "but he loves what he does and he plans to keep on doing it."

One of the things that Trimark is known for (and happy to brag about) is their excellence in customer service. "We have high concern for our investors, and have won many awards in customer service in the industry," Jade notes. "We put primary importance on customer satisfaction and service." With Amvescap's additional resources, Jade implies that the company would be able to maintain and improve the score of their customer service, with, for example, a bigger focus on investor education.

Only time will tell whether the new fund family (which most likely will feature both AIM and Trimark names) will be able to offer more value to investors, but indications are that it could be a successful merger.

Levi Folk, Richard Webb and Peter Diplaros are Investment.com mutual fund specialists and editors of the Fund Counsel newsletter. They can be reached by e-mail at peterd@hqinvestment.com.