Troubled fund company AIC Ltd. of Burlington, Ont., is struggling with the loss of key staff members, just as redemptions are slowing and fund performance is perking up.
Kris Astaphan, executive vice president of AIC and deputy chairman of AIC’s 75%-owned subsidiary National Commercial Bank of Jamaica, a long-time employee and right-hand man and confidante of AIC chairman Michael Lee-Chin, left unexpectedly in December.
Also recently departed from the company is Jeff Nairn and Andrew Dorrington. Nairn, the former Vancouver-based regional vice president of sales for Western Canada has left for TD Asset Management Inc. Dorrington, the former senior vice president of client strategy, has not yet resurfaced elsewhere.
Of the departures, Astaphan leaves the biggest hole. Neither Lee-Chin nor Astaphan would disclose the nature of their differences, but their relationship has been a long one. Astaphan had been with the company since 1993, when it was just emerging as a player on the Canadian mutual fund scene.
A native of St. Kitts and a lawyer, Astaphan is said to have played a key role in negotiating Lee-Chin’s 2001 purchase of NCB from the Jamaican government. He has been involved more recently in the management of AIC’s holdings in Trinidad and Tobago, but this market has proven to be more difficult to penetrate profitably than Jamaica, where Lee-Chin was born. Although Lee-Chin controls more than 90% of AIC, a private company, Astaphan is thought to be one of the few other people with an ownership stake.
Dorrington came to AIC in 2004 from AIM Funds Management Inc. , at which he had worked closely with David Whyte, who moved to AIC later that year to become executive vice president overseeing sales, marketing, client services national accounts and dealer relations. Whyte left AIC earlier this year after running into strategic differences with Lee-Chin, and is now hanging his hat at Dynamic Mutual Funds Ltd.
There has also been continuing turnover in the sales force and wholesaling team, and some restructuring of territories and responsibilities. The company is advertising on its Web site to fill positions for three brand supervisors and an inside sales associate. But it faces the challenge of attracting experienced sales people with strong relationships in the advisor community because of its continuing redemption problem, according to company insiders.
Bad morale
They say morale has been affected by the recent senior departures. Staff members are concerned about the reasons for the turnover, explained by Lee-Chin as a matter of people wanting to move on to pursue other interests. Those who remain with the company say they must do more with fewer resources.
AIC’s net redemptions were $170.3 million in November, an improvement from monthly redemption figures earlier this year and from $279 million in net redemptions in November 2004. But Lee-Chin is still swimming against a strong tide. Net redemptions were $2.8 billion for the 11 months ended Nov. 30, 2005, up from $2.4 billion in the comparable period a year earlier. AIC’s mutual fund assets have shrunk dramatically to $8.7 billion from a peak of $15.4 billion in 2002.
AIC recently expanded its product line by hiring an outside investment manager, Third Avenue Management LLC of New York, to run AIC Global Focused Fund. Third Avenue is a deep value shop run by legendary investor Marty Whitman. Lee-Chin has said he hopes to bring in another high profile outside manager with a successful track record to complement the older AIC flagship funds. The $1 billion AIC Advantage Fund showed a respectable one-year return for the year ended Nov. 30, 2005, slightly ahead of the group average, although it lagged the 22% gain shown by the resource-powered
S&P/TSX composite index.
In early December AIC announced the formation of Copernican Capital Corp. , a separate brand identity. Copernican Capital will develop structured products for sale through the licensed broker dealer network. Its focus will be on conservative, income-generating products focused on capital preservation, absolute returns and tax efficiency. IE
Executive departures continue at AIC
Three senior executives recently left the fund company, which has been suffering net redemptions
- By: Jade Hemeon
- January 4, 2006 January 4, 2006
- 10:34