PHILIP ARMSTRONG, recipient of the 2015 Morningstar Canadian Investment Award for Career Achievement, learned at an early age not to be afraid of venturing into unexplored territory and creating something new.
He carried this perspective with him as he built Toronto-based mutual fund giant Altamira Investment Services Inc., then moved on to found multi-pronged financial services conglomerate Jovian Capital Corp., blazing trails into unproven and lucrative territory along the way.
When Armstrong was five years old, his family pulled up stakes from his native Ireland and moved to Zambia so that his father could pursue a job with the railways being built in the mid-1950s. The family stayed in Zambia until Armstrong was 15 years old.
The young Armstrong, now 65, saw first-hand what could be achieved by combining imagination with opportunity as he watched the rapid transformation taking place as Africa modernized.
“We lived in a little village with a dirt road and hardly any infrastructure, and I saw hospitals, schools, roads and bridges grow up around me. It was amazing to see what came from nothing; to watch it all take shape,” recalls Armstrong, who received the award at a gala event Nov. 25 in Toronto.
“Philip Armstrong has been a pioneer and innovator in terms of popularizing mutual funds and raising the bar [for] investor education,” says Rudy Luukko, Toronto-based investment funds and personal finance editor at Morningstar Canada. “He is an entrepreneur who thinks outside the box. Throughout his career, he has headed up firms that posed a competitive challenge to established players.”
Armstrong returned to Ireland to finish high school, then earned a law degree from Manchester Metropolitan University in England. He worked briefly in a solicitor’s office, but wasn’t seduced by that profession. Fate took hold when Armstrong was hired into the investment trust unit of Lloyds Banking Group PLC, and he “fell into the financial industry,” as Armstrong puts it.
In 1975, Armstrong saw an ad in the Financial Times of London for trust officers in Canada, and he applied. He stayed at Crown Trust Co. in Toronto for six years before moving on to Morgan Trust Co. of Canada, at which he was involved in the building of that firm’s mutual fund arm, Morgan Managed Funds.
The connections Armstrong made in the trust business led to involvement with Altamira in August 1987. He became a founding partner in the fledgling firm, which held $10 million in assets under management (AUM) in one income-oriented retail fund and $100 million in AUM in institutional pools. Under Armstrong’s guidance as president and CEO, Altamira attracted a team of high-octane portfolio managers and soared to $19 billion in AUM before being sold to Montreal-based National Bank of Canada in 2002.
Armstrong had financed his stake in Altamira by putting a second mortgage on his home shortly before the stock market crashed in October 1987, which tested the nerves of Armstrong, a family man with a wife and two young children. But the crash also offered the opportunity for Altamira’s portfolio managers (including Frank Mersch and Normand LaMarche) to buy stocks at attractive values, setting the stage for healthy portfolio returns.
“We were fresh-faced; we didn’t have the baggage of older companies that were devastated by the crash. And we were looking to distinguish ourselves in the marketplace,” Armstrong says.
Altamira imitated the successful approach of U.S.-based fund giant Vanguard Group, selling units in its funds directly to investors instead of selling through the financial advisor network. Altamira, not having to spend on advisor commissions, was able to invest in marketing, service and investor education, boosting its image through large public meetings with the firm’s high-flying portfolio managers.
“We were investor-centric, and looked for ways to simplify the process [and] educate and interact with clients,” Armstrong says. “We were the first fund company on the Internet.” As time went by, the banks became fierce competitors and “began biting at our heels.”
There was a lot of excitement and buzz around Altamira, recalls Dan Hallett, vice president and principal at HighView Financial Group of Oakville, Ont. “Markets were exciting, and the returns on Altamira funds were outstanding. Financial advisors were feeling threatened by this fast-growing, direct-selling mutual fund firm, and there was a bit of a rock star aura around its fund managers.”
Armstrong stepped down from his management role at Altamira in 2000, although he remained a significant stakeholder and moved on to found Jovian. That firm created, financed and helped grow companies in the wealth-management business. Jovian’s holdings included Leon Frazer & Associates Inc., T.E. Investment Counsel Inc. and Rice Financial Group Inc.
Jovian, catching the exchange-traded funds (ETFs) wave early, was an early investor in BetaPro Management Inc. of Toronto, the first independently owned Canada-based provider of ETFs, which later was renamed Horizons ETFs Management (Canada) Inc. Jovian, as the majority shareholder in Horizons, realized a huge profit when an 85% stake in Horizons was sold to Korea-based Mirae Asset Global Investment Co. in 2011. When Jovian was sold to Industrial Alliance Insurance and Financial Services Inc. of Quebec City in 2013, Armstrong’s firm held a combined $14 billion in AUM and assets under administration.
Armstrong has contributed his skills to the investment industry, serving as chairman of both the Investment Funds Institute of Canada and the Mutual Fund Dealers Association of Canada. He also has been active in various charitable organizations, including the Canadian Opera Company and the Ireland Board of Canada.
Armstrong, who says he now is “retired,” adds that he is enjoying his advisory role as a board member for several companies. He foresees technology being a “game changer” in the way financial products and advice are delivered with more “disintermediation” as developments such as robo- advisors, peer-to-peer lending and crowd-funding gather force.
“The millennium generation is tech-savvy and are comfortable doing business in a different way,” Armstrong says. “Technological innovation will lead to new ways of delivery and lower costs.”
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