AIC Ltd. and coperni-can Capital Corp., affiliated investment fund companies based in Burlington, Ont., have decided to outsource their fund accounting services to Mississauga, Ont.-based Citigroup Fund Services Canada Inc., a division of Citigroup’s New York-based Global Transaction Services Group.

At the same time, there are also tentative plans to expand the arrangement to include a suite of back-office services, such as custody and securities lending.

The deal will result in cost savings and will allow AIC and Copernican to concentrate on their main business, which is investment management, AIC executives say.

“As fund management companies look for ways to become more efficient, they are recognizing the opportunities of this kind of outsourcing partnership,” says Vicki Ringelbert, AIC’s chief financial officer. “In the long run, the result of achieving efficiencies will be cost savings for unitholders and lower management expense ratios.”

As part of the agreement, 40 AIC staff members will become employees of Citigroup. As well, Citigroup will lease space in AIC’s spacious office complex in Burlington to supplement its current facilities and accommodate growth of its fund services business.

The office space that Citigroup will occupy at AIC also offers disaster protection by allowing the company to do business in two sites simultaneously and have backup of all records in both locations.

“Fund companies around the globe, including those in Canada, are reviewing their core competencies and looking for help in areas that are better served externally,” says Robert Smuk, head of Global Transactions Services Canada. “We offer services covering the back–office functions, such as fund valuation, custody and securities lending, and bring a global scale and local presence to the table.”

Citigroup provides similar services to more than 40 Canadian companies, including AGF Funds Inc. and Chou Associates Management Inc., both of Toronto. Chou also uses Citigroup for investor record-keeping and client statements.

Smuk says that back-office functions require ongoing investment in expensive technology. And rather than making these investments on their own, Citigroup’s clients are able to benefit from the company’s global scale and its resulting cost savings.

“By outsourcing the fund accounting function to Citigroup, we can concentrate on what we do best — delivering tax-efficient, above-average returns over the long run to investors who choose our funds,” says AIC’s CEO Jonathan Wellum. “At the same time, this agreement provides our fund accounting staff with a remarkable opportunity to join a global leader in fund services.” IE