As captain of an investment-management firm committed to a “value” investment philosophy, Carol Lynde, newly appointed president of Toronto-based Brandes Investment Partners & Co., is steering through a storm.
In a stock market driven by herd behaviour and knee-jerk reactions to current events — in which quality and flotsam are being battered by the same tides — value investing and active fund management are not getting their due respect. Lynde’s challenge is to help financial advisors and their clients keep the faith as the firm’s tried-and-true stock-picking methods ultimately prove themselves. “It’s difficult to keep investors in their seats when things are chaotic and volatile,” says Lynde, who hones her discipline, determination and perseverance by running marathons. “People who react emotionally with their investments usually make the wrong decisions. We provide a long-term, equity solution. And while it’s challenging when our style is out of favour, we remain consistent in what we do and are confident our approach will prevail.”
The Brandes family of mutual funds was established in Canada in 2002 as a subsidiary of San Diego-based Brandes Investment Partners LP, which was founded by Charles Brandes, a strong adherent to the security-selection process pioneered by famed value investors Benjamin Graham and David Dodd. The Canadian firm has grown to hold $2.7 billion in assets under management in its 15 mutual funds and $5 billion in separately managed and institutional accounts.
The Brandes-managed fund lineup includes corporate bond, global equity, U.S. equity, small-cap, global balanced, emerging markets, Canadian equity, bond and money market funds. Brandes also sponsors five Brandes Sionna funds subadvised by Sionna Investment Managers Inc. of Toronto, which were launched in 2007. Sionna is headed by well-known investment manager Kim Shannon. The Brandes Sionna lineup, which accounts for about $900 million in AUM, includes Canadian equity, Canadian balanced, diversified income, small-cap and monthly income funds.
“Our security selection is based on fundamentals of particular companies, and we buy undervalued stocks,” Lynde says. “As good firms increase their profits, they will ultimately be recognized in the market.”
Lynde and Shannon have been travelling across the country, presenting at road shows and supporting advisors in helping to keep their clients invested in volatile times.
“If we keep doing the right thing, the assets will come,” Lynde says. “We make sure we’re also listening to the outside, and that we’re open to what advisors want. Are we meeting the people, having the events they need and providing the right materials to help them help their clients?”
Lynde says many client portfolios lack enough exposure to equities to give them the growth needed to keep up with inflation and have enough assets to last through retirement. The interest rates on fixed-income investments are simply not enough, she says: “So many of us are still healthy at 65, and could be looking at least at another 30 years down the road. You don’t want your money to die before you do. People need exposure to good-quality stocks with a healthy dividend yield.”
Markets will continue to be volatile, Lynde adds. Fears of global recession and government debt problems are the current monsters, and they aren’t the first and won’t be the last obstacles to be faced. But Lynde sees no reason why the healthy, long-term returns historically provided by equities should diminish, given their historical ability to climb back from various setbacks and persevere through economic recessions, wars and the bursting of bubbles.
“Our biggest challenge is that we’re long-term thinkers, and that’s not fashionable or sexy in today’s market,” she says. “But long term is how we need to think, whether we’re talking about governments, corporations or individuals. We have a consistent, deep-value investment philosophy — and that hasn’t changed and will not change.”
As president of Brandes, Lynde is replacing Oliver Murray, who was appointed managing director of the U.S.-based parent firm. Murray continues as CEO of the Canadian arm, while Lynde also continues in her previous position of chief operating officer. Before joining Brandes, Lynde had worked closely with Murray for four years at AIM Funds Management Inc. of Toronto, holding the title of senior vice president in charge of client relations and operations.
Lynde, after graduating with an honours degree in business administration from Wilfrid Laurier University in Waterloo, Ont., and obtaining her certified management accountant designation, began her career in 1986 on the operations side of Royal Trust Co. (since bought by Royal Bank of Canada), overseeing several custodial functions. Later, Lynde served as director of pension services at RT, responsible for institutional pension clients in Ontario and Eastern Canada.
In 1996, she joined Trimark Investment Management Inc. (since bought by AIM), at which she was senior vice president, client relations and administration, and responsible for client services, back-office operations and dealer relations. When Murray invited Lynde to join Brandes, she was attracted by the firm’s reputation and investment philosophy — as well as the opportunity to build its Canadian retail fund business from scratch.
Lynde believes her strong background in business operations has helped her develop a highly focused, pragmatic approach. She has day-to-day responsibility for the Canadian operations, including finance, sales, human resources, information technology, compliance and customer service, and is also involved in determining strategic direction. She helps her team members set goals and expects them to be achieved. There are 55 employees at Brandes, Lynde says, and they are all focused on the same page: “It’s clear to people what their priorities are. By meeting their goals, they understand the value they provide to the company and derive satisfaction from their success.”
Lynde’s leadership style is to focus on listening and understanding the perspectives of others. Among the satisfactions of her job are the interactions with people and building a team.
“We can’t do anything alone, and it’s rewarding to engage people,” says Lynde, who is married and the mother of three girls, ages 22, 19 and 16. “I want people to be excited about what they do and have the satisfaction of achieving results, as well as enjoying their fellow workers and clients.” IE