Multibrand strategy a winner

In the Templeton-Bissett deal, a pair of very different companies are seeking a synergy that just may help them overcome their respective weaknesses, says Young. Templeton is a large, respected company that has been suffering heavy redemptions recently due to poor performance in its core funds. Bissett meanwhile is a small, boutique firm that has increased assets, but not in the way it would have liked. Combined they may bail each other out.

“I applaud Templeton for keeping the Bissett marquee,” enthuses Young. By putting the two brands under its corporate umbrella Templeton is following the multibrand strategy pioneered by Mackenzie Financial Corp. over the past few years.

“It baffles me why more struggling fund managers don’t do this,” he says, noting that even the once-great Trimark Financial Corp. had to learn this lesson the hard way. Mackenzie and C.I. Fund Management Inc. went through tough times and came out of it by going to a multibrand strategy, now Templeton and Trimark have gone the same way.

As for Bissett, Young believes that it is a great property. Much like Perigee Investment Counsel Inc., which was bought by Legg Mason Inc. earlier this year, Bissett went public when financial stocks were hot a couple of years ago. It had mediocre asset growth, and was bought out. Young says these small boutiques with good investment performance have learned that performance alone isn’t enough to succeed in the Canadian fund business. “You also need a good distribution strategy,” Young points out, and running that side of the business themselves just wasn’t working. Templeton gives it the opportunity to tap into much better distribution.

The challenge now is for the pair to execute the strategy. Its one thing to buy the second brand, it now has to integrated and sold properly. Templeton has been faulted for not marketing aggressively enough. But now it doesn’t have to just accept accelerating redemptions because its core funds are out of favour.