Analysts watching AIM Trimark succession plan

When a top manager departs suddenly, it can leave fund companies and their investors in the lurch. AIM Trimark, though, is reassuring investors that it will be business as usual for the funds formerly overseen by star fund manager Geoff MacDonald, who announced his resignation last week.

AIM Trimark has been able to find replacements internally to take the reins from MacDonald, who is resigning for “personal reasons,” on the seven funds he managed or co-managed.

Many of MacDonald’s responsibilities will be taken over by Don Simpson, who will relinquish his lead manager duties with the Trimark Diversified Income Class, Trimark Monthly Income Private Pool and Trimark Canadian Plus Dividend Class to take over MacDonald’s Trimark Income Growth Fund and AIM Trimark Core Canadian Balanced Class.

Clayton Zacharias will take over lead managing duties from MacDonald on the Trimark Canadian Endeavour Fund, while Jason Whiting will take over as lead manager on the Trimark North American Endeavour Fund. Jeff Hyrich, who had co-managed Trimark Global Endeavour Fund with MacDonald and taken over the lead role earlier this year, will manage the fund solo.

The company says that while MacDonald was an integral part of the AIM Trimark investment team, the new managers who have been mentored by MacDonald will be able to continue following his investment strategies, and that there will be no significant changes in the fund mandates of any of MacDonald’s former funds.

MacDonald’s departure is a big loss, says Bhavna Hinduja, fund analyst at Morningstar Canada, but with AIM Trimark, she notes, investors can usually be reassured that the new faces have at least been trained in the old manager’s winning ways. She adds that the company has always been able to rebound from high-profile departures, including some of the industry’s biggest names, such as Bill Kanko.

“Historically, they have been able to prove their mentoring process is extremely good,” she says. “Right from the Bill Kanko days, when he departed from their flagship Trimark fund, it has not lacked at all under managers like Tye Bousada or Richard Jenkins.”

Hinduja says, though, that Morningstar will nevertheless be keeping an eye on MacDonald’s replacements, as their track record is quite short compared to that of the man they are replacing.

“I cannot emphasize how important Trimark’s team culture is to their investment process. That’s why we’re not overly concerned with this departure, but all of these three managers will have extremely big shoes to fill,” she says.

Hinduja says that Don Simpson in particular will be making a big step up from managing a $1.2 billion Diversified Income Class fund to managing more than $7.2 billion in assets held in his new mandates.

“He’s never really managed a mandate this big. Are we concerned? No, but we will be watching it closely,” she says. “He’s done a terrific job of managing in Diversified [Income Class]. I did have a brief conversation with him, and he says that we should expect some portfolio turnover on the foreign equity side since he’s not intimately familiar with those holdings. Overall, we don’t expect too many changes.”

The other manager Morningstar will be watching closely is Jeff Hyrich. The Global Endeavour Fund is one of AIM Trimark’s crown jewels right now, posting returns of more than 28% over the past year. While Hyrich has been helming the fund for a few months now, Hinduja says MacDonald’s influence has been crucial to the fund’s success.

“MacDonald is a significant loss to this fund,” she says. “It still is one of our favourites, but now that Hyrich is a lone ranger, we’re placing it under review. Hyrich has managed the fund quite well since taking lead manager responsibilities, but the absence of Geoff MacDonald will be felt for sure.”

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