TORONTO -- Timing has never been Kim Shannon's strong suit.
The fund manager launched a Canadian equity fund in 1999, just as the investment community's appetite shifted to global markets. Then, during the depths of the 2002 bear market, Ms. Shannon launched her own firm, Sionna Investment Managers.
Now, just as investors' attention has once again shifted overseas, the fund manager is preparing to market a slate of new Canadian equity funds with partner Brandes Investment Partners & Co. To make matters worse, some claim that the biggest opportunities in value-style money management -- Ms. Shannon's bread-and-butter philosophy -- are receding as more financial advisers look to momentum-driven growth-style investing.
"My whole career is totally timed wrong," Ms. Shannon said in an interview. But she is convinced there is "always room" for a value-driven equity fund in portfolios.
"There is tradeoff between risk and rewards. We have married the two. We get pretty good returns without taking on a lot of risk," she said.
To date, Ms. Shannon's departure from CI Financial Income Fund has overshadowed discussions of new products. On Oct. 3, Ms. Shannon handed in her resignation to CI Financial and then held a press conference to discuss Sionna's new joint venture with Brandes. Sionna ran CI's biggest fund, the $6.7-billion CI Canadian Investment fund.
On Jan. 30, Sionna and Brandes will begin a 12-city tour to market their new alliance. Industry watchers suggest the funds -- Brandes Sionna Canadian Balanced, Brandes Sionna Canadian Equity, Brandes Sionna Canadian Small-Cap Equity and Brandes Sionna Diversified Income -- may face a mixed reception.
There's "no question" sentiment has shifted to global markets in the wake of Canada's four-year bull market, said Bob Scott, publisher of The Mutual Funds Advertising Performance Report.
Indeed, foreign common share funds reported net sales of $6.6-billion last year, the Investment Funds Institute of Canada said last week. In contrast, Canadian common share funds reported net redemptions of $7.3-billion in 2006.
Ms. Shannon has "a good name, a good reputation," said Dan Hallett, an independent fund analyst. Nevertheless, "competition in the fund industry is a challenge, period," and there's a long list of Canadian managers posting excellent returns, he said.
Meanwhile, a number of growth-style money managers are in a buoyant mood, a group that includes Vancouver's Phillips Hager & North Investment Management Ltd. and Greystone Managed Investments Inc. of Regina. They forecast a slowdown in corporate earnings, optimum conditions for growth managers.
The success of the Sionna and Brandes partnership ultimately rests on performance, and Ms. Shannon is confident. Sionna typically outperforms in weak or declining markets, and the portfolio is positioned to weather "a potential pullback," she said. Blue-chip financials figure prominently in Sionna's $1.1-billion equity portfolio, a good benchmark for the Brandes funds. The investment pool holds no pricey technology shares, and limited health care equities or debt-heavy telecom stocks.
"The market isn't pricing in all the risks that are out there," Ms. Shannon said. "Eventually, a risk will come and really whack the market down. Evaluations are highish, so the market is vulnerable."
© 2007 The Globe and Mail. All rights reserved.
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