Clean slate gives new manager tremendous advantages

Young is extremely bullish on Webb and his new role at C.I. Webb will join the firm as lead manager for the C.I. American Fund, a new Canadian equity fund and a new global equity fund, which will come in foreign content and RSP-eligible flavours. The new funds will be known as the Landmark funds. Webb will also co-manage a new multi-manager fund, the C.I. American Managers Fund. The new funds will be launched later this summer.

“Derek Webb is the momentum manager of momentum managers,” says Young. Not only is he a guy that can blow away the street on any given day, but he’ll open shop at C.I. with a clean slate which will give him a couple of tremendous advantages, according to Young.

First, he’ll be starting with fresh funds and very few assets. Portfolio management is conspicuously easier from a small asset base, simply because liquidity isn’t an issue and portfolio decisions have a proportionally bigger impact on returns. Second, new funds mean that Webb gets out of positions he didn’t want any more without selling them. At the same time he’ll be building a portfolio in a climate of low liquidity with a small, but likely fast-growing, asset base. Not only will the market’s low liquidity not be the constraint it is on a large fund, but he’ll also be moving stocks up as he buys them.

FundMonitor doesn’t typically recommend short-term trading of mutual funds, and it also doesn’t rate unproven funds, but Young is sorely tempted to in this case. He expects fantastic short-term performance from the fund, but will so far only commit to “keeping an eye on it”.

As for the firm that Webb leaves behind, AIM Fund Management Inc., Young says, “It’s disappointing, but they’ll survive.” Clas Olsson, Jason Holzer and Derk Izuel will takeover the flagship AIM Canada Growth Fund.