CI deals get thumbs-up from industry observers

(August 22, 2003) The massive shake-up that hit the mutual fund sector on Friday morning is being welcomed by those who watch the industry. “CI has been hit hard in this period of net redemptions for the industry,” says Dan Hallett, president of Dan Hallett & Associates Inc. “What they’ve done is picked up two […]

By Steven Lamb | August 22, 2003 | Last updated on August 22, 2003
4 min read
  • Synergy founder prepares for Assante challenge
  • CI may trim and expand Synergy lineup
  • Advisors hope CI deal will change Assante attitude
  • CI deals get thumbs-up from industry observers
  • CI Funds goes on buying spree, takes over Assante & Synergy

    “The biggest and most obvious benefit of marrying distribution with manufacturing, is that there are distribution benefits that will help both sides,” says Hallett. “They’ve acquired a thousand advisors and, relatively speaking, they’re fairly high-end in terms of the size of the assets they manage. They’re certainly taking a run at Dundee, IPC and Investors Group — the main firms that have married distribution and manufacturing.”

    Loach says the “marriage” strategy should provide a substantial boost to CI and its affiliated products.

    “They’re ultimately going to gain access to [Assante’s] Artisan fund of fund product and on their Optima strategy platform,” he says. “Ultimately you want to be both the distributor and the manufacturer of product, on a scale as large as possible.”

    So the reviews for this deal seem fairly positive, but what does it mean for the sector as a whole? Earlier in the summer, Assante was one of three financial planning firms seen to be ripe for a consolidation play, with IPC and Cartier rounding out the trio. Friday’s deal may narrow the number of players in funds, but might not have a radical impact on the industry in the near term.

    “I think Cartier, realistically, has the same number of potential buyers as they did before. I don’t think Assante was really interested in them,” says Hallett. He says Cartier has too many small book advisors for Assante to have been a serious suitor.

    Loach agrees, saying that with 3,500 advisors, Cartier’s top 1,000 control 90% of the firm’s assets under management.

    But he says that the CI takeover of Assante, Synergy and Skylon could be just the catalyst the industry needed to restart the consolidation process.

    “I think it will get the M&A ball rolling quicker, with other companies that are going to want to build, like life insurance companies,” says Peter Loach.

    What do you think of CI’s buying spree? How do you foresee it affecting Assante advisors? Share your thoughts in the Talvest Town Hall on Advisor.ca.

    Filed by Steven Lamb, Advisor.ca, slamb@advisor.ca

    (08/22/03)

    Steven Lamb

    • (August 22, 2003) The massive shake-up that hit the mutual fund sector on Friday morning is being welcomed by those who watch the industry.

    “CI has been hit hard in this period of net redemptions for the industry,” says Dan Hallett, president of Dan Hallett & Associates Inc. “What they’ve done is picked up two fund manufacturing firms that have really bucked that trend, in addition to adding about $8.5 billion to their assets under management.”

    The deal is very positive for Synergy unit-holders as well, says Peter Loach, vice-president and managing director of mutual fund research at BMO Nesbitt Burns. The takeover gives them access to CI’s Harbour and Signature funds, as well as various hedge funds. He says that while some Synergy funds will likely be swallowed up by overlapping CI funds, the smaller firm’s talent will improve CI’s current lineup.

    “I think that Synergy brings a couple of funds to the CI stable that round out their product offering within various sectors,” says Loach. “Primarily, I think [David] Picton, who has the strongest Canadian Momentum fund, definitely rounds out CI. CI has a lot of mutual funds and while they are distinct by style, it’s not as pronounced as Synergy.”

    Loach adds that the deal landed some major talent in Tom Marsico, who he credits with the stellar returns several U.S. funds including the Janus 20. He also says that Synergy president and founder Joe Canavan is “probably the best marketer in Canada.”

    He’s not alone in his praise.

    “Assigning Joe Canavan to run that side [marketing] of it, I think that’s certainly a positive because he is very knowledgeable about the industry, very well respected and he really knows the distribution side very well,” says Hallett.

    Hallett notes that this is just the latest move in CI’s well-telegraphed growth strategy, saying the firm had pulled off an impressive deal to land Sun Life’s Spectrum funds in May 2002.

    “The Assante part of it isn’t a huge surprise, because it had been speculated several months earlier, as CI announced they had accumulated about 6% of Assante,” says Hallett.

    He is not sure that the distribution operations of Assante were that important in sealing the deal, saying the higher margin fund manufacturing made the deal far more attractive for CI. Hallett points out that of the $17 billion in assets Assante has under management, $7 billion is invested in in-house products.

    Related News Stories
  • Synergy founder prepares for Assante challenge
  • CI may trim and expand Synergy lineup
  • Advisors hope CI deal will change Assante attitude
  • CI deals get thumbs-up from industry observers
  • CI Funds goes on buying spree, takes over Assante & Synergy

    • “The biggest and most obvious benefit of marrying distribution with manufacturing, is that there are distribution benefits that will help both sides,” says Hallett. “They’ve acquired a thousand advisors and, relatively speaking, they’re fairly high-end in terms of the size of the assets they manage. They’re certainly taking a run at Dundee, IPC and Investors Group — the main firms that have married distribution and manufacturing.”

    Loach says the “marriage” strategy should provide a substantial boost to CI and its affiliated products.

    “They’re ultimately going to gain access to [Assante’s] Artisan fund of fund product and on their Optima strategy platform,” he says. “Ultimately you want to be both the distributor and the manufacturer of product, on a scale as large as possible.”

    So the reviews for this deal seem fairly positive, but what does it mean for the sector as a whole? Earlier in the summer, Assante was one of three financial planning firms seen to be ripe for a consolidation play, with IPC and Cartier rounding out the trio. Friday’s deal may narrow the number of players in funds, but might not have a radical impact on the industry in the near term.

    “I think Cartier, realistically, has the same number of potential buyers as they did before. I don’t think Assante was really interested in them,” says Hallett. He says Cartier has too many small book advisors for Assante to have been a serious suitor.

    Loach agrees, saying that with 3,500 advisors, Cartier’s top 1,000 control 90% of the firm’s assets under management.

    But he says that the CI takeover of Assante, Synergy and Skylon could be just the catalyst the industry needed to restart the consolidation process.

    “I think it will get the M&A ball rolling quicker, with other companies that are going to want to build, like life insurance companies,” says Peter Loach.

    What do you think of CI’s buying spree? How do you foresee it affecting Assante advisors? Share your thoughts in the Talvest Town Hall on Advisor.ca.

    Filed by Steven Lamb, Advisor.ca, slamb@advisor.ca

    (08/22/03)

    (August 22, 2003) The massive shake-up that hit the mutual fund sector on Friday morning is being welcomed by those who watch the industry.

    “CI has been hit hard in this period of net redemptions for the industry,” says Dan Hallett, president of Dan Hallett & Associates Inc. “What they’ve done is picked up two fund manufacturing firms that have really bucked that trend, in addition to adding about $8.5 billion to their assets under management.”

    The deal is very positive for Synergy unit-holders as well, says Peter Loach, vice-president and managing director of mutual fund research at BMO Nesbitt Burns. The takeover gives them access to CI’s Harbour and Signature funds, as well as various hedge funds. He says that while some Synergy funds will likely be swallowed up by overlapping CI funds, the smaller firm’s talent will improve CI’s current lineup.

    “I think that Synergy brings a couple of funds to the CI stable that round out their product offering within various sectors,” says Loach. “Primarily, I think [David] Picton, who has the strongest Canadian Momentum fund, definitely rounds out CI. CI has a lot of mutual funds and while they are distinct by style, it’s not as pronounced as Synergy.”

    Loach adds that the deal landed some major talent in Tom Marsico, who he credits with the stellar returns several U.S. funds including the Janus 20. He also says that Synergy president and founder Joe Canavan is “probably the best marketer in Canada.”

    He’s not alone in his praise.

    “Assigning Joe Canavan to run that side [marketing] of it, I think that’s certainly a positive because he is very knowledgeable about the industry, very well respected and he really knows the distribution side very well,” says Hallett.

    Hallett notes that this is just the latest move in CI’s well-telegraphed growth strategy, saying the firm had pulled off an impressive deal to land Sun Life’s Spectrum funds in May 2002.

    “The Assante part of it isn’t a huge surprise, because it had been speculated several months earlier, as CI announced they had accumulated about 6% of Assante,” says Hallett.

    He is not sure that the distribution operations of Assante were that important in sealing the deal, saying the higher margin fund manufacturing made the deal far more attractive for CI. Hallett points out that of the $17 billion in assets Assante has under management, $7 billion is invested in in-house products.

    Related News Stories
  • Synergy founder prepares for Assante challenge
  • CI may trim and expand Synergy lineup
  • Advisors hope CI deal will change Assante attitude
  • CI deals get thumbs-up from industry observers
  • CI Funds goes on buying spree, takes over Assante & Synergy

    • “The biggest and most obvious benefit of marrying distribution with manufacturing, is that there are distribution benefits that will help both sides,” says Hallett. “They’ve acquired a thousand advisors and, relatively speaking, they’re fairly high-end in terms of the size of the assets they manage. They’re certainly taking a run at Dundee, IPC and Investors Group — the main firms that have married distribution and manufacturing.”

    Loach says the “marriage” strategy should provide a substantial boost to CI and its affiliated products.

    “They’re ultimately going to gain access to [Assante’s] Artisan fund of fund product and on their Optima strategy platform,” he says. “Ultimately you want to be both the distributor and the manufacturer of product, on a scale as large as possible.”

    So the reviews for this deal seem fairly positive, but what does it mean for the sector as a whole? Earlier in the summer, Assante was one of three financial planning firms seen to be ripe for a consolidation play, with IPC and Cartier rounding out the trio. Friday’s deal may narrow the number of players in funds, but might not have a radical impact on the industry in the near term.

    “I think Cartier, realistically, has the same number of potential buyers as they did before. I don’t think Assante was really interested in them,” says Hallett. He says Cartier has too many small book advisors for Assante to have been a serious suitor.

    Loach agrees, saying that with 3,500 advisors, Cartier’s top 1,000 control 90% of the firm’s assets under management.

    But he says that the CI takeover of Assante, Synergy and Skylon could be just the catalyst the industry needed to restart the consolidation process.

    “I think it will get the M&A ball rolling quicker, with other companies that are going to want to build, like life insurance companies,” says Peter Loach.

    What do you think of CI’s buying spree? How do you foresee it affecting Assante advisors? Share your thoughts in the Talvest Town Hall on Advisor.ca.

    Filed by Steven Lamb, Advisor.ca, slamb@advisor.ca

    (08/22/03)