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AGF's new line of products puts its money where its mouth is

Portion of management fees waived if fund underperforms, KEITH DAMSELL reports


AGF Management Ltd. will today unveil a portfolio product with what amounts to a performance-linked, money-back guarantee, the latest salvo in the fund industry's competitive battle over the fees paid by unitholders.

AGF Elements is a new group of portfolios with five mandates: conservative, balanced, growth, global and yield. The kicker is that four of the five so-called "wraps" with an equity component will waive a portion of the management fee if returns fall short of the industry benchmark return over a three-year period. The management fee refund is capped at 90 basis points. (A basis point is 1/100th of a percentage point.)

"It's an unprecedented commitment to the investor and the money manager," said Randy Ambrosie, AGF's executive vice-president of sales and marketing in Toronto.

The idea of a performance-linked fee rebate is believed to be a first in Canada. "It's an awesome idea," said Michael Morrow, a Thunder Bay, Ont., financial adviser.

What unitholders pay for money management has come under the spotlight in recent months. Earlier this year, CI Fund Management Inc. and Fidelity Investments Canada Ltd. cut management fees. On Friday, a series of fund mergers prompted Dynamic Funds to reduce fees on 15 funds by an average of 25 basis points.

AGF's move "is a good indication of how pricing is becoming more competitive," said John Aiken, analyst at National Bank Financial Inc.

AGF's marketing of the Elements wraps will begin in November. AGF wants to end more than three years of net redemptions in its retail funds by April next year.

Weinberg back on track

Marty Weinberg is back.

The former head of financial advice giant Assante Corp. is launching a private equity "buyout" fund to be based in Winnipeg. Canterbury Park Capital LP plans to raise up to $300-million from institutional investors and use the cash to snap up controlling interests in private firms.

Mr. Weinberg's seed investors are a who's who of the Winnipeg business scene. Leonard and David Asper, senior executives at CanWest Global Communications Corp., and Bob Silver, co-owner of clothing manufacturer Western Glove Works and the Winnipeg Free Press, along with Mr. Weinberg, have kicked in a total of $70-million in start-up capital.

The four men will soon be joined by a to-be-named Toronto partner, a private equity manager leaving his current company. Five former senior managers of Assante are also on the Canterbury payroll, including former chief financial officer Denis Taillieu.

Canterbury marks the Canadian return of Mr. Weinberg. The entrepreneur created Assante in 1995 and, over the next seven years, gobbled up some 26 industry rivals. Mr. Weinberg's tenure was controversial. The company's financial advisers were significant shareholders and the firm's growth strategy rested on shifting clients to in-house funds.

In 2003, the firm was sold to CI Fund Management Inc. for $846-million, a deal that meant more than $200-million for Mr. Weinberg personally. He has spent much of the past two years running Loring Ward International Ltd., the former U.S. operations of Assante that cater to high net worth clients. Mr. Weinberg left Loring in February.

IFIC conference this week

Don't let the presence of Toronto Argonauts coach Michael (Pinball) Clemons and comedian Rick Mercer fool you -- it won't be all football and funnies at the Investment Funds Institute of Canada's annual conference this week in Toronto.

In recent years, many senior fund executives have skipped the IFIC event and sent corporate lawyers in their absence. As a result, this year's agenda has a regulatory flavour with five sessions focusing on compliance. Attendees can get the nitty-gritty on a slew of new legislation, from fund disclosure and independent review committees to Securities Act changes.

PHN offers income trust

Phillips, Hager & North Investment Management Ltd. is quietly dipping its toe in the income trust market, an indication that the fund industry's exposure to the asset class may be near its peak.

Historically, the Vancouver fund manager has been a stalwart "growth at a reasonable price" investor and has shunned investing in income trusts. But intense demand for yield and income products from its clients prompted the company to rethink its views and in June, the firm quietly started up the PHN Canadian Income Fund.

As of June 30, three blue chip trusts together made up about 13.5 per cent of the $4.9-million fund's assets under management: O&Y Real Estate Investment Trust, Canadian Hotel Income Properties Real Estate Investment Trust and the Chartwell Seniors Housing Real Estate Investment Trust.

PHN has yet to begin marketing the fund to a broad client base. As of June 6, two investors held about 70 per cent of outstanding units.

© 2007 The Globe and Mail. All rights reserved.

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