Investors: Watch fund manager’s decisions
There is a nasty little tiff between C.I. Fund Management and AIM, who are more than a little upset about one of their star managers, Derek Webb, suddenly decamping. Upset enough, in fact, to take the matter to court, where the legal wrangle continues.
In the meantime, investors are wondering what Webb’s arrival will mean for the fortunes of the C.I. American Fund and the companion C.I. American RSP Fund. It’s no small matter. Between them the funds have more than $1 billion of our money under management.
They had been run for many years by the capable Bill Priest, a conservative manager whose style tended to favour safety over performance. But few investors complained about the results. Over the five years ending June 30, C.I. American generated an average annual compound rate of return of 21%, making it a strong second quartile performer.
C.I. American RSP, with a shorter record, averaged 31.1% over three years, also high second quartile. Those aren’t numbers to make anyone ashamed, especially given the relatively low risk in the portfolio.
New investment style
Webb is a hard-driving momentum investor, as he showed while at the helm of AIM Canada Growth Class. He makes big bets and, when they pay off, generates great returns. But the volatility is something else!
Great returns, higher risk
This suggests that if you own units in either of the C.I. American funds, you should keep a close watch on developments and make sure you are comfortable with the style change that Webb will eventually implement.
This will definitely not be a case of "same old, same old".
Mutual Funds Update is a monthly newsletter, edited and published by Gordon Pape.