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The skinny on three big foreign players looking to fatten up

AIM, Trimark and FT all have strengths, KEITH DAMSELL writes, and unique challenges ahead


CI Fund Management Inc.'s unsuccessful pursuit of Amvescap PLC has put foreign fund companies operating in Canada in the spotlight. Three major players -- AIM Funds Management Inc., Fidelity Investments Canada Ltd.and Franklin Templeton Investments Corp.-- are each duking it out for market share in this country at tiny but important Toronto outposts for their foreign parents. Here's an overview of their successes, failures and challenges ahead.

AIM Funds Management

The boss: Philip Taylor, president and chief executive officer. He is operations-driven and very low key, described as the "Where's Waldo?" of the fund business.

Who's really in charge: Martin Flanagan, new head of British parent Amvescap PLC, a widely held, publicly traded fund manager.

Assets under management: Mutual fund assets managed for Canadians total $45.4-billion, up smartly from the combined AIM-Trimark assets of $34.9-billion held in 2000. Canada represents about 10 per cent of the parent company's $446-billion in assets under management, yet accounts for 36 per cent of operating profit.

Corporate culture: The most brazen and aggressive of the three foreign majors. Has forged strong ties with the investment advice community. The corporate parent is in a mess, and Canada's strong performance means Mr. Taylor and his team enjoy more independence than their foreign rivals.

Smartest moves: Lucky that AIM Funds won the heated contest for larger Trimark Investment Management Inc. five years ago. Despite losing some key personnel, the Trimark brand and its stock pickers are the source of the company's success. The $5.3-billion Trimark Income Growth Fund and the $301-million Trimark Floating Rate Income Fund are two of the sector's fastest-growing products.

The skinny: AIM Trimark has held on to its top five ranking when it comes to assets under management. Despite mediocre interest in the AIM brand, there's little to suggest a loss of momentum soon.

Biggest challenge ahead: With potential buyers cooling their heels, Mr. Flanagan is under pressure to get Amvescap quickly back on track. A shakeup is expected, likely creating some unease across the company, even at its Toronto jewel.

Fidelity Investments

The boss: Robert Strickland was named president in February. He is a broker by training and spent the past two years overseeing the company's sales and distribution.

Who's really in charge: The private company is controlled by the Johnson family of Boston.

Assets under management: The Canadian mutual fund business tops $32.9-billion; virtually unchanged from $33-billion in 2000. That's less than 3 per cent of the U.S. parent's $1.2-trillion in fund assets under management.

Corporate culture: Fidelity is very secretive about investment decisions. For example, executives and fund managers rarely grant interviews. Investment research is intense and deep. In the wake of U.S. and Canadian fund trading scandals, the company prides itself as the safe place to park money.

The skinny: Fidelity is a lot like Microsoft boss Bill Gates, quiet and nerdy on the outside but instinctively aggressive with intense resources to bear. The company's sheer girth makes it a dangerous foe, but many believe it has been rudderless in recent years, with the best and brightest staff plucked to serve the U.S. head office.

Biggest challenge ahead: Fidelity had strong momentum through the '90s, energy that seemed to dissipate with the market's shift in 2000. Mediocre fund performance and an absence of income and yield products led to $1.5-billion in redemptions last year. In recent months, Fidelity's Bay and Yonge Street offices have been buzzing with activity. Fund fees have been cut, new products rolled out and the sales team overhauled. Several describe the company as re-energized but the jury is still out when it comes to the new boss. Does Mr. Strickland have the right stuff?

Franklin Templeton

The boss: Don Reed, president, chief executive officer and fund manager. Mr. Reed has been at the FT helm for a stunning 16 years, making him one of the industry's longest-serving senior officers.

Who's really in charge: FT is a subsidiary of Franklin Resources Inc. of San Mateo, Calif. The fund company is publicly traded but the Johnson family -- not related to Fidelity's Johnson clan -- owns about one-third of the shares.

Assets under management: Mutual fund assets managed in this country total $21.8-billion, up slightly from $20.5-billion five years ago. Canadian operations represent about 4 per cent of roughly $525-billion in assets under the parent's management.

Corporate culture: Despite a slick Toronto general meeting held every July, FT is widely viewed as a stodgy, conservative firm. Recent settlements in the U.S. and Canada over trading practices were a blow to the image-conscious company.

Smartest moves: Shrewdly bought Bissett & Associates Investment Management Ltd. in 2000 and the Calgary fund manager is now a key growth engine. Wrap program Quotential (a conservative, goal-oriented portfolio of funds) has cannibalized FT funds but has also curbed redemptions. The three-year-old program has $3.5-billion in assets under management.

The skinny: FT is described by some as the missed opportunity in the Canadian fund business. Way back in 1954, Sir John Templeton launched the Templeton Growth Fund and, for a time, the company was the industry leader. But the firm has historically operated below the radar and failed to excite the financial advice community.

Biggest challenge ahead: Fixing the lacklustre Templeton Growth Fund. Month after month, year after year, redemptions whittle away at the former powerhouse. It's now about $5.5-billion in size, less than half the $12-billion in assets under management in 1999.

© 2007 The Globe and Mail. All rights reserved.

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