Northwest, Ethical Funds merge

Desjardins Group will merge its Northwest Mutual Funds with socially responsible fund provider Ethical Funds, which is owned by Canada’s Provincial Credit Union Centrals.

Ownership of the combined Northwest Funds and Ethical Funds will be split 50/50 between the Provincial Credit Union Centrals and Desjardins Group. The new firm will have $5.5 billion in assets under management, and the products of both companies will continue to be offered under their own corporate brands.

Ethical Funds CEO Don Rolfe will be the CEO of the new company, while Northwest Funds’ president, Michael Butler, will take on the role of COO. The head office of the new firm will be in Toronto. However, Ethical Funds will continue to be based in Vancouver. Both companies’ existing sales teams will remain in place across the country.

“Northwest Mutual Funds sees great potential in the SRI category, and this partnership will allow us to broaden our product lines and maintain our focus on better returns with less risk for unitholders. This partnership will lead to increased financial strength and better competitive positioning for both fund families,” Butler says.

Don Rolfe views the merger as a way for Ethical Funds to broaden its market share by leveraging the established brands of Desjardins and Northwest,.

“Ethical Funds is extremely pleased to be partnering with such well-established firms as Desjardins and Northwest,” Rolfe says. “We share common and unique commitments towards fostering sustainability and assisting Canadians in achieving their financial aspirations. This is a great opportunity, and we are all committed to its success.”

Desjardins and the Credit Union Centrals anticipate that the management expense ratio for each fund family will be reduced as a result of the economies of scale generated by the common management of both fund families on one technological platform.

Desjardins Group and the Provincial Credit Union Centrals expect the transaction to receive regulatory approval and close by the end of 2007.

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