AGF Management Ltd., known primarily for its family of retail mutual funds, is raising its profile in Canada’s private and institutional money management business with the purchase of 80% of Highstreet Partners Ltd., a London, Ont.-based investment counsel firm.

The acquisition follows AGF’s 2004 purchase of investment managers P.J. Doherty & Associates Ltd. of Ottawa and Cypress Capital Management Ltd. of Vancouver and, earlier, Montreal-based Magna Vista Investment Management.

Highstreet will become part of AGF Private Investment Man-agement Ltd. , the division that manages institutional, private and large high net-worth accounts. Highstreet CEO Rob Badun will join AGF’s executive team as the unit’s president.

“It’s a step along the wealth continuum,” says Blake Goldring, AGF’s chairman and CEO. “As people acquire more wealth, they often want more personalized investment solutions. Tax issues are often more complex, and estate planning issues come into play.”

There will be no changes to Highstreet’s team, which will continue to work from its London headquarters, and management will still own 20% of the company.

Highstreet has grown rapidly to $4.8 billion in assets in the eight years it has been in business. About $600 million of the total is held by high net-worth individuals, while the balance is in institutional accounts or subadvised assets such as wrap programs for the big banks.

The purchase, which was scheduled to close Dec. 1, brings Toronto-based AGF’s institutional and private assets to $11 billion, accounting for almost a quarter of its $46 billion in total assets. Price was not disclosed.

“We have been winning some significant institutional mandates outside Canada, and Highstreet gives us strength on the domestic side,” Goldring says.

Highstreet uses a proprietary quantitative investment process to outperform the market while protecting capital in down markets. The deal gives Highstreet potentially larger distribution capabilities, while AGF receives an opportunity to create new products that employ the quantitative approach for both retail and institutional investors.

“There are few true ‘quant’ managers in Canada,” Goldring says. “Highstreet goes strictly by the numbers and is highly statistical in its approach, which involves a lot of screening and detailed modelling. It’s the opposite of ‘gut feeling’.”

Goldring says the Highstreet purchase is a “powerful entry” into the Canadian institutional business, and he doesn’t rule out further acquisitions down the road.

The tailored approach offered by such investment counsellors is striking a chord with aging baby boomers, some of whom are graduating beyond the “one size fits all” approach of retail mutual funds.

For one thing, management of taxes on a separately managed or discretionary account can be adjusted to a client’s individual circumstances, and the timing of realized capital gains and losses can be controlled to fit into a client’s tax planning.

And fees charged by investment counsellors are typically lower than those on regular retail mutual funds, and are tax-deductible, further reducing investors’ costs. Highstreet requires its individual clients have assets of $1 million or more.

“Institutional and high net-worth business is the fastest-growing area for our organization,” Goldring says.

Highstreet, he adds, is a “pedigree organization” with a “temperamentally suitable” corporate culture that shares AGF’s values. IE