Mackenzie retires Industrial brand name

Talk about not being able to tell the players without a program! One of Canada’s largest mutual fund companies is remaking itself from top to bottom, and in the process, performing some radical and unexpected surgery.

Last month, without any fanfare or even a formal announcement, Mackenzie Financial quietly retired the brand name on which it rose to near the top of the heap back in the 1980s.

The Industrial Group of Funds, the company’s original product line, was dismantled and the pieces scattered among the other Mackenzie families.

Complete overhaul
The news was revealed at road shows across Canada – meetings with investment advisors at which Mackenzie executives and fund managers unveiled their plans for the year ahead.

The move was just the latest step in a wide-ranging rationalization within the giant firm. It’s the fourth largest in the country, with assets under management of more than $33 billion.

And it’s not the end of the story by any means. Corporate executives promise there will be more streamlining to come.

Welcome news
That’s welcome news for both investors and financial advisors, o have found it increasingly difficult to grope their way through the labyrinth of mutual funds built over the years.

Even with the latest consolidation, Mackenzie shows an incredible 258 entries on Globefund, including spin-off funds and different unit classes. 

The main beneficiary of the Industrial demise is the Maxxum funds. Along with Scudder funds, these passed under Mackenzie’s control last year, after the company was purchased by Investors Group.

Investors had previously acquired the other two product lines.

Next page: Industrial name dumped

Industrial name dumped
We had expected that Mackenzie would fold the Maxxum funds into its existing line-up.

Instead, it decided to retain the Maxxum brand name, despite the fact it has no meaning and little public awareness, and dump Industrial.

Apparently, the feeling within the company was that investors perceived the Industrial title as passé as a result of a long period of indifferent returns from some key funds in the group.

What’s especially interesting about the move is that several Industrial funds have looked much better recently.

Some top performers
Five of them made the Top Choice category in Gordon Pape’s 2002 Buyer’s Guide to Mutual Funds: Horizon, Dividend Growth, Balanced, Income, and Pension.

But good performance clearly wasn’t enough. Investors weren’t noticing and Mackenzie apparently felt the image had been tarnished and it was better to go forward with something different.

The Maxxum name was kicking around so it became the choice.

Check your fund name
So if you have money in any fund that bore the Industrial name, check with your financial advisor. Your fund either has a new name, or is being merged out of existence.

Three funds go to the Maxxum line:

  • Industrial Dividend Growth becomes Maxxum Dividend Growth
  • Industrial Pension becomes Maxxum Pension
  • Industrial Horizon becomes Maxxum Canadian Value.

All continue to be managed by veteran Bill Procter.

Historic fund goes
The disappearance of the Horizon name marks yet another departure from the company’s history.

Industrial Horizon was the first major fund in Canada to offer a back-end load (deferred sales charge) purchase option. This was back in 1987. It may seem hard to believe but at that time (only 15 years ago) all commission-based funds in this country were sold on a front-end load basis. You paid your money at the time of purchase, and the fee could be as high as 9 per cent.

When Industrial Horizon burst onto the scene with its no-money-down approach, investors flocked to it.

Within a couple of years, it had become the largest mutual fund in Canada and revolutionized the entire industry.

But at the time of its demise it had shrunk to about a quarter of its former size and was only a bit player on a much larger stage.

Next page: Funds moved to Mackenzie

Funds moved to Mackenzie
Three other Industrial funds were moved into the recently created and growing Mackenzie product line.

  • Industrial Balanced Fund is renamed Mackenzie Balanced Fund
  • Industrial Income Fund becomes Mackenzie Income Fund
  • Industrial Growth Fund becomes Mackenzie Growth Fund.

That last move is the big anomaly in all this. The Mackenzie line is made up mainly of income, balanced and money market funds.

Growth is the one exception. Like Industrial Horizon, it’s a fund with a proud history. Under the direction of Alex Christ, long-time Mackenzie chairman, it was the firm’s flagship fund through much of the 1980s and at one time was the largest Canadian equity fund in the country, before being overtaken by stablemate Horizon.

But it fell on rough times through most of the 1990s when Christ made big bets on a resource sector that never really took off. Assets melted away and today the fund is less than a fifth of the size it reached in its heyday.

Fund manager changes
Christ has finally stepped aside (a move we have advocated here for years). The management team is being run by another Mackenzie veteran, Fred Sturm.

Sturm takes a big picture, top-down approach to stock selection, which doesn’t mesh with the image the company wants to convey of Maxxum as a bottom-up value group.

Fund orphans
So Growth finds itself something of an orphan. It wouldn’t surprise us if the company allows it to wither away. There was no mention of it in the elaborate briefing book prepared for road show attendees.

Finally, one Industrial fund is being merged out of existence.

  • Industrial Equity has been folded into Mackenzie Ivy Enterprise.

Abridged from the February 2002 edition of Mutual Funds Update.