Ian Ainsworth, manager ofMackenzie Universal Future, favours a top-down style, arguing that macroeconomic developments and trends take precedence over individual stock picking.
"We try to identify business cycle opportunities -- such as whether to be in the consumer sector or emphasize capital spending. Then there are much longer trends such as the influence of China or the impact of network technologies on the Internet," says Ainsworth, 53, a senior vice-president of Toronto-based Mackenzie Financial Corp. "These big themes guide relative performance among stocks in the marketplace." Having developed a macro view, Ainsworth chooses companies that will benefit from these trends and themes. "We are looking for superior companies that can gain market share -- and do it profitably," he says, referring to Wal-Mart Stores Inc. ( WMT/NYSE), the U.S. retail giant.
For risk control purposes, Ainsworth ranks companies according to a scoring system that factors in their market capitalization, industry position and balance sheet health. About 50% of his portfolio is comprised of "tier one" names that garner a 2.5% to 4% weighting. Another 30% to 40% of the portfolio consists of "tier two" names that range from 1% to 2%. The balance is in "tier three" names that never exceed 0.5% of fund assets.
Ainsworth, who heads the growth-style equity team at Mackenzie, tries to find new ways to benefit from longer trends. For instance, the Chinese growth story can be played directly or indirectly.
"You don't just play China by investing in a leading cement maker, Anhui Conch [Cement Co. Ltd.]," he says, referring to one of his holdings inMackenzie Universal Global Future. "You also own Canadian companies like Dorel Industries Inc. ( DII.B/TSX) that take advantage of China and distribute their products into developed markets."
A native of London, England, who grew up in Windsor, N.S., Ainsworth graduated with a bachelor of arts in economics from Dalhousie University in 1974. He took off a year to travel, and returned to Dalhousie. In 1977, armed with an MBA, he moved to Toronto where he worked briefly in the planning department at Traders Group.
In 1978, Ainsworth joined Confederation Life as metals and technology analyst. The latter sector was relatively small then. "You had military electronics and computers. But it was a long-term theme that you could link your career to. I'm glad I didn't link it to steel."
Three years later, he landed a job as head of research at Ruggles & Crysdale, an institutional investment firm that later became part of Guardian Capital Inc. Ainsworth left in October 1987 in order to start his own firm with another partner. But the stock market crash put an end to that plan and he returned to Guardian Capital where he managed its investment account.
Between 1989 and 1992, Ainsworth was at Black Galper Heesels Ltd., where his responsibilities as an equity manager included management of pension assets and captive trust accounts held by its parent, Central Guaranty Trust. Ainsworth and several others eventually moved to Altamira Management Ltd., after an unsuccessful bid to buy BGH.
At the outset, Ainsworth managed U.S. and Canadian large-cap funds. But as Altamira was looking to expand, he was charged with building its international equity team. In 1995, he began managing its science and technology fund. Three years later, Ainsworth assumed the flagshipAltamira Equity, a fund that he restructured along large-cap lines.
Ainsworth's career took another turn when the firm, which had long been on the auction block, was sold to National Bank of Canada in August 2002. Several months after parting ways with Altamira, he joined Mackenzie. In April 2003, he assumed Mackenzie Universal Future, previously managed by John Rohr.
It was a relatively smooth transition, since Ainsworth and Rohr shared a similar growth style and bias to technology companies. Designed as a core growth fund, it holds about 75 names, with the maximum single position accounting for 5%.
Last year, given his buy-and-hold emphasis, turnover was a relatively low 31%. "The markets were ready to go when I acquired the portfolio. It was actually positioned for a growth market," he recalls. A laggard for the past two years, it has turned around thanks to the recovery of growth and technology stocks.
But Ainsworth faced a more formidable challenge in Mackenzie Universal Global Future. Working closely with Mark Grammer, an Altamira alumnus, he reorganized the fund and increased its Asian and emerging markets exposure.
Since April 2003, Ainsworth has also re-engineered the $19.6-millionMackenzie Universal Emerging Technologies Capital Class. Although it was previously a "dot-com" fund, he gave it a more balanced mix of technology companies.
Looking ahead, Ainsworth says the equity market is vulnerable to rumours and political concerns, but he remains upbeat. "The economy is growing -- we should see good growth in this quarter," he says, adding that earnings revisions are on the rise. "In fact, global growth is very strong because of China. It's starting to be attractive to put money back into cyclical, recovery names."
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