What Do New Managers Do to Fund Performance?

Explore the impact of fund management turnover with Michael Dobson and his impressions on the change in leadership at CI Global Income & Growth. 

Michael Dobson 16 June, 2023 | 4:34AM
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Michael Dobson: Last year, a significant amount of investment professionals left the CI Global Income & Growth Fund. Turnover of such magnitude is never a good thing, but in this rare instance, the fund seems to have held up. Today, I'm here to tell you why the fund still earns a rating of Neutral.

The fund has three founding portfolio managers – John Shaw, Geof Marshall and Eric Bushell. Bushell retired in 2021, while Shaw and Marshall remain, joined by Drummond Brodeur and Matthew Strauss, both of whom have been involved with the fund for over a decade. Allan Maclean-Howard was the resident derivatives and quantitative systems expert on the fund until he left in the second quarter of 2022, but CI's shift from a boutique structure to a centralized structure means that CI Global Income & Growth benefit from in-house teams specializing in these areas. Performance since those departures also show encouraging but early signs.

Also in July 2022, a large chunk of the group responsible for international equity left the firm. CI Global Asset Management quickly replaced them, and the results are still to be determined. However, the fund itself had been lowering its weight in international equity for over a decade. Adjusting for changes in overall asset allocation, international equity dropped from 54% of its equity sleeve at the end of May 2013 to 33% in April 2023. For context, that's about 20% of the overall portfolio today.

Starting August 2022, a little more than a week after the departures, CI Global Income & Growth's F share class beat its category index by over 1% annualized and ranked in the top quartile of its category. It's still too early to definitively answer the exact impact elevated turnover had on performance, but we will be monitoring it moving forward. CI Global Income & Growth is a great and ongoing case study for investment professional turnover. With many new members on the global equity team, the fund is in a more delicate spot than it's been in the past. The leaders are, by and large, still there, trying to steady the ship. Only time will tell if they will be successful.

For Morningstar, I'm Michael Dobson.

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Michael Dobson  Michael Dobson is an Associate Manager Research Analyst at Morningstar Canada

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