Sandy McIntyre, recently appointed president of Sentry Select Capital Inc. of Toronto, is combining the dual responsibilities of leading the day-to-day operations of the business and maintaining his role as chief investment officer and mentor to the investment team.

Both those roles are big boots to fill. McIntyre’s brainpower will increasingly be focused on strategy for the mid-sized fund company, which has about $6.5 billion in assets under management. The goal is to boost Sentry to the upper rungs of the Canadian fund business.

“I am now very much running the business, and that is where my interests lie,” says McIntyre, who is nearing his 60th birthday and has been with Sentry Select since 2000. “I’ve spent a lot of years contributing to the growth of the business and am now being given the opportunity to run it.”

McIntyre has already taken steps to reinforce his team, elevating senior portfolio manager Dennis Mitchell to deputy chief investment officer. He has also promoted former vice president of product development and corporate strategy Philip Yuzpe to chief operating officer. Company chairman, founder and former president John Driscoll, who is in his late 60s, continues as CEO.

McIntyre had taken over as Sentry Select’s CIO about two years ago, using a valuation-driven methodology. “My job has been to be coach, counsel and, rarely, disciplinarian,” McIntyre says. “The time has come to position the next generation. There are great portfolio managers in their 30s and 40s who are the future of the organization.”

McIntyre says the team beneath him, which includes five senior portfolio managers and eight junior ones, are better trained and have deeper skill sets than he did at the same stage of his career. Sentry Select’s portfolio managers tend be MBAs or holders of the chartered financial analyst designation who are layering the experience acquired at Sentry Select on top of a strong academic financial education.

McIntyre earned a university degree in English and history before accidentally landing in the financial services business with his first job doing administrative work for a trust company. Finding he had an aptitude for numbers, he was quick to spot the potential of the investment business; McIntyre became a retail broker at the age of 28 for Jones Heward Investment Management Inc. of Toronto, for which he subsequently became a specialist in high-yield investments, remaining with the company for 20 years.

When McIntyre began trying to gather assets as a broker, he says, none of his friends had any money, and neither did their parents, most of whom were still paying off mortgages and raising families.

“The clients with the most potential were older people, and it’s still the same,” McIntyre says. “I learned how to manage money for an older clientele. They had different priorities and expectations than a 30-year-old trying to be a hot stock jockey.”

McIntyre’s clients had wanted low volatility and an income stream. With the baby boomers now nearing or entering retirement, McIntyre says, that’s what many clients want from their investments today.@page_break@McIntyre was a big fan of income trusts in their day, as they were useful in helping investors meet those needs. He now uses similar analytical principles in assessing dividend-paying equities and corporate bonds, and these are the principles McIntyre imparts to his team. Essentially, they seek liquidity, a strong balance sheet, good growth prospects and an attractive valuation.

“You can’t make money if your starting point is an outlying valuation,” McIntyre says. “You make money when valuations are depressed. But we are ‘valuation’ investors, not ‘value’ investors. It’s important not to get caught in a value trap, where you are chasing assets just because they’re cheap. You don’t want to own a company that looks cheap but, beneath the surface, is deteriorating.”

Whether Sentry Select’s fund managers are in charge of a precious-metals fund, an energy fund or a fully diversified fund, McIntyre says, they seek businesses that will be “value creators” regardless of what happens to external variables such as commodity prices. The weighting of a company in the market index is irrelevant, but free cash flow, healthy dividends and strong balance sheets are important.

“We don’t rely on commodity prices or other external variables to make an investment work out,” McIntyre says. “We must rely on what we can analyze. Generally, if we get the analysis right and the business succeeds, the market price takes care of itself.”

Sentry Select portfolios will often deviate significantly from their relevant indices. McIntyre says it’s not necessary to capture all of the market upside if the downside is less than that of the index. For example, in 2010, Sentry Canadian Income Fund captured 35% of the downside of the S&P/TSX composite index and 74% of the upside. The fund was awarded a 2010 Canadian Lipper Award for the best risk-adjusted returns over five years in the income trust equity category. The fund had a five-year average gain of 6.4% as of Jan. 31, 2011, compared with 5.5% for the index.

“The secret to sound investing is to have sequentially higher low-water marks — those are the stepping stones to success in portfolio management,” McIntyre says.

“I started as a stockbroker and have worked with clients in good times and bad,” says McIntyre. “And I’m not sure a portfolio manager who hasn’t had that experience can understand what money means to a small investor who doesn’t have a lot of it. If a manager resorts to risk-seeking behaviours to grow assets, and those are a mismatch to the client’s objectives, you’re in conflict-of-interest mode.”

While Sentry Select’s fund lineup includes broadly diversified funds as well as sector funds, such as those specializing in gold, real estate and energy, McIntyre says, there’s room for a couple more. He sees opportunities in the U.S. equities market, based on low valuations and an improving economy, as well as in emerging markets.

Since 2008, the Sentry Select lineup has expanded beyond basic front-end load funds to include those with deferred sales charges, as well as low-load and institutional-class funds.

“Building brand awareness is very much a 2011 project,” McIntyre says. “It’s our year to break out, and we’re working hard at it.” IE