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© Copyright 2000 Rogers Media. The following article first appeared in the April 2001 edition of
BENEFITS CANADA magazine.
The Top 40 Money Managers of 2001
Are Canada's top players in the pension asset management business ready for the world stage? They
certainly managed 2000's volatile markets.
By Kevin Press
Canada's Top 40 Money Managers grew their pension business by 11.3% during the year ended Dec. 31, 2000, in the
process sending the industry's total pension assets under management over the $500 billion mark for the first
time. But even as they racked up these record-breaking figures, it became increasingly clear how small a part
most Canadian money managers play on the world stage.
As the country's pension funds continued to increase the foreign content in their investment portfolios,
the need for money managers to offer global market expertise reached new heights in 2000. Few
Canadian-owned organizations have that capacity, and so more consolidation is expected in the short term.
RT Capital Management Inc., a mainstay of BENEFITS CANADA's Top 40 Money Managers report, is the latest to
admit its domestic market expertise isn't enough to properly serve the firm's pension clients.
"We need to have the ability and the capacity to manage assets using Canadian investments, as well as U.S.
and non-North American assets," says Michael Wilson, the company's president and chairman. "It is difficult
to develop that within Canada in a business like ours. We felt the best way to do it was to go outside."
There was speculation that RT Capital's announcement had something to do with last summer's high closing
scandal. The firm agreed to a July settlement with the Ontario Securities Commission that included
top-level suspensions and fines. Wilson insists that is not the case. The matter has been discussed for
"five years now," he says. "It was really brought to a head after last year's budget."
His competitors agree with Wilson's analysis of the domestic pension asset management business. "Canadian
managers, relative to other firms in the world, are pretty small," says Geri James, manager, relationship
development at Barclays Global Investors Canada Limited in Toronto. "It's hard to grow something in another
market. And because [Canadian managers are] so small, it's very difficult to buy something elsewhere."
Jean Dumoulin, president and managing director of State Street Global Advisors Ltd. in Toronto, predicts
the emergence of a new Canadian money management industry. "We see it growing into a barbell-type
structure," he says. "You will have specialized niche boutiques on one hand, and you will have more global
players on the other."
Michel Nadeau, president, CDP Global Asset Management and deputy general manager at the Caisse de
dépôt et placement du Québec in Montreal, says you can count on more consolidation.
"Canadian money managers are very good, but they have not developed international skills," he explains. "RT
Capital is a good example of that. They are very good performers in domestic securities, but the future is
really in non-Canadian securities and in non-traditional asset classes."
The consolidation rumour mill is turning pretty hard. Last month, the National Post's Derek DeCloet
wondered aloud--and in print--if TAL Global Asset Management might be put up for sale by its parent
Canadian Imperial Bank of Commerce. Sam Reda, TAL's executive vice-president in Montreal says the report is
"without foundation."
ANTICIPATING MARKET VOLATILITY
RT Capital Management was one of 10 firms on the Top 40 to see a decrease in pension assets under
management during the year. The firm is reporting $20.8 billion in assets as of that date, down 3.8% from
the previous year. That figure represents a $4.5 billion drop in pension assets since June 30, 2000 (just
before the high closing story broke).
The big Top 40 winners during the year included State Street and Brandes Investment Partners, L.P. Both
enjoyed more than 50% growth in their pension business (see "The leaders," below). The Caisse saw the
largest dollar increase; it's up $8.9 billion.
The successful firms in 2000 increased their assets by winning new business and by anticipating the market
volatility that marked the year's last quarter. The Caisse saw an overall return on investment of 6.2%
during the year, in part because it moved away from Canadian equities too early. They got the call right,
if not the timing. "We were a bit penalized," says Nadeau. "But we believe it is just short-term pain. We
believe that in the long term, the gains will be in international equities."
Looking ahead, James at Barclays says her clients are looking for more quantitative strategies. "Pension
plan sponsors are looking for things that they have a better understanding of, where they know that the
risks are controlled," she says.
Plan sponsors take comfort in the fact that Canada's largest pension asset managers are leading them
successfully through an extraordinary period of market volatility. And they can adopt a wait-and-see
approach with new global players coming into the market. Those that don't show the right commitment to
Canadian pension plan sponsors will have a hard time holding onto business, despite whatever global
expertise they bring to the table.
The leaders
The Caisse de dépôt et placement du Québec grew its assets under management more than any
other firm. State Street and Brandes saw an increase of over 50%.
Fastest Growing ($)*
Rank : Company
1 : Caisse de dépôt et placement du Québec
2 : TD Asset Management Inc.
3 : State Street Global Advisors Ltd.
4 : Barclays Global Investors Canada Limited
5 : CC&L Financial Services Group
6 : Phillips, Hager & North Investment Management Ltd.
7 : McLean Budden Ltd.
8 : J.P. Morgan Fleming Asset Management
9 : Newcastle Capital Management Inc.
10 : Jarislowsky, Fraser Limited
Fastest Growing (%)*
Rank : Company
1 : State Street Global Advisors Ltd.
2 : Brandes Investment Partners, L.P.
3 : Standard Life Investments Inc.
4 : Jones Heward Investment Counsel Inc.
5 : GE Asset Management Incorporated
6 : Newcastle Capital Management Inc.
7 : Barclays Global Investors Canada Limited
8 : TD Asset Management Inc.
9 : J.P. Morgan Fleming Asset Management
10 : GWL Investment Management Ltd.
* Among the Top 40 Money Managers only. As of Dec. 31, 2000.
Money Managers of 2001
As of Dec. 31, 2000.
1999 : 2000 : Company
1 : 1 : Caisse de dépôt et placement du Québec
4 : 2 : TD Asset Management Inc.
3 : 3 : Phillips, Hager & North Investment Management Ltd.
6 : 4 : Barclays Global Investors Canada Limited
2 : 5 : RT Capital Management Inc.
5 : 6 : TAL Global Asset Management Inc.
13 : 7 : State Street Global Advisors Ltd.
10 : 8 : Jarislowsky, Fraser Limited
7 : 9 : Perigee Investment Counsel Inc.
8 : 10 : Bimcor Inc.
12 : 11 : McLean Budden Ltd.
14 : 12 : CC&L Financial Services Group 2
9 : 13 : Sceptre Investment/Putnam 3
15 : 14 : Greystone Managed Investments Inc.
11 : 15 : Knight, Bain, Seath & Holbrook Capital Management Inc.
19 : 16 : J.P. Morgan Fleming Asset Management
16 : 17 : Beutel, Goodman & Company Ltd.
17 : 18 : Guardian Capital Inc.
26 : 19 : Newcastle Capital Management Inc.
20 : 20 : Elliott & Page Ltd.
23 : 21 : GWL Investment Management Ltd.
18 : 22 : Franklin Templeton Institutional 4
21 : 23 : New Brunswick Investment Management Corp.
22 : 24 : Capital Guardian Trust Co.
24 : 25 : Natcan Investment Management
-- : 26 : Alliance Capital Management Canada, Inc. 5
32 : 27 : Standard Life Investments Inc. 6
25 : 28 : Montrusco Bolton Investments Inc.
33 : 29 : AMI Partners Inc.
27 : 30 : YMG Capital Management Inc.
28 : 31 : Elantis Investment Management Inc. 7
30 : 32 : Laketon Investment Management
-- : 33 : Brandes Investment Partners, L.P.
-- : 34 : GE Asset Management Incorporated
34 : 35 : Sprucegrove Investment Management Ltd.
37 : 36 : Addenda Capital Inc.
29 : 37 : Lincluden Management Limited
36 : 38 : Leith Wheeler Investment Counsel Ltd.
38 : 39 : Seamark Asset Management Ltd.
-- : 40 : Jones Heward Investment Counsel Inc.
Footnotes
1 Figures have been adjusted according to the financial results' presentation adopted two years ago. 1999
total assets under management were $106.003 billion.
1 Merged with CT Investments. 2000 and 1999 figures include CT assets.
2 Formerly listed as Connor, Clark & Lunn Investment Management Inc.
3 Putnam has bought a 5% minority interest in Sceptre. Sceptre is the exclusive marketer of Putnam
institutional products in Canada.
4 Formerly listed as Templeton Management. Changed name to parent company as of Nov. 1, 2000.
5 Merged with Sanford C. Bernstein on October 1, 2000. 1999 figure includes Sanford C. Bernstein assets.
6 Excludes $5,764.6 mil of UK assets under management.
7 Formerly listed as Canagex.
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