By the end of this summer, investors in the venerable Templeton Growth Fund will have a new fund manager.

Lisa Myers, vice president, portfolio manager and a key member of the team at Nassau-based Templeton Global Advisors Ltd. for 10 years, will replace vice president and portfolio manager George Morgan, and will become the fifth manager of the fund since its inception in 1954. Offered by Toronto-based Franklin Templeton Investments Corp. , the fund is one of the oldest and most famous in the industry, and has posted a 13.3% average annual return since its inception 52 years ago.

Lead manager of the fund since 2000, Morgan has decided on his own initiative to leave his Nassau-based post at Templeton headquarters and move to Calgary, where he had enjoyed living and working in the 1980s. The Irish-born Morgan, who spent six years at the beginning of his career as a geotechnical engineer, also met his wife in Calgary, and has close friends and family ties in Western Canada.

“I’m trading the ocean for the mountains,” says Morgan, who admits that Canadian winters may be a challenge after the balmy Bahamas. “I’m looking forward to taking a break from the day-to-day responsibilities that having a regular job entails, and to having some time for exploration and research.”

Morgan and his wife have two sons, aged 10 and 12, and rather than live in Nassau and send them to a boarding school for a high-quality education, Morgan wants them to continue their education in Canada and establish a closer connection to their Canadian roots.

As for himself, Morgan will not be looking for a full-time job right away, although he does plan to stay close to the investment business in the management of his own money. He is looking forward to exploring investment frontiers, possibly experimenting with sophisticated techniques such as options or futures. He is anticipating spending time at a vacation home he owns in Canmore, Alta.

Morgan will have much more leeway in privately managing his own funds than he has had being responsible for other people’s money within the Templeton organization. The Templeton mutual fund empire has been built on the strict value investment philosophy established by company founder and mutual fund pioneer Sir John Templeton, now 94 years of age and a figurehead at Templeton.

Every Templeton manager follows a similar style, and is supported by a global team of 35 analysts and a regular “peer review” process by fellow portfolio managers that reinforces diversification and risk reduction.

Stocks in all Templeton funds are chosen from a global “bargain list” of 90 to 135 companies. Individual fund managers may choose which names from this list they want to own and in what quantity, as well as the timing of when to buy and sell. But, Morgan says, there are no “maverick managers or superstars” within the group, and the culture is co-operative rather than competitive.

“The Templeton philosophy of bottom-up analysis and investing with a five-year time horizon lies above and beyond George and me,” says Myers, who will be working closely with Morgan until he leaves for Canada at the end of the summer. “The changeover will be a seamless transition. Other than the fact that George and I have separate brains, we will be following the same disciplined investment process.”

Myers has already been steeped in the Templeton style through her management of two funds available in the U.S. market, Templeton Income Fund and Templeton International Fund, in addition to some institutional accounts with global mandates. For the Canadian market, she is responsible for the equity portion of Templeton Global Income Fund. She also contributes to the Templeton team’s overall research capabilities by analysing the global retail, textile and apparel industries.

Before joining Templeton in 1996, she was a specialist in corporate and real estate law for a New York City-based law firm.

Myers says the equities she has been seeking in her management role at Templeton Global Income are essentially a “subset” of the stocks she would choose for the more broadly diversified Templeton Growth Fund. Essentially, she has looked for companies from the Templeton bargain list that either have a current high dividend yield or are sitting on a lot of cash and, therefore, have the potential to provide an income at a later date.

@page_break@“The bargain list at Templeton tends to create a similarity in the way a lot of portfolios look within the group,” Myers says. “Recently, we’ve been finding particularly good value in the media, telecom and U.S. large-cap stocks. We choose from a selection of names, and while I may be compelled by some, George may be compelled by others — and that’s where the differences will lie.”

Myers comes to Templeton Growth Fund at a time when it is contending with heavy redemptions. The fund currently has assets under management of $4.8 billion, down dramatically from $10.4 billion in 2000, when Morgan took up the reins. Like other global fund managers, Morgan has had to battle a strengthening Canadian dollar that has taken out a bite out of the returns of international funds that don’t hedge against currency movements.

In addition, Templeton’s stock-picking system has kept the fund away from some of the hot stock market areas, such as resources, income trusts and small-caps.

“There have been a series of things that didn’t sit well with investors and have led to redemptions during the past few years,” says Dan Hallett, fund consultant and president of Dan Hallett & Associates Inc. of Windsor, Ont. “The fund lagged during the tech boom, and since then it has been hurt by the soaring Canadian dollar. In addition, it’s a big, old fund and a lot of assets have come off the deferred load schedule. Money that’s freed up is looking for something that’s more exciting in the current market.”

Although Templeton Growth Fund’s returns haven’t been exciting compared with those generated lately by many Canadian equity funds, it has held up relatively well to its global peer group. For the five years ended May 31, the fund’s annual compound return of 0.4% was a better showing than the global equity group’s average annual loss of 0.14% or the MSCI world index’s loss of 1.35% in Canadian dollars.

Investors in the U.S. dollar-denominated version of the fund, who were unaffected by the soaring Canadian dollar, experienced a superior 19.6% return during the same five-year period.

“It’s been an incredible domestic market in Canada,” says Morgan. “Our relative performance has been strong, but with the Canadian dollar up about 40%, I’ve been fighting against a headwind virtually my whole time on the fund.”

The fund is slightly ahead of the MSCI world index, with its three-year average annual return of 11.5% and its one-year gain of 5%.

Myers believes Canadians ultimately will come back to diversifying internationally with the strong profits made at home, and she is looking forward to the “exciting opportunity” of managing the flagship Templeton Growth Fund. IE