Have mandate, will travel

As a result of Hubbes’ expanded management responsibilities, he is no longer calling the shots at the mutual funds he had steered for several years, including AGF Canadian Stock Fund, AGF Canada Class Fund and AGF Canadian Stock Class Fund. Responsibility for these funds has been divided between AGF portfolio managers Peter Frost and Caterina Prato.

“I’m head coach and cheerleader, which can be a tough job in difficult markets,” says Hubbes, 48. “Portfolio managers have a tremendous sense of pride and can be competitive individuals. My job is to foster an environment in which they can thrive, in which they have the resources and tools they need to do their jobs, and in which they are properly compensated. It’s also important to mitigate key man and woman risk, and make sure that succession planning is in place with a strong team behind every fund manager.”

Hubbes says it’s important to strike a balance between allowing creative and intelligent people free rein to follow their instincts and keeping them focused on client expectations and risk management.

“When you’re dealing with bright individuals, a bureaucracy will not yield good returns,” says Hubbes, who balances his own work life with skiing and cooking. “A purely mechanist approach will not succeed.”

He says investment styles, such as value and growth, outperform at different times in the stock market cycle. It’s important to understand both a portfolio manager’s mandate and the environment in which he or she is operating, in order to identify roughly what the investment outcomes should be and ask questions if those expectations are not met.”If you don’t get the expected outcomes,” Hubbes says, “you need to start drilling and looking for remedies.”

Hubbes spends about a quarter of his time travelling the world, visiting the various portfolio-management teams as well as clients and potential clients. AGF’s institutional business is growing rapidly, with almost 50% of its AUM from institutional clients, and many of these clients are based outside Canada. “Our competition is not just Canadian-based managers,” says Hubbes. “We’re going up against people all over the world. We have institutional clients in Asia, the Middle East, Europe and the U.S., and they include pension funds, sovereign wealth funds and endowments. It’s a growth engine, and the opportunities are massive due to the huge size of the global market relative to Canada. We are marketing aggressively, but picking our moments.”

Hubbes says the process of landing an institutional client can be arduous and involve many meetings, as clients with large sums of money do lots of “due diligence.”

“With accounts as big as $1 billion, decisions are not taken lightly,” Hubbes says. “Clients want to understand our commitment, the oversights we have in place and the resources behind the product.”

Hubbes also is busy at home on Canadian turf. Since early 2011, AGF has been assimilating the acquisition of Toronto-based Acuity Investment Management Inc. “A lot of investors bought into the Acuity process, and we won’t change what they do,” he says. “There’s a long history of success, and you don’t tamper with that.” (For more on AGF, see story on page 31.)

Hubbes, who speaks German and French, is thriving on the travel that comes with his new responsibilities, although he doesn’t like to spend too much time away from his partner, Suzanne, a physician at Princess Margaret Hospital in Toronto, and his four-year old son.

He encourages his international and Canadian teams to communicate with each other, both formally and informally. Once a week, Hubbes organizes a global call during which all the offices dial in and exchange views.

He also encourages fund portfolio manager “exchange programs,” whereby managers will work in another office for up to six months. For example, Patricia Perez-Coutts, AGF’s senior vice president and portfolio manager who usually works in Toronto, has spent six months in Singapore, while Rory Flynn, chief investment officer of Dublin-based AGF International Advisors Co. Ltd., has spent six months working at the Toronto office. Hubbes is proud of the diversity of AGF’s global team, whose various members speak a total of 10 languages, including Fulani, Portuguese and Japanese. “When you travel, you learn more about how the rest of the world operates,” Hubbes says. “The opportunities for a Canadian company that is globally focused are huge.”

Hubbes’ eyes were opened to international opportunities early on. After graduating with a master’s degree in biochemistry from the University of Toronto in 1990, he embarked upon an international MBA degree at York University. The two-year program required him to do a four-month internship abroad, and he was hired to work in an office then maintained in Germany by AGF.

When Hubbes graduated from York in 1992, he jumped at a full-time offer from AGF to be an investment analyst instead of pursuing his original ambition of a career in the pharmaceutical business. The following year, he was appointed managing director of AGF’s Berlin office. Hubbes returned to Canada in 1994 to join the Canadian equities team; by 1996, he was running AGF Canadian Stock Fund. By the time Hubbes relinquished his stock-picking responsibilities in late 2011, he was managing almost $6 billion in AUM in Canadian-focused retail mutual funds and institutional accounts.

It won’t be a straight line, but Hubbes can’t ignore the expected ascendency of emerging markets during the next 20 years. AGF has shown industry-leading performance on the equities side with its multiple award-winning AGF Emerging Markets Fund; and within the past two years, the firm has introduced AGF Emerging Markets Bond and AGF Emerging Markets Balanced funds.

“The next trend is global investing, even though there have been times when you couldn’t give global funds away,” Hubbes says. “You need to have a full product shelf to be ready. “  IE