Analyst questions Mackenzie’s fund manager moves

(April 30, 2003) Mackenzie Financial’s recent move to sever ties with Janus Capital is being welcomed by fund industry analysts. But not everyone is sold on the managerial changes Mackenzie plans for the Janus funds.

Last week, Mackenzie announced the termination of Janus as lead manager of the Janus American and Janus Global Equity funds. The Janus name will be phased out later this year.

Janus has lost a number of important staffers in the last few years, says Dan Hallett, senior investment analyst at Sterling Mutuals, most recently Warren Lammert, who headed the Janus American team, and Helen Young Hayes, manager of Janus Global.

“Poor performance combined with the loss of key senior people is not exactly an alluring combination,” Hallett said in a report. “I wasn’t nuts about Janus to begin with, so this simply reinforces my initial assessment.”

Mackenzie Financial Services president David Feather admits the departures of Lammert and Hayes were contributing factors to the company’s decision to ditch Janus. But Feather told Morningstar.ca he was more concerned about personnel turnover in general at Janus.

“It was something we were conscious of, that a lot of the people who had been around for a long time were departing the organization,” Feather said.

Ian Ainsworth, recently hired from Altamira, will take over Janus Global Equity on August 1, when the fund will be renamed Mackenzie Universal Global Future. Phil Sanders and Dan Becker of Kansas-based Waddell & Reed will assume responsibility for the new Mackenzie Universal U.S. Large Cap Growth fund, replacing Janus American.

Hallett calls Mackenzie’s decisions “half-right.”

“I obviously agree with the firing of Janus, but I don’t buy the implicit assumption that Ainsworth is the best choice for unitholders based on the existing pool of global talent,” he said, pointing to Ainsworth’s past aggressive style and inconsistent risk controls.

As for Waddell & Reed, Hallett says not overly impressed, admitting he has had limited exposure to the firm. “The U.S. market is extraordinarily difficult to beat over time. To convince me that a firm is capable of beating it, I’d have to see something pretty unique. I haven’t seen that.”

Hallett does give Mackenzie credit for reducing management fees on the two funds by 25 basis points to 2.25%. But he notes that Mackenzie will save money by bringing one of the funds in house and that Waddell & Reed is unlikely to command as high a fee as Janus.

Dump the two Janus funds, Hallett recommends in his report, provided no significant costs are incurred. He suggests the Synergy American Growth Fund as a possible replacement for Janus American Equity, and either Synergy Global Growth or CI World Equity in place of Janus Global Equity.

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What do you think of Mackenzie’s manager moves? Do you agree with Hallett’s opinions or find fault with his thinking? Share your point of view on this or any other industry-related topic in the “Free for All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca

(04/30/03)

Doug Watt