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AIM loses Trimark star

FUNDS REPORTER

Award-winning manager Richard Jenkins has resigned from AIM Funds Management Inc., dealing yet another blow to the fund giant now suffering from heavy outflows of money.

Mr. Jenkins, who runs the $5.9-billion Trimark Select Growth Fund, plans to join former colleague Bill Kanko at his firm, which runs money only for Hartford Investments Canada Corp., sources say.

Mr. Jenkins, who gave notice on Friday and will join Black Creek Investment Management Inc. when the non-compete clause in his contract expires in July, is the third defection by a senior fund manager since August.

That was in addition to last October's departure of AIM Funds chief investment officer Patrick Farmer, who has still not been replaced.

"It's a big loss," Dan Hallett, a Windsor, Ont.-based independent fund analyst, said yesterday in an interview. "With every departure, the level of concern rises exponentially among advisers and myself."

The resignations "may accelerate" net redemptions that reached nearly $744-million in January," said Mr. Hallett, who has 10 recommended Trimark-brand funds "under review."

"I was afraid of further departures."

Investors have been pulling money out of AIM Funds for six consecutive months, totalling $2.1-billion in outflows by the end of January. AIM is Canada's sixth-largest fund company with $41-billion in assets.

Its woes are exacerbated by a move by two other departed managers, Tye Bousada and Geoff MacDonald, to form EdgePoint Capital Partners Inc. - bankrolled partly by Robert Krembil, co-founder of Trimark Financial Corp.

Publicly traded Trimark, a popular fund among advisers, was acquired in 2000 for $2.7-billion by AIM Fund's British-based parent Invesco PLC, formerly known as Amvescap. The acquisition vaulted AIM Funds into the big leagues in Canada.

Toronto-based EdgePoint is seeking approval from regulators for its registration. Mr. Krembil, 65, will be a silent partner.

The 43-year-old Mr. Jenkins, meanwhile, could not be reached for comment. He joined Trimark in 1994, and has won industry awards for the best European equity fund in 2004, and best global balanced fund for three years from 2004 to 2006.

The recent defections may stem from the former Trimark managers having trouble coping with the bureaucratic corporate culture of a larger organization, Mr. Hallett said.

They were used to being part of a smaller company "run by its founder [Mr. Krembil] and one of the greatest investors of our industry and went to running money at just another big mutual fund company," he suggested.

The successful courtship of Trimark was hailed as a smart move by Amvescap because of the complementary investment styles of the two firms in Canada. AIM is growth manager, while Trimark is more of a value manager.

AIM bought Trimark after its fund performance suffered in the late 1990s as it refused to ride the technology bubble, which burst in 2000. "When the tech boom really did fall apart, that was when a manager like Trimark excelled," Mr. Hallett recalled.

Trimark turned out to be AIM Funds' "saviour" at that time because some money that would have flowed out of AIM stayed within its fold because of the strong performing Trimark funds, he said.

Like other value-oriented mutual fund names like Brandes, Saxon and ABC, the Trimark-branded funds have again been suffering from underperformance over the past year, and it's not unusual in the latter stages of a bull market, Mr. Hallett said.

"They will come back - it's just a matter of time," but some of the top managers are no longer there, he said.

In January, Mr. Bousada resigned from the $5-billion Trimark Fund, a global stock fund similar to Mr. Jenkins' Trimark Select Growth Fund.

Mr. MacDonald, who left last August, ran about $12-billion in assets as lead or co-manager of the Trimark Income Growth, Trimark Canadian Endeavour and Trimark Global Endeavour funds.

While AIM's takeover of Trimark had a successful honeymoon for a few years, there are now cracks in that marriage, Mr. Hallett said.

"At this point, it certainly seems it hasn't worked out because a lot of their best managers have essentially gone," he said.

© 2007 The Globe and Mail. All rights reserved.

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