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Mutual Fund News

When the name's the thing

Corporate strategy Build the company through acquisitions while maintaining different offerings through original brands

FUNDS REPORTER

In a bid to freshen up Mackenzie Financial Corp.'s mutual fund lineup, Charles Sims has snapped up another brand name for its collection.

Its latest offering to investors will come after completing this week's $297-million takeover of investment firm Saxon Financial Inc. in late September.

Saxon will become a sub-brand under the Mackenzie umbrella.

Its current stable of names include Cundill, Putnam, Universal, Sentinel and Maxxum. Only Mackenzie and Ivy are home-grown brands.

"The sub-branding strategy helps differentiate our products in the marketplace," said Mr. Sims, Mackenzie's president and chief executive officer.

"As the markets change and evolve and investors' needs change, they can switch within the different brands within our family," he added.

A BRAND WITH LOTS

OF SUB-BRANDS

Unlike rivals CI Investments Inc. or AGF Management Ltd., which have histories of merging newly acquired funds into their main brands, Mackenzie has tended to keep the names in play.

While some might argue the different brands could be confusing, they also give the feel of having many choices. So why go elsewhere?

Diversity is even part of the corporate culture of Mackenzie's Winnipeg-based parent IGM Financial Inc., Canada's second-largest fund company, a unit of conglomerate Power Corp. of Canada.

IGM owns Mackenzie, which sells its funds through independent financial advisers, and Investors Group Inc., which sells its funds through its own network of advisers. Both operate as separate empires managed co-operatively at the top by Mr. Sims and Murray Taylor, the co-CEOs of IGM.

THE CUNDILL MODEL

Cundill is a deep-value investment shop with a global outlook that was founded by investment guru Peter Cundill, who is still the chief investment officer overseeing the Mackenzie Cundill funds.

Toronto-based Saxon has $13-billion in assets, including $2-billion in mainly no-load mutual funds and $11-billion in institutional assets run by its Howson Tattersall Investment Counsel unit.

Like Cundill, Saxon's Howson Tattersall investment team will become part of Mackenzie, but operate independently.

Robert Tattersall, CEO of Saxon, and partner Rick Howson, who also oversee the Saxon mutual funds, will stay with Mackenzie until at least 2010.

"It was important for Bob and Rick that they stay involved in the business, that their team stays together, and that they have an opportunity to grow the business," Mr. Sims said.

"That is why we have made the decision to maintain the Saxon brand as a sub-brand of Mackenzie, and to market their multicap value style."

WHY SAXON SOLD

Negotiations with Saxon began in earnest in the spring after Mackenzie received a call from Saxon through its investment advisers. A special committee of Saxon's board had begun reviewing strategic alternatives, including a sale, about a year ago.

"The acquisitions have to strategically fit the general business direction, and have to make sense financially," Mr. Sims said. "Most importantly, we have to like the people because this business is all about people."

But Saxon's strategic relationship with the business arm of the Canadian Medical Association, which owns 30 per cent of investment firm, was also key to the deal, he added.

CMA owns a financial-planning unit catering to doctors and their families, and also MD Management Ltd., a fund company whose products are run by external managers. Howson Tattersall runs $9-million of MDM's assets as part of its institutional business.

"The institutional relationship was important to us," said Mr. Sims, referring to the pipeline that Mackenzie will get to the investment wealth of this country's doctors.

Not counting the Saxon acquisition, Mackenzie has about $60-billion in assets with about 27 per cent in institutional assets and the balance in mutual funds. The acquisition of Saxon would boost total assets to $73-billion with 38 per cent in the institutional offerings.

"What we liked about it [acquisition] was that the people had good reputations," he said. "They had built a good business around a value investment process on the equity side, and had a strong fixed-income team."

Charles Sims

Title: President and CEO of Mackenzie Financial Corp., and co-president and CEO IGM Financial Inc.

Born: Toronto, age 47

Education: Administrative and commercial studies BA from University of Western Ontario and C.A.

Last job: Chief administrative officer of global distribution at fund giant Franklin Resources Inc. and responsible for opening up its business in China.

Family: Wife Laurie and two girls, 12 and 17.

Hobbies: Golf, sailing and power boating.

Recent reading: New Ideas from Dead CEOs: Lasting Lessons from the Corner Office by Todd G. Buchholz and Seabiscuit: An American Legend by Laura Hillenbrand

Best move: "Marrying my wife."

Worst move: "Not taking an international transfer to the U.K. earlier in my career when I was with Coopers & Lybrand."

The mutual brands

Mackenzie: Mix of strategies. Created in 1967 by founder Alexander Christ.

Ivy: Created in 1992, under value-oriented manager Jerry Javasky.

Sentinel: Focuses on fixed-income offerings now. Acquired Sentinel Investment Management Corp. in 1988.

Universal: More of a growth tilt to its stock funds. Bought funds from CI Investments Inc. in 1992, but had been the external manager for them.

Cundill: Deep-value contrarian investing. Acquired funds in 1998.

Maxxum: Equity-income funds with a focus on dividends. Acquired from IGM's Investors Group Inc.'s former subsidiary Scudder Maxxum Co.

Putnam: Blended value and growth style. Acquired Canadian funds last December from Putnam Investments, which was bought last year by sister company Great-West Lifeco Inc.

© 2007 The Globe and Mail. All rights reserved.

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