Insight October 2007 Monthly Update

This issue of Insight updates and expands the research we published in April 2006 on the use of sub-advisors by Canadian mutual fund companies. We look at both in-house and external investment managers and the assets they control, noting a continuing trend towards the use of firms that are external but affiliated. We also provide a list of the manager changes that took place in the past year and a half. Since our last report on this subject, the sub-advisory skies have brightened somewhat. Sub-advisors have considerably more money under their care, and their market share has stabilized. While a couple of high profile industry “divorces” clouded last year’s sub-advisory scene—including CI’s break-up with Sionna and IA Clarington’s split from Seamark—this front has been fairly calm this year. As of the end of June, there were 186 external money managers—almost as many as at the end of the 1990s’ bull market. Six out of 10 fund manufacturers now use sub-advisors, compared with fewer than five from three and a half years ago. However, there are nowhere near as many fund mandates, thanks to a period of substantial consolidation of the fund product shelf.