AGF loses pair of award-winning managers

Charles Oliver and Jamie Horvat, managers of a number of AGF mutual funds including the award-winning AGF Precious Metals Fund, resigned on Friday. AGF Funds said the pair will be replaced by their mentor, AGF Management’s vice-chairman W. Robert (Bob) Farquharson.

AGF Funds’ president, Randy Ambrosie, would not disclose why the pair left, other than to say their departure was amicable. The funds affected by their departure are the AGF Canadian Growth Equity Fund, AGF Canadian Resources Fund, AGF Global Resources Class, AGF Precious Metals Fund and AGF Canadian Small Cap Fund.

The company says Farquharson, who is in his 45th year with AGF, will take on full management responsibilities for their funds.

With a heavy resource focus, all of the funds have performed well during the commodities boom of the past few years, most notably the AGF Precious Metals Fund, which has won the Canadian Investment Award for best precious metals equity fund the last two years in a row.

Originally trained as a geologist, Oliver joined AGF in 1997. In 2002, he was named co-manager to Farquharson on the AGF Global Resources Fund, the AGF Canadian Resources Fund and the precious metals fund. In 2004, he was named manager of the AGF Canadian Small Cap Fund.

Horvat joined AGF in 2004. In October 2007, he was appointed portfolio co-manager of the AGF Canadian Resources Fund, the AGF Precious Metals Fund and the AGF Global Resources Class.

Bhavna Hinduja, a fund analyst with Morningstar Canada, says the departure of Oliver and Horvat is a big loss, but it is tempered by the fact the man who trained them will be overseeing their funds.

“We do believe this is a significant loss for the AGF team in general, and particularly the loss of Charles Oliver, who has really been the knowledge base for the resource team over there,” Hinduja says. “With that said, we are not overly concerned by their departure because Bob Farquharson, who has really been the mentor for both Charles and Jamie, is going to take over the lead manager responsibilities for all of those funds. He is pretty much the grandfather of the AGF team.”

Ambrosie emphasized that Farquharson has always been active in the management of the funds behind the scenes, and since he only recently relinquished full management a couple of years ago, many of the funds’ holdings are companies he bought.

“What Bob had not done was take an active role in the marketing of the funds. Bob was happy to have the younger guys go out on the road,” Ambrosie says. “Let’s make no mistake about it — these two gentlemen left AGF on very amicable terms. They were passionate about getting their story told, but, you know, one of the members on the investment management team said there was never a day that Charles and Jamie weren’t in Bob’s office talking about positions in the portfolio, comparing notes and sharing ideas. So Bob has had a very active role with these two young men.”

Hinduja does have concerns about the longevity of Farquharson’s management; after 45 years in any business, most people are eyeing retirement. Ambrosie dismisses those concerns, saying that Farquharson’s reappointment to the funds is permanent. He says in addition to managing the funds, Farquharson will be looking to mentor a new crop of talent.

“Bob was in this morning talking to the team. He’s passionate about the business. He’s incredibly healthy and incredibly interested in what we are doing at AGF. Bob’s been with the firm since 1963. He loves the firm, he loves the business, and there’s no reason to believe he won’t be with us for many years to come,” Ambrosie says. “We’ll still continue to develop a team. A great example of this is Coulter Wright [who is being added to the AGF Canadian Growth Equity Fund]. He’s learning the discipline of being an investment analyst. He’s young, energetic and passionate about the investment management business, and he’ll be another one in the great line of students that Bob has taught.”

What of the fate of his departing protégés? The nature of their departure leads industry analyst Dan Hallett, president of Dan Hallett and Associates, to speculate they have been hired by another firm or are going to start their own.

“They are leaving together, so they will probably end up somewhere together, whether it’s their own firm or at a competitor,” Hallett says. “Their numbers are good at the time they are leaving. That would be my first guess, without really knowing anything in terms of what their actual plans are.”

Hallett notes it’s a tough loss to have experienced resource experts depart during a period where precious metals and commodities are in high demand.

“Any time you’re looking at a specialty, it becomes a little more difficult to find people. The fact that we have had a commodities boom — there are more qualified replacements available than there would have been five years ago,” he says. “The prolonged successes in commodities have provided incentives for people to specialize in that area. It’s pretty standard that when you need somebody, you start calling people you like at competing firms.”

In fact, AGF confirms it is looking outside its walls to recruit a specialist in global and Canadian resources.

“We are going to the market to look for a resource-specific talent, someone who can add value to the team. That search is underway,” Ambrosie says.

The Bay Street rumour mill has it that the pair will re-appear at Sprott Asset Management, although there is little substantiating evidence.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com

(01/28/08)

Mark Noble