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High-profile portfolio managers leaving mutual fund firms

Two veteran mutual fund managers are on the move.

CI Mutual Funds Inc. lost Ben Cheng to Fortress Investment Group, a New York-based hedge fund manager that recently opened a Toronto office. At his former employer, Mr. Cheng was one of several portfolio managers who oversaw the CI Signature High Income fund. He was considered the $50-billion fund manager's in-house expert on income trusts.

Fortress was founded in 1998, and has $12-billion (U.S.) in assets under management.

Toronto-based CI plans to have senior vice-president Eric Bushell, another veteran member of the Signature fund team, and other colleagues pick up Mr. Cheng's coverage.

Mr. Cheng is the latest in a string of traditional mutual fund managers to move over to the hedge fund industry, which offers the potential of great investing freedom and higher compensation for top performers.

AIC Ltd. will lose the services of executive vice-president and portfolio manager Larry Sarbit next month. He has not announced any future plans. Mr. Sarbit shared responsibility for managing $2-billion (Canadian) in three funds -- AIC American Focused, AIC RSP American Focused and AIC American Focused Plus, which is a $30-million hedge fund.

This is the latest in a series of departures from Burlington, Ont.-based AIC, which has seen assets under management fall by a third in the past three years, to $10.4-billion at the end of February. Peter Hodgson, national sales manager, left last week. And Tim Cestnick, AIC's director of tax and estate planning, resigned in early February.

AIC is Canada's 15th-largest mutual fund manager, down from 11th spot in 2002. The privately held company is owned by founder and chief executive officer Michael Lee-Chin.

© 2007 The Globe and Mail. All rights reserved.

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