Repeated calls from investors for lower fees, less account volatility and more transparent reporting has led to the launch of another mutual fund firm, just in time for the 2006 RRSP season.

Winnipeg-based Value Partners Investments Inc. was given the regulatory green light in late October to begin pitching its new family of three funds to advisors and brokers across the country, excluding Quebec and the territories. The trio — a Canadian equity fund, a foreign equity fund and an income fund — will be managed by Cardinal Capital Management Inc. , also of Winnipeg, says Paul Lawton, president of the new firm.

The former IQON Financial Inc. executive says Value Partners is targeting mid-market investors with a minimum account size of $25,000: “Our funds are for people who want institutional-type management and results, but don’t have a million dollars in their accounts to go get it.”

The funds’ MERs of 2.3% are slightly lower than the industry average of almost 2.5%. The management fees will drop 30 basis points when clients’ assets reach $250,000, Lawton says.

Investors’ continued demands for lower fees was the impetus for launching Value Partners, says Paul’s father and part-owner, Jim Lawton. The president of Lawton Partners Financial Planning Services Ltd. , a local financial advisory firm with 40 employees, and director of Cardinal has been a mainstay of Winnipeg’s financial community for the past 30 years.

“The larger fund firms are reluctant to reduce fees. But senior people in the industry say it’s time somebody shook things up,” he says. That is much more easily done by a smaller player: “How does a big fund company go back to its shareholders and say:
‘We’re making too much money. We’re going to discount investors’ fees’?”

Value Partners marks the second launch of a Winnipeg-based national mutual fund company in a few months. In late August, Larry Sarbit, formerly a fund manager at AIC Ltd. and Investors Group Inc., christened Sarbit Asset Management Inc. and its first fund, Sarbit U.S. Equity Trust.

The elder Lawton says Manitoba’s capital is the perfect place to base operations. “We think Winnipeg is an absolutely great place from which to run a business. We have people here who are dying to have opportunities; who have the energy, drive and know-how to build a national company,” he says.

Value Partners’ funds will be managed by a three-member team at Cardinal that will be overseen by Cardinal’s president, CEO and chief investment officer, Tim Burt, who has also worked for London Life Insurance Co. and Richardson Greenshields Canada Inc.
during his 30-year-plus career.

Burt is optimistic that managing the three funds will boost not only Cardinal’s assets under management but the firm’s reputation, as well. “One of our frustrations has been the fact that we’re great money managers, but we’re still relatively unknown in [Manitoba]. Hopefully, these funds will give us the exposure we haven’t had in the past and will call more attention to us,” he says.

Cardinal has plenty of experience on the equity side, but the income fund is uncharted waters for the firm. “It will include income trusts, which we’ve avoided in the past,” Burt says.. “It will be a balanced fund, with trusts, bonds, common equity and preferred [equity].”

The 13-year-old Cardinal — which has 15 employees and manages $530 million in client assets, up from $300 million a year ago — is described as a “top-tiered” Canadian equity value fund manager with a solid long-term track record by Bruce Friesen, president of Canadian MGR Search, a Toronto-based firm that rates institutional money managers.
Friesen notes that Cardinal’s 10-year return of 19.8% on its Canadian equity value portfolio ranks among the top 10% in Canada, and the portfolio also has a one-year return of 30.4%. IE