How Satish Rai's departure will impact TD Asset Management

Despite the loss of this experienced manager, TD's flagship bond fund shouldn't be affected.

Vishal Mansukhani, CFA 19 June, 2014 | 11:04PM
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Satish Rai, chief investment officer of TD Asset Management (TDAM), is retiring from the firm in January 2015. Bruce Cooper will take over as CIO after a six-month transition period.

Rai has been CIO at TDAM since 2010. However, the equity and fixed income teams have reported up to him since 2003. As CIO his primary responsibilities involved oversight of all investment management at TDAM and communicating TDAM's investment outlook and philosophy to the media. Apart from broader leadership responsibilities, Rai also managed TD's pension fund and is listed as part of the team that manages TD's flagship bond fund, TD Canadian Bond  .

His successor Bruce Cooper heads up TDAM's fundamental and quantitative equity groups, overseeing a total of $50 billion in active equities, and co-chairs TDAM's Wealth Asset Allocation committee. Like Rai, Cooper is a TDAM veteran and has spent 20 out of his 23 years of investment experience at the firm. Cooper's current role and broad leadership experience within the investment management function makes him a suitable replacement for Rai.

Though Rai's departure is certainly a loss, it will not impact our analyst rating on any TD funds. Although listed on TD Canadian Bond, Rai was not involved with its day-to-day management. But in his leadership role, Rai spent considerable time building out TD's bond capabilities and making it a team approach to mitigate key-person risk and cultivate transferability of its investment process. With a deep bench of nine portfolio managers and six credit analysts on the active fixed income team, most of whom have worked closely with and have been mentored by Rai, the fund is in safe hands. The four other managers officially listed on the $10.5-billion fund are Rob Pemberton, TDAM's current head of fixed income, along with Olga Bylaard, David McCulla and Chris Case.

Many of TDAM's fixed income and balanced funds get macroeconomic direction from TDAM's Wealth Asset Allocation committee, which Rai is not part of. These funds will not experience a direct impact from Rai's departure. TDAM will eventually seek a replacement for Cooper on the committee after the transition period.

TD's pension fund is not significantly impacted by Rai's departure. TD Financial had transitioned much the pension plan's responsibility to TD's treasury and balance sheet management group, and seeks the help of various investment managers when required.

Rai had a big impact in shaping TDAM's fixed income teams into some of the best in Canada. He also built out TDAM's risk capabilities. These traits will undoubtedly be missed by the firm, and we will assess the impact of Rai's departure on the culture of the firm after meeting with its leadership and examining TDAM's stewardship practices through 2014.

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About Author

Vishal Mansukhani, CFA

Vishal Mansukhani, CFA  Vishal Mansukhani, CFA, is a manager research analyst at Morningstar Canada.

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