Toronto-based IA Clarington Investments Inc. (IAC) has ended its relationship with subadvisor Sarbit Advisory Services Inc. (SASI).
Winnipeg-based SASI became subadvisors to IAC after Industrial Alliance Insurance and Financial Services Inc. acquired Sarbit Asset Management in 2008. SASI’s CEO and CIO Larry Sarbit and portfolio manager Tim Skelly co-managed the IA Clarington Sarbit U.S. Equity Class (Unhedged) and IA Clarington Sarbit U.S. Equity Fund.
In a release Thursday, IAC said the two funds have new names and new portfolio managers, effective immediately. The new names are, respectively, the IA Clarington U.S. Equity Class and IA Clarington U.S. Equity Currency Neutral Fund. Both funds are now managed by Calgary-based QV Investors Inc.
Eric Frape, senior vice-president of products and investments at IA Clarington, said in the release that the firm monitors its funds to ensure they’re positioned for the opportunities and complexities of the market.
“The changes we’ve made to our portfolio manager lineup reflect our commitment to offering active, high-conviction solutions tailored to the evolving needs and expectations of our clients,” he said in a statement.
The IAC release said the objective of the funds’ mandates remains unchanged. It also lists additional portfolio manager changes, and Frape said in an interview that “a variety of factors” led to the changes across the funds, including performance.
As a general point, Frape noted that Sarbit’s unique mandate and approach as a value investor differ from a more traditional approach where a portfolio is diversified across sectors.
According to the Dec. 31 quarterly report of the IA Clarington Sarbit U.S. Equity Class (Unhedged), the fund (Series A) returned 8.5% since its inception in July 2011, compared to 16.8% for the S&P 500 Index. Likewise, the IA Clarington Sarbit U.S. Equity Fund (Series A) returned 7.1% since its inception in June 2009, compared to 15.6% for the benchmark.
Sarbit said value investors have been challenged to find ideas in an expensive market. “We’ve been carrying about 40% cash and struggling to put the money to work,” he said in an interview. “But our discipline says you don’t buy just because you have cash.”
Sarbit and Skelly will continue to work together, though Sarbit said he wasn’t sure where they would land.
Over his three-decade career, Sarbit built several funds into billion-dollar positions, his firm’s release said. At IAC, an initial $80 million of assets under management grew to $1.4 billion, with SASI recently managing about $726 million for IAC, it said.