Big changes at Altamira

Everyone expected some changes would be made after fund manager Altamira was acquired by National Bank of Canada last year, but few could have anticipated the sweeping overhaul that saw the departure of several of the firm’s highest-profile managers and introduction of an entirely new approach to the way in which Altamira will operate its funds.

The catalyst was the appointment of the dynamic Gisele Wilson as Altamira’s chief investment officer in November. A Montreal resident who was president of TAL Global Asset Management for several years, Wilson had decided to take a few years off work to smell the roses. Her semi-retirement lasted only eight months before National Bank called with a challenge she couldn’t refuse: stop the bleeding at Altamira and get the company back on its feet.

It won’t be an easy task. Altamira has been losing assets at an alarming rate. In mid-2000, the company had more than $7-billion under management. At the end of December, that figure had plummeted to just over $4-billion. In 30 months, Altamira had lost more than 40 per cent of its asset base, the main source of the company’s revenues.

Part of the problem is e blow delivered to Altamira’s growth-oriented equity funds by the bear market. Altamira Equity, the company’s largest fund with $819-million in assets, is a mere shadow of its former self. In 1996, this fund was riding high, with more than $2.5-billion in assets. But since gaining almost 48 per cent in 1999 by overloading on technology, the fund has been going downhill. The last two years have been disasters, with losses of almost 19 per cent in 2001 and 19.7 per cent in 2002.

So it shouldn’t have come as a great surprise when one of Wilson’s first moves was to say good-bye to Ian Ainsworth as fund manager. Ainsworth’s strength in the tech sector served the fund well for a brief time, but didn’t fit with Wilson’s desire for a more traditional, broadly diversified equity fund with less volatility and more consistency. (Globefund shows Altamira Equity’s risk rating to be about a third higher than the category average over the past three years.)

Replacing Ainsworth is Virginia Wai-Ping, who is anything but high profile, although she did win an award as best small-cap fund manager in 2000 for her work on the CIBC Capital Appreciation Fund.

Wai-Ping will continue the growth style that has been characteristic of Altamira Equity, but with some differences. Risk will be more tightly assessed in the stock selection process, and the fund will no longer be a closet sector rotator, heavily overweighting towards certain sectors of the economy.

“We want to see more consistency and more predictable returns for investors,” says Wilson. “This is something I have always believed in, and I think that’s what people want.”

Two other significant changes at Altamira:

• Altamira Bond Fund. Veteran manager Robert Marcus is out. He had run the fund since 1991, making it the top-performing bond fund in Canada over the past decade. Wilson is vague when she talks of his departure, calling him a “fine money manager who has done a good job” but saying that she wanted “some new blood”. Replacing him is Anne-Marie Thomas, who has been with the company since 1998 and already runs the more conservative Altamira Income Fund. Under her watch it has outperformed its peer group, although not by an impressive margin. Altamira Bond will continue to take a long-term approach, which means it is inherently more risky than the Income fund, albeit with greater profit potential.

• Altamira Balanced Fund, Altamira Growth & Income Fund. Both these balanced funds were managed by Shauna Sexsmith, who was seen as a major acquisition to the Altamira team when she joined the company in 1997. Her aggressive style worked well for both funds during the strong bull market of the late ‘90s, but has been out of sync recently. The funds are now being run by a team, which will continue to use a growth approach towards stock selection.

Wilson has only been in her new post for two months, so these changes are probably only the beginning. Look for more to come, including a closer working relationship with the National Bank funds, of which she is also chief investment officer. These are indeed new times for Altamira. Perhaps they will be better times as well, but we’ll have to wait and see.

This article originally appeared in Mutual Funds Update, a monthly electronic newsletter of common sense mutual fund advice edited by Gordon Pape. Take advantage of a three-month trial subscription available to users for just $9.97 plus tax.