Gold-rated Beutel Goodman Income placed under review as Corneil announces retirement

Vishal Mansukhani, CFA 3 October, 2014 | 11:21PM
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Bruce Corneil, managing director of fixed income at Beutel Goodman and lead manager of Morningstar Gold-rated Beutel Goodman Income  , last week announced his retirement, which will be effective March 31, 2015.

Prior to joining Beutel in 1994, Corneil spent more than 20 years as a money manager at Manulife Financial, including eight years as the head of Canadian investments. Corneil has an exceptional long-term track record and a strong tactical acumen, navigating his funds through a number of credit crunches and other crises.

Throughout Corneil's tenure on Beutel Goodman Income, which dates back to January 1994, the fund's returns have ranked in the top quartile three-quarters of the time over rolling three-year periods until August 2014. However, the fund has lagged badly in recent years as Corneil positioned his portfolio for higher interest rates. With duration, a measure of interest rate sensitivity, well below its rivals in the Canadian Fixed Income category, it has trailed approximately 80% of its peers for the five-year period ending Oct. 2, 2014.

Going forward, the fixed income team and the fund will be led by David Gregoris. Gregoris has been involved with setting the firm's fixed income strategy alongside Corneil for the past 20 years. Every portfolio management decision since the team was formed has been made by both managers in concert. Their long tenure together mutes the impact of Corneil's retirement.

However, Corneil's retirement is still a material change to the firm's fixed income operation and the fund. The firm is currently evaluating the nature of resources that it can add to fill the void left by Corneil's departure.

That being said, over the next six months Corneil has an incentive to leave the firm in good hands, given that he will remain a Beutel Goodman shareholder for the next nine years. That Corneil will continue to maintain his Beutel stake is also a vote of confidence in the firm's investment culture.

Given the significance of Corneil's departure, we have placed Beutel Goodman Income's Analyst Rating under review, with an update to follow in the coming weeks.

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About Author

Vishal Mansukhani, CFA

Vishal Mansukhani, CFA  Vishal Mansukhani, CFA, is a manager research analyst at Morningstar Canada.

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