Long known as a money manager for institutions and multi-millionaire clients, Connor Clark & Lunn Financial Group of Toronto has launched a new division that is offering a series of six managed portfolios to clients with accounts of $100,000 or more.

The portfolios from Connor Clark & Lunn Managed Portfolios Inc. , introduced in January, are available through the financial advisor channel on a no-load basis. Initially, CC&L, which manages $32 billion in assets, is focusing on introducing the new portfolios via advisors with whom it has established relationships, either through its structured products division or its high net-worth or institutional accounts.

The firm’s focus for the new portfolios is expected to be on distributors that do not represent proprietary products or have their own investment-counselling divisions. CC&L expects a greater emphasis on mutual fund dealers and firms with an orientation toward financial planning rather than securities brokerage.

“Clients with assets of $250,000-$1 million to invest are known as the ‘mass affluent’,” says Warren Stoddard, managing partner. “It’s a distinct market segment and one of the fastest-growing. It makes sense to be represented in that space with a product that offers institutional-quality management at a fair price.”

The six CC&L portfolios each come in a Series A version as well as a Series F version appropriate for advisors running a fee-based business. Series A pays advisors an annual trailer fee of 95 basis points; the annual management fee, exclusive of taxes, is capped at 1.95%. Series F caps management fees at 1%, and most advisors will add their own advice fees on top of that base. The trailer fee paid to advisors on Series F is negotiable.

The average Canadian equity mutual fund, by contrast, charges an annual management expense ratio of 2.2%, according to Morningstar Canada, and fund-of-fund portfolios can run even higher as they often contain an additional layer of fees on top of those charged by the fund managers who manage the various asset categories.

“The individuals we’re targeting have typically worked hard to amass their savings, and $250,000-$1 million is a lot of money for them,” says Greig McKenzie, CC&L’s vice president of sales and marketing. “At this threshold, they are looking for a better value proposition than what’s widely available in the marketplace. We’re offering high-quality management at an attractive price.”

The six CC&L managed portfolios are spread across the risk spectrum, and include conservative, balanced income, balanced, balanced growth, growth and aggressive equity. Each portfolio is diversified across multiple asset classes, and the weighting in each asset class can be adjusted within a specified range to allow for changing market conditions.

For example, the conservative portfolio contains a target allocation of 15% for income securities, but this may be adjusted to anywhere between 5% and 25%. Each portfolio is continually monitored and rebalanced.

“There are two layers of decision-making within the portfolios,” says Craig Swistun, marketing leader, CC&L Managed Portfolios. “The asset mix is reviewed on an ongoing basis and the targets are not static. There is also active security selection. Each asset class is pure, so there is no overlap among the different asset classes.”

The portfolios include stocks, bonds, income trusts and cash instruments. As they are sold by prospectus, they cannot employ strategies available to hedge funds, such as short-selling or investing in managed futures or derivatives.

The six portfolios are managed by a diverse group of money managers within the CC&L fold, including Connor Clark & Lunn Investment Management Ltd. and a handful of other managers in which CC&L owns an interest. These include New Star Canada Inc., PCJ Investment Counsel Ltd. of Toronto, Scheer Rowlett & Associated Investment Management Ltd. of Toronto and Montreal-based Baker Gilmour & Associates.

The portfolio managers have complementary areas of expertise. CC&L, for example, specializes in overall portfolio allocation, fixed-income and a “growth at a reasonable price” style of stock-picking, New Star, whose parent company is based in Britain, will be responsible for U.S. and foreign equities; PCJ is handling Canadian small-caps; Scheer Rowlett employs value style equity selection; and Baker Gilmour tracks short-term bonds.

Unlike the portfolios CC&L manages for its high net-worth clients with $1 million or more to invest, the six new managed portfolios offer no individualized customization in securities selection nor tailoring to an individual’s tax needs.

@page_break@“Most advisors have a broad relationship with clients, and these structured portfolios allow us to look after the investment management while the advisor manages the relationship and focuses on other needs, such as tax and estate planning,” McKenzie says.

CC&L’s strategy is similar to that of private money manager Burgundy Asset Management Ltd. of Toronto, which launched its Beaujolais Private Investment Management division about two years ago. Beaujolais brings Burgundy’s investment expertise, previously available only to clients with $3 million in investible assets and up, to those with $500,000 or more. Swistun says one of the key differences is that CC&L’s portfolios are managed by a handful of separate but affiliated firms, while Burgundy’s are managed in-house.

CC&L Managed Portfolios is headed by Nick Mancini, who joined the company last year. Mancini has had a long career in the financial services business, previously holding senior positions at Amex Canada Inc., Dunn & Bradstreet Inc., Canada Trust, Trimark Financial Corp., Assante Corp. and Portus Alternative Asset Management Inc. He left Portus two years ago, before its financial problems surfaced. IE