Michael Quinn, who has been manager of the $180.6-millionBissett Canadian Balanced fund of funds since its inception nearly 13 years ago, plays a major role in the Bissett funds that are its components.
"I have an oversight role on some of these other funds, ensuring that the company strategy and philosophy is followed," says Quinn, 48, president and chief investment officer at Calgary-based Bissett Investment Management, a unit of Franklin Templeton Investments. "The fund reflects that." Launched in July 1991, the fund was designed to mirror the firm's pension accounts. It adheres closely to a 60/40 split between equity and fixed-income, respectively. "We got to those weightings based on our overall view of the market, and historical returns and risk levels," says Quinn. "We're trying to get an asset mix that will still allow investors to participate in the gains available in the capital markets without taking a lot of risk."
The equity side reflects a growth-at-a-reasonable-price investment style. Conversely, there is a conservative bias on the fixed income side. "We don't want to take a low-risk asset like bonds and turn it into a high-risk, equity-type asset by doing a lot of short-term rate anticipation trading," says Quinn. "We're trying to create a laddered portfolio that has a superior income stream over time."
The fund holds seven underlying funds: 40%Bissett Bond, 34%Bissett Canadian Equity, 6%Bissett Multinational Growth, 6%Bissett American Equity, 6%Bissett International Equity, 6%Bissett Small Cap and 2%Bissett Microcap.
"In one fund, you get geographic and capitalization diversification," says Quinn. "Essentially, we just have to set the asset mix and ensure the portfolios are in line with that mix. It's really quite simple."
Quinn has been a previous manager of many of the underlying funds. From 1985 to 1996, he managed Bissett Canadian Equity. He also managed Bissett Bond from its 1986 inception until 2000.
But as Bissett entered a period of strong growth in the late 1990s, Quinn shifted his attention to the firm's institutional clients. Bissett now manages assets of about $10 billion, of which about one-third belongs to institutional clients.
Born in Richmond, QC, Quinn graduated in 1976 with a bachelor of business administration degree from Bishop's University. He then landed a sales administration position with Atco International in Montreal. His job was to ensure the efficient delivery of sales proposals for mobile housing camps for its Middle Eastern clients.
In 1977, Quinn was transferred to the firm's Calgary office, where he stayed for another two years. In 1980, he left to join a small accounting firm. But within a year, he moved on, joining Royal Trust, where he was an investment officer and handled estate and agency accounts.
In 1984, Quinn joined Bissett Investment Management, a four-person operation that then managed about $300 million. Although he was appointed head of fixed income, the small scale of the firm meant he was also responsible for the Canadian equity fund. "That's how things were done. It was beneficial, too, because interest rates are a big determinant of stock prices," he says.
In 2002, Quinn became president and chief investment officer. His colleague Fred Pynn shares responsibility for the investment management operations. Quinn monitors Canadian fixed income, income trusts and U.S. equities.
"My role is to ensure the integrity of the process, which is pretty rigorous," says Quinn, who chairs the firm's investment committee. Developed initially by company founder David Bissett, the process focuses on companies that have above-average growth rates and trade at below-average valuations. The bottom-up methodology is based on criteria such as high returns on equity and high earnings growth rates.
The underlying funds each have about 40 holdings, whose maximum weighting is about 4.5%. In aggregate, though, the balanced fund has about 250 names, although there is some overlap. Turnover is a fairly modest 25% to 30%. Much of the trading consists of rebalancing the fund as the firm reduces positions that have grown too large because of price appreciation.
The Morningstar four-star rated fund has been in the top or second quartile over all periods. That is attributable, says Quinn, to the consistent performance of the underlying funds, the long-term asset mix and regular rebalancing.
Looking ahead, Quinn acknowledges that bond returns will be harder to come by this year, since yields are quite low. As for equities, he cautions that the expansion of price-earnings multiples that has propelled stock-price gains over the last 18 months is likely to reverse itself somewhat, as interest rates rise a bit. "The things that we look at will prove to be very important, such as ensuring that the companies we favour are profitable, and that we're not over-paying for them."
