Ian Ihnatowycz sits in front of a window overlooking Toronto's futuristic city hall and the imposingly solid old city hall. It's a fitting location for a money manager with forward-looking social objectives but whose investment style is grounded in old-fashioned value analysis.
Ihnatowycz (pronounced E-NA-TOW-ITZ) is founder, president, CEO and lead portfolio manager for Acuity Investment Management Inc. The company manages $925 million in assets split among 24 funds under the Acuity and Clean Environment brands, plus pooled funds, and pension, institutional and private money. Clean Environment funds have been "quite successful" according to Ihnatowycz. Since their launch in 1991 the funds, which seek out companies with good sustainable development practices, have captured nearly 10% of the money invested in socially responsible funds in Canada.
Ihnatowycz continues to capitalize on the growing trend of broadened social awareness among investors. In November, Acuity introduced Acuity Social Values Canadian Equity and Acuity Social Values Global Equity funds. While the Clean Environment funds have a mid-cap, technology focus, the Social Value funds will have a preponderance of large-caps and no technology bias.
Despite the social values screens first used to winnow out companies, the new social funds will adhere to Ihnatowycz's value-based selection. He and his team of two other managers and three analysts look for long-term value with a growth element.
They want reasonably priced companies with strong management holding a significant ownership position. They also look for good strategic positioning to generate healthy revenue and/or earnings growth. The team studies profit-margin trends, competition and suppliers, and selects companies that are among the leaders in their industries.
The Bethesda, Md.-based Calvert Group, the oldest and largest American mutual fund company specializing in socially responsible funds, will advise Acuity on the social suitability of prospective global investments. Michael Jantzi Research Associates Inc., a Toronto-based social research company, will advise with respect to Canadian investments.
For Ihnatowycz, 48, the transition from health-care analyst with Confederation Life in 1982 to manager of environmental and social funds has been a natural one. He graduated from the University of Toronto in 1975 with a degree in pharmacology, and then did some graduate work in medical science at McMaster University in Hamilton before entering an MBA (finance) program at Western.
Ihnatowycz completed his MBA in 1982 and was hired on by Confederation Life to combine his science background with his finance knowledge. By 1986, which was also the year he obtained his chartered financial analyst designation, he was a small-cap manager at Confederation.
In 1987 he left to join Hughes King & Co. (now amalgamated with MMA Investment Managers Ltd.) as an investment strategist and chief investment officer. After four years with Hughes King, Ihnatowycz founded Acuity with some private wealth-management accounts and the concept of Clean Environment Funds.
Ihnatowycz believes that his science background has given his funds an edge. He points to his early discovery of Biovail Corp. International, a pharmaceutical company, and Calpine Corp. a U.S. firm with cogeneration and geothermal technologies. Both companies have had exceptionally strong earnings growth over the last six years.
It's no coincidence that Acuity's two other managers also have science backgrounds. Hugh McCauley and David Stonehouse both have science degrees, along with MBAs and CFAs. All managers and analysts work on all the funds. "It's very much a team effort," says Ihnatowycz, though he admits to being "first among equals."
Asked if Acuity might look for efficiencies of scale like so many other Canadian mutual fund companies, Ihnatowycz says emphatically, "We're not for sale. We love our independence. We set up our company to do things differently and we are."
