Many Canadians are familiar with the big names of the investment universe – Warren Buffett, Charlie Munger, George Soros and Bill Ackman, all from the United States. But Canada is also home to astute and successful professional investors.
Dozens of wealth managers have long, stellar track records and equally compelling strategies from which average investors can steal a page and apply it to their portfolios.
These six money managers are by no means the only leading lights, but their track records exemplify the depth, diversity and deftness of Canada's wealth-management landscape.
Stephen Jarislowsky, founder, director and chairman emeritus, Jarislowsky Fraser Global Investment Management
Mr. Jarislowsky founded his firm in Montreal in 1955, and today it manages about $38-billion for pension funds, corporations and high-net-worth individuals in Canada and the United States.
Do-it-yourself investment blogger Mark Seed calls Mr. Jarislowsky "one of my investment heroes" because he has a straightforward take on investing that is beneficial for the little guy. Central to Mr. Jarislowsky's philosophy is not submitting to the predators of the investment jungle – a reference to his 2005 book, The Investment Zoo. Mr. Jarislowsky's wealth building formula is easy to understand, too: Own companies with predictable rates of revenue and long-term dividend growth, and diversify.
A proponent of staying the course, he keeps trading to a minimum and believes that low fees are crucial to long-term growth, says Mr. Seed, who blogs about DIY strategies at myownadvisor.ca.
Jason Donville, president and CEO, Donville Kent Asset Management
The Toronto-based hedge fund manager is a bottom-up, growth-at-a-reasonable-price investor specializing in Canada's midcap equity space, says Robin Speziale, author of Market Masters: Interviews With Canada's Top Investors.
It's been a successful recipe. His Capital Ideas Fund has averaged about 20 per cent annualized returns since its inception in 2008. Part and parcel to Mr. Donville's success is finding "companies that have a 20-per-cent return on equity or more for at least seven years." His strategy also involves ensuring "management running these companies are superb capital allocators, meaning they take free cash flow and invest it really well within the business."
While 2016 wasn't a good one for his flagship fund, a $10,000 investment made in 2008 in the Capital Ideas Fund would have grown to more than $52,000 today.
David Taylor, chief investment officer, Taylor Asset Management
A sub-portfolio manager with IA Clarington, Mr. Taylor heads up its Focused Canadian Equity Class fund, which produced a return exceeding 33 per cent in 2016, notes David Keelaghan, news editor with Wealth Professional magazine.
With almost 30 years in the industry, Mr. Taylor is a three-time winner of the best equity fund of the year award from Morningstar Canada. As well he has earned 15 Lipper Fund Awards for top returns in the three-, five- and 10-year categories.
A contrarian value investor, he boosted returns by investing heavily in energy stocks at their low point in early 2016. "His firm buying a four-per-cent stake in Home Capital this spring shows he certainly isn't afraid of risk this year, either," Mr. Keelaghan says.
Peter Hodson, CEO, 5i Research Inc.
Before starting one of Canada's leading investment research firms, Mr. Hodson managed the Sprott Growth Fund. What makes Mr. Hodson stand out, in Mr. Seed's opinion, is that unlike many fund managers, Mr. Hodson is not afraid to do nothing. His approach to building wealth favours slow and steady returns rather than get-rich-quick schemes, he says. Central to this is to "keep your management fees and transaction costs as low as possible for as long as possible."
Yet Mr. Speziale says Mr. Hodson, who is also owner of Canadian MoneySaver magazine, is not a value investor. Instead he blends elements of many disciplines, including momentum.
A key tool that Mr. Speziale "learned from him is you can validate some of your stock picks by looking at price momentum," he says, adding that a company repeatedly reaching its 52-week high can be a good indicator of future performance. "That often tells you smart money is accumulating positions, which increases trading volume, in turn putting upward pressure on the price."
Hanif Mamdani, head of alternative investments, Royal Bank of Canada's RBC Global Asset Management
Recently named Steward of the Year by Morningstar Canada for exemplifying investor-friendly behaviour, Mr. Mamdani manages the PH&N Absolute Return Fund for RBC. The Vancouver-based portfolio manager often focuses on high yield and investment-grade North American fixed income.
"The fund has a one-year rate of return exceeding 30 per cent," Mr. Keelaghan says, adding that Mr. Mamdani took advantage of the upside in Canada's beaten up energy sector. He also recently won an award for the best combined 10-year return and Sharpe ratio, a measure of risk-adjusted return, at the 2016 Canadian Hedge Fund Awards.
As well, Mr. Mamdani was recently named Morningstar Canada's Fixed Income Manager of the Year.
Francis Chou, founder, Chou Associates Management
A value investor managing more than $400-million in his firm's flagship Chou Associates Fund, he has a track record of annualized returns of more than 10 per cent over the past 30 years, says Mr. Speziale. "Francis Chou loves to buy one dollar's worth of intrinsic value for 50 cents, which means he only buys a stock when its price trades below intrinsic value."
While that may seem straightforward, it's difficult to execute. "Most investors would buy based on low price-to-book multiples." On that basis alone, Mr. Chou has said, investors would have bought Citigroup and Bank of America prior to the financial crisis in 2008 because they were trading at very low price-to-book multiples. "And then the floor came out right from under them because that book value was full of garbage loans," Mr. Speziale says.
In this respect, Mr. Chou excels at separating undervalued gems from the value traps.
His successful BlackBerry strategy is an example of this knack for uncovering intrinsic worth. He invested in BlackBerry when it was still Research In Motion and its shares were nearing their all-time low of about $6 – all based on its patents.
"That's intrinsic value he saw when the market didn't," Mr. Speziale says, "and now BlackBerry trades more than double that price."