Who's Managing Your Fund?

By Tom Bradley

In a recent posting (Complacency: A Major Misstep of Mutual Fund Investors), I talked about how commonplace fund mergers and manager changes have become in our industry. I referred to manager changes at Trimark, fund mergers at Ethical and Northwest Mutual Funds, structural shifts at Bank of Nova Scotia, and the likelihood that Manulife's purchase of AIC would result in numerous changes.

Manulife issued a press release today announcing that the acquisition had closed and providing some clarity as to how the funds are going to be affected. It looks like I understated the impact a little. Here are a few excerpts from the note:

“In October, MFC Global Investment Management will assume portfolio management duties from Portland Investment Counsel (formerly AIC Investment Services Inc.) of the following funds:

AIC Trust Funds:

• AIC Canadian Equity Fund1

• AIC Value Fund2

• AIC Canadian Balanced Fund1

• AIC Global Balanced Fund2

• AIC Dividend Income Fund1

• AIC Global Premium Dividend Income Fund2

• AIC Bond Fund1

• AIC Global Bond Fund2

• AIC Money Market Fund1

• AIC U.S. Money Market Fund1

• Value Leaders Income Portfolio2

• Value Leaders Balanced Income Portfolio2

• Value Leaders Balanced Growth Portfolio2

• Value Leaders Growth Portfolio2

• Value Leaders Maximum Growth Portfolio2

• Copernican International Dividend Income Fund2

AIC Corporate Funds:

• AIC Value Corporate Class2

• AIC Canadian Balanced Corporate Class1

• AIC Global Premium Dividend Income Corporate Class2

• AIC Total Yield Corporate Class2

• AIC Money Market Corporate Class1

AIC Segregated Funds:

• AIC Canadian Balanced Segregated Fund 3

• AIC Global Premium Dividend Income Segregated Fund 3

• AIC Money Market Segregated Fund 3

Effective on or about January 11, 2010, Ariel Investments will no longer act as sub-advisor for the AIC American Small to Mid Cap Fund, AIC American Focused Fund and AIC American Focused Corporate Class. Effective on or about January 11, 2010, Loomis Sayles will no longer act as sub-advisor for the AIC Global Fixed Income Fund. MFC Global Investment Management will retain sole responsibility for portfolio management of these funds.”

In my posting, I encouraged investors to pay attention when others are making changes to their portfolios. In this case, advisors and clients have some work to do, because the press release makes it clear what Manulife’s decision making criteria are and what’s driving the transaction. It isn’t client returns.

“The acquisition of AIC funds creates significant scale and presence for Manulife in the Canadian retail investment fund market.”