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Fund king Kanko returns to the game

Hartford hopes the star manager's presence will help boost its meagre assets in Canada, KEITH DAMSELL writes

Bill Kanko is back.

The star fund manager who helped build the Trimark brand in Canada has returned from two years in obscurity. Mr. Kanko has agreed to be sub-adviser of a global fund on behalf of Hartford Financial Services Group Inc. It's a high-profile hiring that the U.S. insurance firm will soon be promoting across the investment community.

"It's a very good move for Hartford," said Dan Richards, an industry marketing consultant. "When you are a new player on the scene, it's always a struggle to get people's attention. . . . This will give Hartford a chance to get in the door."

Mr. Kanko's career path has been nomadic. He built his reputation through the 1980s and early 1990s at Trimark Financial Corp., then left in 1994 to co-found Bluewater Investment Management Ltd. Three years later, he was at Mackenzie Financial Corp. and then, in 1999, was lured back to Trimark.

The timing of his return was perfect and cemented his star status. The fund manager's knack for finding undervalued global stories coincided with the meltdown of the growth-focused tech cycle. Between 2000 and 2003, Mr. Kanko's Trimark Fund and Trimark Select Growth Fund posted some heady double-digit returns while competing global funds were in the red.

Mr. Kanko "has probably got as good a reputation as you can get," independent fund analyst Dan Hallett said.

Industry consolidation saw AIM Funds Management Inc. swallow Trimark, a deal that "totally changed" the corporate culture, Mr. Kanko said. More significantly, the fund manager was a victim of his own success, personally managing a whopping $13-billion for the merged company.

"It was getting less and less fun because it meant having to look at bigger and bigger companies all the time," he said. A long-term future with AIM was of little interest, and in April, 2004, he resigned.

Mr. Kanko has spent the balance of the past two years setting up Black Creek Investment Management Inc. The firm manages about $40-million from a non-descript office tower in west Toronto and is named after a stream that runs through Mr. Kanko's home course, the nearby Lambton Golf and Country Club.

Discussions with Hartford Investments Canada Corp. began about a year ago. The Connecticut company is in need of a high-profile champion in this country. It quietly launched its fund business in 2000 largely to serve the Canadian operations of key U.S. client Edward Jones & Co. But Hartford has been unable get a following; its 10 mutual funds available to Canadian investors hold a slender $485-million assets under management.

"Hartford has been in Canada, but doesn't have a name in Canada," said Laurie Davis, a fund industry veteran appointed president of Hartford's Canadian subsidiary in January.

Under the terms of the partnership to be announced today, Black Creek will take over management of the lacklustre $18-million Hartford Global Leaders Fund from Wellington Management Co. Mr. Kanko wants to build the Black Creek investment team and can foresee the firm managing as many as five Hartford funds several years from now.

The Black Creek-Hartford deal is described as a "perfect fit" by both Ms. Davis and Mr. Kanko. Hartford snags a star manager that will generate some much-needed buzz for the firm; Mr. Kanko, meanwhile, can focus on investing and avoid the marketing, legal and distribution challenges that confound many small fund managers.

Mr. Kanko brings "a breadth of strength" to the Hartford offering, said Brian Dentinger, a partner at Edward Jones. "Any time you can get one of the best money managers in Canada added to your team, it's a huge win."

Now a word from Jarislowsky

The red-hot metals market is poised to pop.

That's the opinion of Stephen Jarislowsky, the outspoken 80-year-old investment guru who shows no signs of mellowing. The Montreal manager spoke out on a wide range of issues in a recent interview with Report on Business Television's Howard Green.

A few nuggets:

Aside from a handful of uranium producers, the $60-billion money manager holds no metal or mining stocks. Mr. Jarislowsky believes the metals market, and by extension, mining stocks, are susceptible to market manipulation and are to be avoided. "Metals are nothing but a bubble, no different than the high-tech bubble," he said.

The heated oil and gas market has left the loonie grossly overvalued in relation to the U.S. dollar, Mr. Jarislowsky said. He fears Canada will be left "totally non-competitive in any activity that deals with the U.S." and the country's manufacturing sector will suffer the consequences. "If we don't watch out, all we are going to have left is a petroleum industry," he said.

His current buy list is comprised of a mix of undervalued, non-cyclical, large-cap U.S. and European stocks. Successful investors must be patient investors, he said. "Don't be influenced by emotions, don't follow the fashions, buy quality companies in growing industries."

kdamsell@globeandmail.com

© 2007 The Globe and Mail. All rights reserved.

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