Scott Mackenzie is going to tear out his home office in the new year. The 26-year veteran of Morningstar Canada retired from his position as president and CEO on Wednesday, which is to say that he has something better in mind for the downstairs space — a composition studio.
“My initial university training was in music,” he told me on his last day at work. “I studied composition theory and composition. I have a bachelor’s degree, which I hope to take more advantage of now that I have a little more time.”
Canadians have benefited greatly from Mackenzie’s decision to choose a different profession, no matter their taste in music.
He was recruited to join Portfolio Analytics Limited in 1988 by the late Bill Waters, a professor of economics at the University of Toronto and the first academic dean of the Rotman School of Management’s Executive MBA program. In addition to his academic work, Waters had entrepreneurial interests.
Mackenzie was 26 at the time, with enough training in computer science to win an interest in the fledgling firm.
“I was hired to develop the databases,” he said. “We’re in this tiny little office on Merton St., and I’m sitting there more or less intimidated by all these people.”
Portfolio Analytics conducted attribution analyses of pension funds in those early days. Fund executives didn’t like sharing their holdings, so Mackenzie was assigned to start tracking the mutual fund companies.
“I developed the systems to track not just the performance, but the holdings,” he said. “I developed the securities databases to put that together. … That was more or less the birth of PALtrack.”
Advisors loved it. It provided portfolio performance measurement, attribution analysis, risk analytics, benchmarking and reporting. It wasn’t long before Mackenzie was teaching them how to analyze mutual funds.
PALtrack faced off against Bell Charts, Morningstar’s Principia and other analytics shops throughout the red hot 1990s. But while the competition was fierce, the players also saw an opportunity to button the industry down a bit.
Mackenzie was the founding chairman of the Investment Fund Standards Committee, which established performance-calculation standards and an official fund classification system.
“In those days, every time you opened a newspaper, they’d have a different equity fund as the number one fund,” he said. “Everyone used different categories.”
It’s easy to forget just how different the industry was in those days. Mutual funds marketed as holders of Canadian equities would be so overweight technology or financial stocks that they would cease to function as promised. As long as the performance numbers were there, investors and their advisors didn’t ask questions.
“Back in those days, it was anything goes,” he said.
Morningstar bought Portfolio Analytics in 1999 and made Mackenzie a vice-president. A year later he became president and chief operating officer of Morningstar Canada, and then global head of data, research and index products out of the Chicago office. He returned to Toronto as president and CEO in 2004, and has been in that chair ever since.
Mackenzie will be missed, as much for his understated style as for his remarkable contributions to the industry. He and I worked together in the early days of Advisor’s Edge magazine — I edited his monthly mutual fund column.
I don’t recall a single conversation with him in which I didn’t learn something. Yet, despite his already considerable standing in the business, he always made me feel like a partner he appreciated. It’s difficult to imagine I’m the only one he made feel that way.