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Mutual Fund News

High-profile fund manager leaves AGF

INVESTMENT FUNDS REPORTER

Christine Hughes, a high-profile manager at AGF Management Ltd., has left the fund firm just as the RRSP contribution season kicks into gear.

Spokeswoman Lucy Becker confirmed yesterday that Ms. Hughes has departed AGF. A press release said she was going "to pursue outside interests." Ms. Hughes could not be reached for comment.

Ms. Hughes ran the $2.3-billion AGF Canadian Balanced Fund, which won the 2009 Lipper Award for performance in the Canadian equity balanced category for the one-, three- and five-year periods ended in Dec. 31, 2008.

Mutual fund analysts suggested the uncertainty arising from the departure of Ms. Hughes could make it more difficult to sell the fund during the season for registered retirement savings plans. It also comes at a time when balanced funds are in vogue.

"A manager change like this is going to be a little tougher on the salespeople who are trying to generate interest in the fund," Al Kellett, a fund analyst at Morningstar Canada, said in an interview.

Michael White, who joined AGF early last year and worked with Ms. Hughes on the fund, will become lead manager subject to regulatory approval, the firm said.

Toronto-based AGF, which has been suffering from net redemptions during the past couple of years, saw $103-million in net outflows in December. Dan Hallett, director asset management at HighView Asset Management Inc., described the departure of Ms. Hughes as a "big blow" because the Canadian Balanced Fund is "a bit of a rarity in that it is very actively managed from an asset standpoint.

"A lot of balanced funds do not do anything other than pick stocks and then throw in some Canada bonds," he said. "There is [in this fund] an attempt to deliver value - not only from the standpoint of selecting securities or asset, but also from selecting asset classes and making shifts in pretty bold fashion."

In 2008, Ms. Hughes' fund was invested in about 30 per cent each in equities, cash and gold because she foresaw a market meltdown. "I had been expecting this blowup for quite a few years," she said in an interview last year. "There was so much debt being piled up in the system. It was just time, in my mind, when the bomb would go off."

AGF Canadian Balanced Fund lost only 7.4 per cent during the 2008 market downturn, but lagged last year with a 1.8-per-cent gain because of its defensive stance. The fund has posted an average annual return of 4.5 per cent over the five years ended Dec. 31.

Martin Hubbes, chief investment officer at the fund arm of AGF, suggested that Mr. White is the "ideal successor" to assume leadership of the fund given his past history. He started his career working with Ms. Hughes at a private investment counselling firm in the 1990s; both left that organization to manage a retail mutual fund as a team at another company, AGF said.

© 2007 The Globe and Mail. All rights reserved.

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