Fund giant CI Financial Corp. of Toronto’s recent move to acquire relatively tiny Hartford Investments Inc. of Toronto will bring star mutual fund managers into the CI fold and may ultimately broaden the distribution for CI products.

The addition of Hartford, which has about $1.75 billion in assets under management in 18 funds, will bring CI’s retail fund AUM to $68.4 billion. CI is the third-largest fund company in Canada, behind RBC Asset Management Inc. of Toronto and IGM Financial Inc. of Winnipeg.

“Hartford is a growing business and has a lot of momentum,” says Stephen MacPhail, president and CEO of CI. “We are not inclined to change what’s doing well, and there is a good base to grow from.”

U.S.-based Hartford Financial Services Group Inc. , a 200-year-old financial services and insurance giant with US$88 billion in AUM, recently initiated the sales process for its Canadian subsidiary, launched in 2000. Hartford Financial wants to focus on its U.S.-based business and strengthen its capital base.

In Canada, Hartford Invest-ments has developed a small but high-quality lineup of portfolio managers, and is known for its solid relationships with dealers and advisors.

Hartford’s best-known Cana-dian portfolio managers are subadvisors Bill Kanko and Richard Jenkins of Black Creek Investment Management Inc. of Toronto, who both made their reputations at the former Trimark Financial Corp. The three Hartford funds advised by Black Creek include Hartford Global Leaders, Hartford Global Balanced and Hartford International Equity.

Other managers within the Hartford group include Beutel Goodman & Co. Ltd. and Regina-based Greystone Managed In-vest-ments Inc.

CI will keep the Hartford lineup as separate and distinct brand, as it has with other fund families, such as Signature, Harbour and Cambridge.

“Our strategy is to have separate fund families,” says MacPhail. “Each manager is different and has a distinct style. We prefer to position it that way and allow them to work independently.”

Dan Hallett, vice president and director of asset management with HighView Financial Group of Oakville, Ont., says the acquisition, which is expected to close in December, gives CI needed reinforcement in its global offerings. CI is strong in Canadian equities, but Black Creek, in particular, are known for its global expertise.

“CI is a big supermarket,” Hallett says, “but its strength has traditionally been on the Canadian side. And there is nothing that would be considered a top pick on the international side.”

MacPhail is also interested in some of Hartford Invest-ments’ distribution relationships, particularly its strong presence on the Edward Jones product shelf.

“We have a relationship with Edward Jones already,” MacPhail says, “but with Hartford, it becomes more extensive. The deal will allow us to [increase] the level of service, enhance the product line with Edward Jones and achieve more scale with them.”

There is also the possibility of developing a relationship with Hartford Financial, which could lead to new money-management mandates and distribution opportunities for CI in the U.S., MacPhail says.

“We’re dominant in the Canadian asset-management business and they’re big in the U.S. If we can keep the conversation going, there could be opportunities to do business together.”

Aside from the acquisition of Hartford’s assets and fund managers, MacPhail is pleased about the quality of the acquisition’s sales, service and marketing staff.

“We’ve been keeping a lot of jobs open at Cl during the past few months in anticipation of working with as many Hartford staff as we can across our organization,” he says. “In a company this size, there are always a lot of opportunities, and we have found many of our great employees through acquisition.” IE