Ross Kappele, who took over as president of Toronto-based Guardian Group of Funds Ltd. this past February, candidly admits his biggest challenge is getting the message out to advisors that GGOF has top-quality offerings in global equity fund investing.

GGOF is best known for its income products, with 57% of its $6.2 billion in assets under management in income-producing funds. About one-third of total assets is in just two funds, each with about $1 billion in AUM: GGOF Monthly High Income Fund and GGOF Monthly High Income Fund II. The $635-million GGOF High Yield Bond Fund also accounts for a significant share.

But the federal government’s announcement this past October of tax changes to income trusts revealed GGOF’s vulnerability to being disproportionately exposed to one asset class. The big income funds’ AUM dropped in the wake of the announcement, although they have subsequently recovered, with AUM up slightly for the six months ended April 30.

“We’re known and respected for our income product,” says Kappele. “But the challenge is getting the recognition we deserve in the global equity space.”

GGOF is enjoying success in the global arena with its GGOF Asia Growth and Income Fund, which takes a balanced approach to emerging markets by holding a mix of blue-chip stocks and adding a layer of bonds. The balanced approach is designed to reduce risk and volatility; it achieved the desired result when Asian equity markets tumbled earlier this year and the fund held up better than more aggressive, pure equity funds in the region.

Kappele, 43, takes over from Harold Hillier, who has relinquished the president’s role but remains chairman and CEO of GGOF and head of BMO Asset Management Group. Hillier had been president of GGOF since 1994. As president, Kappele has overall responsibility for all facets of GGOF’s business, including product development, investment management, marketing, wholesaling and client services.

The company has 34 funds; with $6.2 billion in AUM, it has come a long way from the $2 billion in AUM when it was bought by Bank of Montreal in 2001. Kappele wants to see AUM continuing to expand at this healthy clip.

Kappele knew before he graduated from high school that he wanted to jump into the financial services fray, with its changes and challenges. He grew up in Toronto, where a neighbour was a stockbroker. From conversations over the fence, the young Kappele gained the impression that his neighbour had an interesting, enjoyable job, and that Bay Street would be a fascinating place to work. After graduating with an economics degree from the University of Western Ontario in 1986, Kappele took a year off to travel and ski, but couldn’t ignore the call of the financial services industry.

In 1987, he was accepted into a training program at Toronto-based brokerage Midland Doherty Ltd., just in time to have a front-row seat at one of the biggest market crashes in history — the Black Monday of Oct. 19. If that wasn’t enough to instil a respect for the vagaries of the industry, several years later, in 1995, he found himself working in institutional client services at the Boston division of London-based Barings Bank when the venerable institution was hit by the failure of highly leveraged trading by rogue trader Nick Leeson at the Singapore branch. Leeson’s losses of US$1.4 billion brought the bank to the brink of collapse before it was rescued by ING. As the disaster unfolded, Kappele took his leave of the bank and returned to Toronto, where he joined GGOF as vice president of regional sales.

“The financial business is a fun business; there is never a dull day,” says Kappele. “The business is always changing, with new products and constant evolution of the competitive landscape. It’s always exciting.”

Kappele’s training program at Midland gave him the opportunity to work in several divisions, including the institutional side, bonds and mutual funds. After a few years at the firm, he became aware of mutual funds’ enormous potential as an investment solution for a Canadian population becoming more concerned about retirement security. He joined CIBC Securities Inc. as its Western regional sales manager in Vancouver, with a plan to develop the bank’s mutual fund business, which until then had been concentrated primarily in money market funds. At CIBC Securities, he developed a relationship with Barings Bank, a subadvisor to CIBC’s investment portfolios, and in 1993 joined the pension sales and institutional service side of Barings Bank’s branch in Toronto. He spent several years soliciting business from pension funds and other institutional accounts before moving to Boston in a similar role.

@page_break@He joined GGOF on the wholesaling side, working his way up through various sales positions, starting with responsibility for Toronto and becoming national sales manager in 1998 and senior vice president of sales in 2000. This wholesaling experience has given him a strong sense of advisor and investor needs.

“The role of the wholesaler is not to push product — product is everywhere in this industry, “ Kappele says. “The wholesaler’s role is more consultative, and involves understanding how advisors run their businesses, what their challenges are and how we can help. The business is relationship-driven and, although you need good products, that alone doesn’t get you over the finish line.”

One of Guardian’s newest product initiatives is Guardian Solutions, a family of five multi-fund wrap portfolios. Unlike some wraps that contain a confusingly wide selection of funds, each Solutions wrap is limited to five to nine GGOF funds, so every fund manager has a meaningful impact on the portfolio. The funds are advised by a range of money managers, including respected global firms New York-based Lazard Asset Management and San Francisco-based Matthews International Capital Management.

“Managed programs such as Solutions allow the advisor to dedicate more time to serving clients, helping them with all their financial issues while delegating investment management, asset allocation and portfolio rebalancing to the fund company,” says Kappele.

Although he enjoys a lot of management independence in the relationship with GGOF’s corporate parent, Kappele sees opportunities to reap benefits from the relationship. GGOF has worked with BMO’s capital markets group in developing its principal-protected notes and could further leverage the bank’s considerable strength in this area.

“BMO is great corporate backer to have,” Kappele says. “GGOF is not a big company — we are a mid-size player in a competitive universe — yet we have the backing of a big organization. It’s the best of both worlds.”

Kappele hasn’t forgotten the love of skiing he nurtured during his year of freedom before beginning his career. He and his wife, Jackie, spend winter weekends in Collingwood, Ont., negotiating the slopes with their three young children. Summer brings soccer season. But, Kappele says, he’s the only one in the family who doesn’t play, putting him in the unusual position of being a spectator. IE