, and president of Toronto-based Franklin Templeton Investments Corp.
Ten years ago, Reed also looked after the company's Florida-based Templeton Investment Counsel Inc., which meant weekly visits to Fort Lauderdale. Although he's now concentrating on the Toronto operations, Reed is still racking up the miles--102,000 miles on Air Canada alone last year. His trips have included visits to San Mateo, Ca., Edinburgh, Nassau, Fort Lauderdale, New York and Hong Kong. "Most of it has to do with research meetings or client meetings," says Reed, who also oversees about $1.4 billion in institutional accounts.
A veteran money manager with more than 35 years of experience, Reed is very much a team player. He relies on a group of manager-analysts who follow thousands of stocks and come up with recommendations for the company's bargain list. Twice a year, he meets about 60 members of the global equity team in cities such as Edinburgh or Fort Lauderdale.
This is supplemented by twice-weekly teleconferences with analysts, who offer sector reports and present new ideas. Portfolios are subject to peer review, and portfolio managers will ask analysts to provide additional information on specific names.
"It's not just the portfolio that is being reviewed, because all of us will own the stocks, depending on different mandates," says Reed. "It's a situation where we have people from around the world--Hong Kong, Geneva, Toronto, and so on--so it's important to get together. It works well and we've been doing it for a long time."
An example of how the process works is Royal Bank of Scotland, one of the top holdings that emerged from discussions with the bank analyst. "It's the fifth largest bank in the world," says Reed, "and it's fully integrated, with operations in retail and asset management."
In the classic Templeton style, the stock was trading at a sizeable discount to what analysts believed it could be worth. While the stock is up 40% since 2003, Reed is content to keep holding it. "If I thought there was no more potential, I would liquidate the position," he says.
Reed holds about 72 Europe, Australasia and Far East (EAFE) stocks names in his fund, and limits single holdings to about 3.5%. He makes these overseas picks from Templeton's global bargain list of 150 names. This list includes North American stocks that fall outside the mandate of his fund. Turnover is very low, at 4.2% for the six months ended June 30, 2006, and 9.5% for calendar 2005.
While investing is very much in Reed's blood, buying and selling stocks was not uppermost in his mind after he graduated from Acadia University in 1966 with a bachelor of commerce degree.
The Montreal native began his career in personnel and worked for DuPont of Canada in Kingston, Ont. A year later, he went back home and worked as assistant personnel manager for the Royal Victoria Hospital. From 1969 to 1971, Reed worked for AGT Data Systems. He began in personnel and then switched to sales of accounting systems.
But Reed had an interest in stock markets and decided to apply his experience as a salesman so he could become a broker. He trained at Dupont Glore Forgan and eventually moved into institutional sales. In 1973, he moved to Baker Weeks, where he encountered the onerous 1973-74 bear market. "Retail sales were very difficult, but I learned a lot about the business."
In January 1975, he joined Montreal Trust as a portfolio manager for personal trusts and estates. Two years later, Reed was transferred to Toronto where he managed assets held by institutional clients.
In 1982, Reed went on his own and helped establish Reed, Monahan, Nicholishen Investment Counsel. But his career took another turn when his involvement with the Toronto Society of Financial Analysts eventually led to a series of meetings with Sir John Templeton. "I didn't want to leave where I was, but he recruited me into the firm," says Reed, who joined the Templeton organization in September 1989.
The 3-star rated Templeton International Stock, which Reed began co-managing with Sir John Templeton in 1989 before becoming the sole manager a couple of years later, has been a top-quartile performer over 10 years and 15 years. But it hit a road bump from 2000 to 2002, when it suffered double-digit losses.
Lately, though, the fund has rebounded to the top quartile over one and three years. In the three years ended March 31, it returned an average annual 14.6%, two full percentage points better than the median mutual fund in its International Equity peer group.
"There are periods when we will underperform for a variety of reasons," says Reed. "We have strong disciplines and it's important to stick with them. That's why we will outperform in other periods."
