By James Langton

(January 17 – 18:00 ET) – Bill Holland, chief executive of C.I. Fund Management Inc., told C.I.’s story at the RBC Dominion Securities Conference on Wealth Management’s closing luncheon.

Holland was very upbeat about C.I.’s prospects. He suggested that although just 13% to 15% annual growth is realistic in the Canadian mutual fund business, he believes that big Canadian fund companies have the power to add market share and earnings in excess of that.

One of the primary advantages of size is in wholesaling. Holland says that while you can’t control investment performance, firms can build market share with effective wholesaling. C.I. has 40 inside and 40 outside wholesalers, growing at 20% a year, something a small or mid-sized firm couldn’t dream of.

Staying on the product shelf of advisors is the critical daily battle, Holland says, noting that “once you’re off the shelf, you’re off the shelf.” He suggested these days advisors are just dealing with two or three independent firms, while also selling their proprietary funds, and using exchange-traded funds.

Holland suggested that C.I. will also build its brand aggressively. He says the banks opening up their distribution channel to third party funds is becoming incredibly meaningful to fund companies, and that the banks will only deal with well-known firms, essentially piggybacking on their brand. C.I. will also continue to hire high profile fund managers, as it did with Derek Webb last year, and it will invest in technology to help facilitate its distributors’ businesses.

New products at C.I. will likely be focused on the hedge fund side. “Given the profit margins in this business, we are going to take it as far as we can go.” Holland noted that C.I. already has $1.8 billion under management in its hedge business. Along the same lines it is focusing on making its four U.S. ventures profitable independent of in-house assets, noting BPI Global is already there.

Assuming that these initiatives do build share and earnings, the looming question will be what to do with those earnings. Holland says he believes that fund firms should not carry much cash on the balance sheet.

But as growth slows, the cost of financing distribution drops and there are millions in redemption fees poised to flow in. Holland also notes that the firm benefits from the government’s recent decision to drop corporate tax rates.