Power

Globe Investor Magazine, November 18, 2008

Richard Guay

TITLE: President and CEO, Caisse de dépôt et placement du Québec, Montreal

VITALS: Guay grew up in Montreal. The 47-year-old and his wife have four children at home, ranging in age from 11 to 18.

WHAT HE CONTROLS: Canada's largest pension plan, with $155.4 billion in net assets at the end of 2007. As chief investment officer,Guaypersonallyoversees the management of 14 specialized portfolios.

SHOW OF POWER: A pure investor, not a puppet of Quebec politicians. A Teflon man: The pension fund's disastrous adventures into subprime paper didn't stick to him even though he was chief investment officer at the time. He can bring more capital to bear on a single deal than any other money manager in the country. One of the most internationally adventurous investors among those running large capital pools.

PERFORMANCE: Average annual return of 12.4% for the five years ended 2007, positioning it near the top of Canadian pension funds. Return on investment in 2007 was 5.6%, after booking a $1.9-billion writedown on its $12.6-billion holdings of asset-backed commercial paper.

WHAT'S NEXT: The Caisse needs a long-run return of 6% to 7% to be sustainable. This year, Guay says, they'll be lucky to achieve this goal. He's confident, however, that their moves over the past six years to reduce fixed-income assets in favour of areas like real estate, private equity and hedge funds will pay off. Those might not sound like safe bets in this environment, but Guay says he's picked his spots.

"The key point is that if you look.at the first quartile of private equity firms, the best teams outperform equity markets by a huge, huge margin," he says. The same goes for real estate, he adds. "[Our real estate team] sold almost everything we had in the shopping centre business in the U.S. two years ago."

"I strongly believe that we were among the Canadian leaders in terms of risk systems, risk calculations, but if they don't capture a crack in the contract, like the one in asset-backed paper the risk system actually failed somewhat," he says. "We have to never forget statistics also have their limits." -Tara Perkins

Ned Goodman

TITLE: President and CEO, Dundee Corp.; chairman of subsidiary Dundee Wealth Inc. and a portfolio manager, Toronto

VITALS: The 71-year-old Montreal native holds a B.Sc. in geology and an MBA. His son David succeeded him as CEO of DundeeWealth in 2007.

WHAT HE CONTROLS: Controlling shareholder of Dundee Corp. (which has real estate and resources investments, and DundeeWealth, with $59 billion in fee-earning assets at Sept. 30).

SHOW OF POWER: If there is big money to be made on a new trend, you'll likely find Goodman was there long before you. His specialty has been junior mining, where the big fortunes are won and lost in Canada, and where you can turn $10 into $100 in a matter of months. If Goodman is backing a company, everyone on Bay Street is interested. He hasn't slowed down in his 70s, and is still known for working the numbers on a deal through the weekend. Tough and entrepreneurial, he believes that independent, family-run wealth management companies can still beat the banks at their game-an inspiration to everyone on the Street who aspires to work for somebody other than the Big Five.

PERFORMANCE: Dundee's Class A shares lost 52.5% over the year ended Sept. 30. Its average annual return over five years: 10.2%.

WHAT'S NEXT: Ned Goodman's speech to a Bay Street audience in March now seems prescient. At the time, he suggested that North American stock markets were not in a bull market, but had been in a flatlining trend since 2002-similar to the Dow Jones pattern from 1966 to 1982. "It was a tough time to invest" back then, but not impossible, he said. "That's the time I built my career."

The outspoken entrepreneur built Dundee into an asset manager focused on wealth management, real estate and resources. Its largest subsidiary, Dundee-Wealth, owns Dynamic mutual funds, a brokerage arm and financial-planning firm. He expanded into the fund-distribution business before other rivals. "To compete with the banks, you have to be better than the banks," he says.

A pioneer, he forged ahead with income trust funds as early as 2001. He is a value-oriented money manager, but has added growth managers to his firm's menu. His vision is "to surround yourself with the people who are smarter than you...and give them room to make it all happen." -Shirley Won

Eric Sprott

TITLE: Chairman, CEO and portfolio manager, Sprott Asset Management Inc.

VITALS: Sprott has a B.Comm. and a CA designation. The 64-year-old is married with two children.

WHAT HE CONTROLS: Sprott is president, CEO and controlling shareholder of TSX-traded Sprott Inc., which owns Sprott Asset Management. He manages several of SAM's 21 funds.

SHOW OF POWER: He is Mr. Canada: the only hedge fund manager in the country who is knownonWall Street.While Sprott has made an enormous fortune, he is still an approachable man whom you can find at his favourite Bay Street watering hole at the end of the day, a Coors Light in hand. He is one of the most aggressive traders and investors in the country. When he makes up his mind to take a position, he moves fast and large.

PERFORMANCE: The $1.5-billion Sprott Canadian Equity Fund's 10-year annualized return as of September: 28.6%

WHAT'S NEXT: For proof that the markets are in big trouble, you need look no further than Eric Sprott. Arguably Canada's most successful investor, Sprott has watched his flagship Canadian Equity Fund plummet some 40% year-to-date as of last month, after a decade of eye-popping returns. Meanwhile, his recent and much-celebrated IPO of Sprott Inc. is trading well below its $10 high. Sprott made his fortune by betting on small companies with growth potential, and points out that he has long been bearish on the financial system. He says he is surprised that investors didn't follow his lead by flocking to hard assets like gold and oil when the meltdown hit this fall. Moreover, as government interventions fail to repair tattered markets and currencies, Sprott predicts there will eventually be a flight from paper instruments. Until that happens,he's digging in."I'm quite happy to continue to raise cash, stay with my gold positions and hope that the existing positions I have manage to survive."- Nick Rockel

Rajiv Silgardo

TITLE: Chief executive officer and chief investment officer, Barclays Global Investors Canada,Toronto

VITALS: Born in New Delhi, and has a Master of Commerce (from the Delhi School of Economics) and an MBA (University of North Carolina Chapel Hill). Silgardo is 51, married with two teenaged daughters.

WHAT HE CONTROLS: BGI Canada's pension fund assets have grown from $1 billion to $57 billion since Silgardo became CIO in 1995. The fund also controls $17 billion in retail ETFs.

SHOW OF POWER: Silgardo is the face of passive index investing in Canada and, as a result, he is every active fund manager's worst nightmare. So many institutional investors have given up beating the market and gone to low-cost passive indexing that Barclays has become the fastest-growing money manager in the country.You might think of him as just a branch-plant manager of the massive Barclays global asset-gathering machine. But Silgardo is so effective that he is a big reason that once-powerful domestic competitors have given up independence and consolidated in hopes of just staying alive. Some see Barclays' success as one of the reasons fund managers such as PH&N decided to sell.

PERFORMANCE: BGI Canada's flagship $7.9-billion iShares Canadian LargeCap 60 Index Fund was up 13.67% annually over the five years ended Sept. 30,versus a group average of 9.78%, and 12.04% for the index. Over one year, the fund is down 11.44%, better than the group average of minus 17.68%.

WHAT'S NEXT: BGI Canada, the largest pension manager in the country, oversees $57 billion in assets. Since the inception of its flagship $5-billion "active Canadian equity strategy" portfolio in 1997, returns have averaged 2.3% above the index, or 9% annualized as of Sept. 30. Its results have also been far less volatile than those of other managed funds.

Equally impressive, BGI Canada now has $17 billion in exchange-traded funds and a 90% market share (among the big players, only Toronto-Dominion Bank ventured into the field-and quickly retreated). With the mutual fund business maturing, Barclays expects to benefit at the expense of its costlier rivals. "ETFs are under 3% of mutual fund assets," says Silgardo, who argues that it's tough for active fund managers to beat the index. "I see no reason why it can't [exceed] 10%."

And what about the rocky times on the stock market? Good for the ETF business, says Silgardo. With their lower fees, "in these turbulent times, more net return [from ETFs] goes to the investor" than to the fund managers. - Sean Silcoff