WHAT ARE WE LOOKING FOR?
How star fund managers are faring in their new shops.
When a high-profile manager leaves your fund, the big question is whether to follow them. Sometimes, you don't need to decide right away because a manager has a non-compete clause in their contract prohibiting them from starting work immediately.
We look at the returns of four managers who have left their old firm within the past five years to see how their new funds performed in the 2008 bear market versus the old ones they left behind.
In some instances, the new funds may not be directly comparable to the old funds because the strategies of both investments can differ. However, this exercise is only to see how investors might have fared if they chose to be loyal.
The managers include:
Alan Jacobs who quit Sceptre Investment Counsel Ltd. in 2007 to join Sprott Asset Managment.
Bill Kanko who left Invesco Trimark in 2004, and began running money for Hartford Investments Canada in 2006.
Alan Radlo who left Fidelity Investments Canada at the end of 2006, and started at CI Financial in 2007.
Kim Shannon who quit CI in 2006 to run money for Brandes Investment Partners.
WHAT DID WE TURN UP?
As expected, everyone lost money last year. But we are only checking out performance relative to their peers. The smaller and more nimble new funds often, but not always, beat the old ones.
When Mr. Jacobs was wooed over to Sprott, his move created expectations because his new employer has what one analyst then described as a "performance culture."
Despite performance fee incentives, Sprott Small Cap Equity's 53-per-cent loss barely differed from Sceptre Equity Growth's 54-per-cent decline.
Investors who followed Mr. Kanko to Hartford Global Leaders (which had been run by Boston-based Wellington Management until mid-2006) lost less money last year than if they had stuck with his old funds. His new fund lost 20.4 per cent compared with a sharper drop of 27 to 28 per cent for the Trimark funds.
Mr. Radlo took a year off after leaving Fidelity because he had a non-compete clause. But that certainly didn't hamper his stock-picking ability.
His CI Cambridge Canadian Equity's 23.6-per-cent loss dramatically outperformed his peers running his former Fidelity True North and Fidelity Canadian Growth funds. They, respectively, shed 35 to 37 per cent. The same is true for CI Cambridge Global Equity, which lost 17.8 per cent compared with Fidelity NorthStar's 33-per-cent plunge.
Mr. Radlo's CI Cambridge Canadian Asset Allocation Fund, for which he oversees the equity portion, was virtually neck and neck with his old Fidelity Canadian Asset Allocation Fund.
Ms. Shannon, who was named fund manager of the year in 2005 at the Canadian Investment Awards, has stayed ahead of her old stock fund even though her new one charges higher fees.
Her Brandes Sionna Canadian Equity fund lost 24 per cent last year compared with the 27.4-per-cent drop for CI Canadian Investment fund. Her old fund now has a higher foreign content - 24 per cent compared with 11 per cent when Ms. Shannon left.
Her Brandes Sionna Canadian Balanced fund, however, had a slightly higher loss of nearly 19 per cent in 2008 compared with CI Signature Canadian Asset Allocation fund, which shed 15 per cent.
|Returns of star managers in their new life|
|(as of Dec. 2008)||Latest||% return|
|Category Assets ($-mil)||MER||2008||2007||2006||2005||2004|
|Alan Jacobs (Sprott)|
|Sprott Small Cap Equity-A*||Cdn. Sml/Md Cap Equity||76.0||2.80||-53.1|
|Sceptre Equity Growth-A||Cdn. Sml/Md Cap Equity||252.1||1.58||-54.0||16.3||38.7||19.9||25.6|
|Bill Kanko (Hartford)|
|Hartford Global Leaders A**||Global Equity||129.0||2.25||-20.4||-9.4||10.7|
|Trimark Fund-SC||Global Equity||1,374.3||1.62||-28.6||-9.7||27.0||4.2||4.8|
|Trimark Select Growth||Global Equity||2,689.1||2.34||-27.4||-16.0||23.7||2.6||5.3|
|Alan Radlo (CI Financial's Cambridge)|
|CI Cambridge Canadian Eqt Corp Cl||Cdn. Equity||188.5||2.45||-23.6|
|Fidelity True North-A***||Cdn. Equity||730.6||2.39||-34.6||12.5||17.3||23.4||14.5|
|Fidelity Canadian Growth Company-A||Cdn. Focused Equity||248.6||2.46||-37.3||13.0||8.3||13.4||17.2|
|CI Cambridge Global Eqt CC||Global Equity||187.3||2.47||-17.8|
|Fidelity NorthStar-A||Global Equity||904.1||2.46||-33.2||-1.6||11.1||9.0||14.5|
|CI Cambridge Cdn Asset All. CC||Cdn. Equity Balanced||171.4||2.48||-20.0|
|Fidelity Canadian Asset Alloc.-A||Cdn. Equity Balanced||1,783.0||2.38||-19.4||5.9||11.7||14.0||10.7|
|Kim Shannon (Brandes Sionna)|
|Brandes Sionna Canadian Equity||Cdn. Equity||459.1||2.49||-24.1||1.4|
|CI Canadian Investment||Cdn. Focused Equity||3,749.6||2.25||-27.4||1.4||14.2||22.0||15.2|
|Brandes Sionna Canadian Balanced||Cdn. Equity Balanced||158.2||2.28||-18.6||-2.4||12.4||-3.6||5.4|
|CI Signature Cdn Asset Allocation||Tactical Balanced||268.6||2.25||-15.0||2.4||9.3||13.0||10.0|
|MSCI World ($ Cdn)||-26.1||-7.1||20.6||6.6||7.3|
|S&P 500 index||-38.5||3.5||13.6||3.0||9.0|
|S&P/TSX composite index||-35.0||7.2||14.5||21.9||12.5|
|S&P/TSX Small Cap||-47.9||-2.9||6.7||8.9||5.8|
*MER excludes performance fee which may be charged.
**Bill Kanko took over fund in mid-2006.
***Alan Radlo ran this fund from 1996 to 2002.
© 2007 The Globe and Mail. All rights reserved.
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